A company that targeted up to 30 Manx businesses and a government department in what trading standards officers described as a digital ad ’scam’ has gone into liquidation.
The Examiner reported back in December 2014 how the island’s Office of Fair Trading warned firms to be vigilant about cold callers offering to sell advertising space.
It came after 30 local firms and the government’s former Department of Community, Culture and Leisure were caught out.
Now the company at the centre of the allegations, Blackpool-based Arena Digital Productions, has gone into voluntary liquidation, with debts of more than £930,000.
In a statement the OFT said it believed a significant number of local businesses agreed contracts with the firm during 2014, and possibly 2013, and could now be owed money.
We reported in 2014 how Arena Digital Productions had secured a deal to pay the DCCL to put up advertising screens at the Villa Marina, the NSC and the Wildlife Park.
Agents for the company then sold advertising space on the screens on the basis that it had government backing.
But companies claimed the promised amounts of advertising failed to be screened while others found the contract’s small print tied them into an automatic renewal they didn’t want - and were threatened with legal action and an adverse credit rating if they didn’t pay up.
In an email seen by the Examiner, OFT boss Mike Ball told David Cretney MLC: ’This is a classic advertising scam which is well-known to trading standards colleagues in the UK but this is the first time we have seen it here in this guise.
’The problem is that the contracts themselves are deliberately written to be vague and thus difficult to prove a breach. We are finding situations where the provider has failed to deliver against the sales "patter" but not breached the written terms
’That is the way the scam works.
’The scam is reliant upon the salesman being able to associate the advertising with someone reputable (in this case DCCL) which makes potential victims feel more confident.’
At a meeting in Preston last August, directors of Arena Digital Productions Ltd agreed to wind up the company, as it was unable to continue in business due to its liabilities.
Jeremy Woodside and Lindsey Cooper of Manchester-based RSM Restructuring Advisory LLP were appointed liquidators.
A statement of affairs showed the company had debts of £934,540 but assets of only £22,870 expected to be realised.
Among its creditors were the Her Majesty’s Revenue and Customs, which was owed £116,902, and Preston and Nottingham city councils, owed £7,295 and £2,666 respectively.
Also listed as creditors are Arena Digital Ltd, formerly R&S Partners Ltd, a still active company set up in April 2014 by two of Arena Digital Productions’ directors which is owed £54,668.
Arena Digital Productions Ltd (Canada) is shown as being owed £562,429 and Arena Digital Productions (Australia) which is owed £13,092.
Businesses who believe they are owed money should contact RSM’s Liam Comiskey at firstname.lastname@example.org