HR
professionals are being forced to pay for unwanted HR products by clever sales
firms exploiting ‘a grey area’ in law.
Personnel
Today has received complaints from numerous readers unhappy with firms
which cold call HR departments offering ‘must-have’ HR products on set terms of
approval.
Having
secured acceptance from the ‘client’, the product is dispatched for a trial
period – typically three weeks – and the company is invoiced if it fails to
meet the deadline. Anyone who returns the product late and refuses to pay is
warned their credit rating will suffer, and threatened with legal action.
Examples
of companies that use this sales technique include D:R Publishing, which sends
out the pamphlet Flexible Working – Unleash your People’s Potential and
TGL Publishing and Field Publishing which both sell a CD-Rom called HR
Advisor.
Personnel
Today readers described the CD-Rom content as ‘bad quality’ and ‘rubbish’
and criticised the thin content of D:R Publishing’s pamphlet.
Cherrill
West, personnel manager at A&M Hearing, a subsidiary of Siemens, was billed
for £299 by D:R Publishing when she sent back its guide after the trial
deadline. West said she was disappointed by the size of the thin pamphlet and
its content.
She
said D:R Publishing’s former director Heidi Dickson aggressively pursued her
for payment despite West making it clear that an administrator who was not
authorised to agree with the publisher’s terms and conditions received the
sales call.
“I
am not vindictive but I want to warn other people to be careful about what they
agree to over the phone,” she said.
Siemens’
legal department advised her to avoid legal action over such ‘a small figure’
and A&M paid in full.
Nicola
Thackeray, HR manager for Askam-Bryan College was forced to pay £395 to Field
for its HR Advisor, when she sent it back late. She claimed it was of no value
to her, and Field had sent her unsolicited material she never wanted in the
first place.
Pauline
Shoesmith, HR adviser at Coral Eurobet, paid £464 for her copy of HR Advisor
after being threatened with legal action for returning the product after the
trial time period.
However,
Filip Lademacher, director of both TGL Publishing and Field Publishing,
defended this so-called ‘inertia trading’.
“When we call, we state the length of the approval term and when the
product becomes chargeable,” he said. “We make it clear the onus is on the
customer to return the CD-Rom and check the person we send it to has the
authority to accept it.”
He
claimed an e-mail confirming the call is sent, and a subsequent letter reminds
the customer of the date of expiry.
D:R
Publishing could not be contacted.
Rob
Shields from the Insolvency Service said these type of distance selling firms
“trade on the very edge” of the law. “Generally speaking they will pull out
[from bringing prosecutions] at the last moment,” he said.
David
Sanders, lead officer for civil law for the Trading Standards Institute, said
such ‘inertia selling schemes’ took advantage of “a grey area in the law”.
He
believes companies which stand up to legal threats and are willing to go to
court might well get a result in their favour, but the law had not really been
tested.
‘Forty
per cent of invoiced clients paid up without comment’
Based on information from the Official Receiver at the Insolvency
Service
The
man in charge of TGL Publishing and Field Publishing operated a firm called
Berger and Co plc that was wound up earlier this year for carrying out
disreputable business.
The
firm, trading as Berger and run by Filip Lademacher, cold-called companies
offering to send business reports for review on workplace management issues.
If
the client agreed, reports were sent out by recorded delivery. If Berger did
not receive the report back in 21 days, it issued an invoice.
The
company made 72,000 cold calls a month and recorded a turnover of £1.18m for
the year ending 31 March 2001. Forty per cent of invoiced clients paid up
without comment.
However,
Berger was wound up in March after an Edinburgh judge ruled it had not
maintained a minimum standard of behaviour and had “carried out a disreputable
business”.
Berger
made no mention of the price of products, and it was not suggested there was
any binding commitment to buy until after the client had agreed to receive a
report. It also failed to check that the person agreeing to the review had the
power to commit his employer to any contract.
The
petition to wind up Berger was carried out by the DTI’s Companies Investment
Branch under section 447 of the
Companies Act 1985.
