How to avoid rogue advertisers
The sales and marketing director has come to you with a purchase order for an account with a new advertising company. You’ve heard some rumours about rogue publishers lately. How can you help vet this new agency?
Regular scams
As you know, but the sales and marketing director might not appreciate, a purchase order (PO) is a legally binding sales contract between the buyer and seller detailing the exact merchandise or services to be provided. So you’re always a little wary of POs to new suppliers, but as this one relates to advertising, you’re even more concerned. You recently read that a publishing company making misleading claims about circulation figures, and demanding payment for ads never placed, has been wound up in the High Court following an investigation by the Insolvency Service (Rose Garland Limited). The Companies Investigation Branch (CIB) is quoted as saying that: “This case should act as a reminder to businesses to remain wary of anyone who cold calls, asking potential customers to place ads in wall planners, diaries, children’s fund books and other similar publications.”
The vast majority of publishers are legitimate. However, it’s important to remain vigilant because a rogue publisher sees an SME as an easy target. They will use carefully scripted and deliberately misleading sales patter to sell advertising space in various types of publication. According to Trading Standards, costs usually range from about £100 to £1,000, depending on the size of the advertisement. And what do you get for your money? Usually, absolutely nothing!
Other problems include sending an invoice for a fictitious advertisement which is often paid without question, tricking employees into authorising ads “agreed” by another colleague, and being asked to re-book an ad which had never been used.
How to avoid being scammed
There are a number of steps you can take to avoid the company being scammed.
Tip 1. First of all, put a policy in place stating that no member of staff is allowed to agree to an advertisement over the phone and must always ask for written details. Only once these details have been received and authorised, should a PO be sent to the supplier. The policy should also ensure that all invoices are matched to POs before any payment is made.
Tip 2. Most local trading standards websites have an online leaflet about publishing and other marketing scams. To find your local office, go to http://www.tradingstandards.gov.uk and enter your postcode in the “need help?” section. Circulate this leaflet to members of staff who take external calls, and make copies of a Publishing/Marketing Questionnaire (PMQ) available to such staff (see The next step for a sample PMQ).
What can you do if it goes wrong?
When the advertiser won’t repay your money, simply ignores requests for repayment or makes endless promises to repay that are not kept, you need to take final action straightaway. This should include appointing a collection agency, pursuing the debt through the county court, or passing the debt to a solicitor. In the event of non-payment, you can use the PO as a legal document in a court of law to demonstrate intent.
For a list of questions to ask a potential advertiser, visit http://financialcontroller.indicator.co.uk(FC 02.06.09).
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