Mark and Jane Earnshaw ran Chique Makeovers and Photography from offices in Hull from 2014 onwards alongside co-director and photographer Lauren Crainer, who has since stood down.
The company was prosecuted by Trading Standards after 48 customers, most of them women, complained about the business model, which involved running fake competitions where the 'winner' had to pay a fee for a photoshoot and high-pressure sales tactics which left many trapped in 'unregulated' credit agreements that they could not cancel.
The company and the three directors faced a number of charges at Hull Crown Court relating to engaging in either misleading, unfair or aggressive commercial practices between 2018 and 2020.
Mark Earnshaw, 53, and Lauren Crainer, 32, pleaded guilty and the charges against Jane Earnshaw were allowed to lie on file.
Chique had studios in Garforth near Leeds, Hessle near Hull, Wakefield, Huddersfield and the Meadowhall Business Park in Sheffield. Since the pandemic three of the sites have closed.
The prosecution outlined how Chique's street promotional team would approach people in shopping centres and supermarkets to tell them they had won a competition for a makeover and photoshoot - after which point 'the scales were stacked against the customer'.
Call centre staff would contact those they had obtained data from to tell them all they had 'won' - but that they had to pay a £25 deposit for their photoshoot and faced a cancellation fee of up to £99 if they failed to turn up to their studio appointment.
The prosecuting counsel said: "The competition was a soft sell to extract as much money as they could. At each stage the pressure was ramped up. It was a planned model and a deliberate one. Different staff were involved at all five sites but the methods were strikingly similar and put profits over consumers. There was a culture of unfairness."
The court heard that those who agreed to claim their 'prize' would be sent a confirmation email which included contractual terms - among them that only one photograph would be free and that the rest would have to be paid for. Staff, including one, Rebecca Lancashire, who gave evidence, were instructed to give customers as little information as possible and not to mention the cancellation fees until after the booking had been agreed.
The prices of photography packages were not adequately promoted on the Chique website, and immediately after the shoot had taken place customers were asked to fill in a review form which gave a 'misleading impression' of their experience.
They were then taken into a small viewing room and told that prices for their photographs would range from £500 to £1,000. The prosecutors alleged that: "It was clear that they were expected to buy them and anyone who voiced objections was ignored, as were people's vulnerabilities."
One victim, Pamela Wilkinson, was a cancer survivor on disability allowance benefits who went to the Huddersfield studio when she was feeling 'very down' to cheer herself and her daughter up. They were offered a £1,000 package which they were unable to cancel despite Ms Wilkinson's pleas that she could not afford the fee. She ended up with a county court judgement against her for the debt.
Staff also filled in affordability forms for creditors with incorrect information about customers' incomes, and told them their photos would be deleted if they did not immediately buy them.
The court was told that the Advertising Standards Authority had begun an investigation into concerns over the 'competition' and had warned Mark Earnshaw that the advert was misleading as no competition should charge a fee to claim a prize. He responded to say that he had removed the competition, but it continued after this point and he was given further warnings about the booking charges being a banned practice.
The prosecution stated that 'back of house' director Mr Earnshaw was responsible for finances, the website, dealing with customer complaints and responding to Trustpilot reviews. He was 'implicated in all steps and had either first hand knowledge or was alerted to them. It was either active consent and connivance or neglect.'
Lauren Crainer was in charge of technical services, having worked with Mr Earnshaw's wife Jane for a similar company called Flawless before they set up their own business. Her role was characterised as 'neglect' though she was not aware of the ASA's formal warnings.
Prosecutors further accused Mr Earnshaw of a lack of transparency in relation to declaring his income and means, claiming that he had not disclosed the rent accrued from a caravan in Bridlington he owns. They said he has 'substanstial assets', having listed his home for sale for £1million, and also owns a Spanish apartment worth £165,000. He had refused to provide recent bank statements to the court.
The company had an average pre-Covid turnover of £1.5million but has since struggled and now generates around £230,000.
Mr Earnshaw's defence counsel provided references which described the father-of-two as 'reliable, reasonable, honest, hardworking and ethical.' It was claimed that he rarely visited Chique sites in person and that the business model established by his wife and Miss Crainer in 2014 had not altered by the time he joined as a director in 2017 during a period of expansion.
The defence added that the business had implemented changes including replacing staff, installing CCTV with audio, and providing better training, and as a result had improved its Trustpilot rating and 'turned things around quickly'. They added that Mr Earnshaw derived no income from a new venture he had set up advertising holiday properties owned by others.
Lauren Crainer's defence counsel said his client, who has two sons aged under three, 'deeply regretted' the consequences of the wrongdoing and was a 'compassionate, caring' woman who could not cope with the expansion of the business. She has since set up a 'valuable and modest photoshoot business to empower women' called In Bloom Boudoir and had found the experience of court 'truly harrowing'.
Sentencing, Judge Sophie McKone said: "You were in the business of making people feel good. This model was designed to reel people in and they were then put under pressure to spend considerable amounts of money when they could not afford to do so. Their feelings were manipulated. This model could not have sprung up overnight - it required careful planning and training of staff to implement."
Chique was ordered to pay £30,000 plus £15,000 court costs, while Mark Earnshaw, of Lydgate Road, Shepley, Huddersfield as an individual was fined £4,000 with £10,000 costs. Lauren Crainer, of Old Hopkinson Drive, Birkby, Huddersfield, was fined £1,000 with £5,000 costs.