A company selling orthopaedic products to elderly people in their own homes, was this week wound up in the public interest, in the Manchester District Registry following an investigation by Company Investigations (North) of the Insolvency Service.
Reo Marketing Ltd operated from premises in Chesterfield and carried on an almost identical business to two previous failed companies. The company’s tactics included telesales staff who cold-called private individuals with the intention of deliberately misleading them into agreeing to a home visit. The pretext being that they were participating in a survey designed to obtain feedback on the company’s products.
In reality, the company was seeking to exploit a selling opportunity. Once inside the home, the company’s agents employed further misleading or high pressure tactics on vulnerable people. For example, the agents made unsubstantiated claims with regard to the medical benefits of the products, on occasions falsely claiming to represent social services, in order to complete a sale.
Investigators found the average age of the company’s customers was 79 years. Despite the fact many of those targeted suffered from physical and mental health problems, sales visits routinely lasted for three or more hours, with some customers reporting they were followed around the house by the salesman or that they only agreed to a purchase to conclude the appointment.
Commenting on the case, Insolvency Service investigator Scott Crighton said:
“This company’s tactics were typical of those that prey on the elderly and vulnerable. The methods used to get people’s trust and gain entry into people’s homes and the conduct of sales people once they got there, were unacceptable. Companies that adopt these tactics should know that Company Investigations can and will investigate and, where appropriate, take action to put them out of business”.
Investigators found that the company achieved a turnover of £1.3m in under 10 months by adopting a confusing pricing structure and offering non-existent discounts. In reality, they added mark-ups against the cost price of several hundred percent and, in one case, as high as 1,326%.