The connected companies SAS Fire and Crime Research UK netted £18m, during a 31-month period to September 2010, by targeting elderly customers with false promotional offers and high pressure sales tactics.
A case led by the Company Investigations unit of the Insolvency Service found that both businesses promoted the alarm system as being free, when in fact customers were forced to pay substantial monitoring charges.
They also falsely told customers that the alarms would be monitored by police and sought to waive customers’ statutory rights to cancel.
The companies also falsely gave the impression that the systems were monitored by the council, and gave inaccurate crime statistics, in a bid to generate an appointment with a sales agent who would apply pressure to sell the alarms.
Insolvency Service chief executive Stephen Speed said: “Our examination of SAS’s trading practices established their customers were, on average, 69-years-old and it was this targeting of potentially vulnerable customers that was a matter of particular concern.”
SAS Fire operated a network of offices throughout England, Scotland and Wales, from which it promoted the sale of alarm systems incorporating remote monitoring and a rapid response service when activated.
Cold calls were made to market the systems, claiming customers had been specially chosen, before a follow up visit.
Customers were encouraged to buy a package costing up to £6,000 for a 15-year contract in order to obtain the alarm system at the promoted price of £1.
Customers were pressed to make an immediate purchase during the visit and the alarm system would typically be installed within 48 hours, thereby limiting customers’ ability to exercise their statutory right to cancel the contract within seven days.
Speed added: “We found the company’s tactics were typical of those that prey on the elderly. The company used unacceptable methods to gain trust and entry into people’s homes and once inside the conduct of their sales people breached consumer protection law.”