A Yorkshire based company has been fined £150,000 after it tricked thousands of elderly people into thinking they had won substantial cash prizes through fake promotional material sent out in the post.
Kingstown Associates Limited, based in Driffield, has also been ordered to pay more than £10,000 in court costs after it sent out two promotional mailings - ‘Healthy Living Direct’ and ‘All the Very Best’ - which created a false impression that recipients were guaranteed a share of tens of thousands of pounds.
However, in order to claim the cash prize, consumers had to first purchase products from Kingstown Associates. Having made a purchase they discovered the cash prize had very little , if any, value.
The scam mailings, sent between January and June 2018, failed to say how much of the cash prize would be paid to the recipient and how many consumers, on average, would claim from the fund.
The investigation by the National Trading Standards Yorkshire & the Humber Regional Investigations Team found that there were 11,016 “winners” of the ‘Healthy Living Direct’ £10,000 cash prize with each person receiving £0.91 - the total amount awarded being £10,024.56.
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Earlier this month, the company was found guilty of ‘banned practices’ under the Consumer Protection from Unfair Trading Regulations 2008. This included creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact there is no prize or other equivalent benefit.
Lord Toby Harris, Chair of National Trading Standards said: “Cases of postal scams are widespread but notoriously difficult to measure given low reporting rates.
"Anyone who suspects that they or someone they know is receiving scam mail should report it to the Citizens Advice Consumer Helpline by calling 03454 04 05 06.
"We’d also urge people to join our Friends Against Scams initiative to help empower people to identify scams and prevent neighbours, family and friends from falling victim to mail scams.”
Cllr Andrew Waller, Executive Member for Economy and Strategic Planning at City of York Council, said: “I applaud our investigators for unveiling and successfully prosecuting a mail scam that preyed upon vulnerable members of the community for financial gain.
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“As this prosecution shows, when companies deliberately give misleading or false information, we will investigate and bring them to justice.
“We encourage residents to keep an eye out for vulnerable neighbours and if you think someone you know is being targeted, contact Citizens Advice consumer helpline on 03454 04 05 06.”
The company had previously been investigated by the Advertising Standards Authority (ASA), who banned the company’s misleading promotional mailings. However, the company failed to make sufficient improvements to its commercial practices.
ASA Director of Complaints and Investigations, Miles Lockwood said: “We welcome the sentencing handed down to Kingstown Associates Ltd for its scam promotional mailings following our work with and investigation by National Trading Standards Yorkshire & the Humber Regional Investigations Team.
"Its direct mailings gave the impression that recipients would definitely receive an award when that was not the case and were in fact subject to various significant conditions that treated consumers unfairly and were misleading.”