Insolvency Service (National): ‘Free trial offers’ can be costly advises the Insolvency Service as 3 companies are wound up in the public interest

Three companies involved in the mis-selling of health supplements including Acai Berry Detox, Life Cleanse and Resveratrol have been ordered into liquidation following an Insolvency Service investigation.

An investigation by The Insolvency Service on behalf of the Government found that customers of Vivera Limited, Viv3lab Limited and Trading Planet Limited were enticed to sign up to a ‘Free Trial Offer’ that required only a small charge to cover postage and packaging, typically £3.95.   However, if the customer failed to cancel the offer within the cancellation period, usually 15 days, they were deemed to have agreed to an ongoing supply of the product from the companies, at a cost of around £70 to £80 each month.

The investigation found that the three companies were under common control and that between them, during March 2009 to November 2009, they dealt with over 947,000 customer orders in excess of £25 million.  Trading Planet Limited and Viv3lab Limited also used the trading style ‘Healthscience’.  

Commenting on the case Alex Deane, of The Insolvency Services, Company Investigations said;
“Companies using deliberately misleading offers for financial gain is serious misconduct and it undermines the confidence the public have in business.  I hope the action taken on this matter sends a clear and simple message; if you set out to defraud you will be closed down.  

“This action should also serve as reminder to anyone interested in signing up for a ‘free with postage and packing’ offer, if it seems to good to be true, it usually is.  Always check the validity of any company that requires your personal banking details and quickly inform your financial provider if you notice any subsequent unusual activity.”

The grounds for winding up the companies were that the promotion of the ‘Free Trial Offers’ was misleading.  In particular:-

·  The websites used by the companies misled customers into believing that the trial offer was risk free and limited in nature;

·  The terms and conditions of the offer were designed to confuse the customer and were not provided in any durable medium;

·  The length of the trial offer was not made clear.  Customers were provided with a 30-day supply of the product, but had, typically, only 12 days from receipt of the product in which to cancel any future supply;

·  Charges to customer credit/debit card statements were applied in one of up to 23 different trading names in a deliberate act to confuse and mislead.

The companies also failed to keep proper accounting records; failed to co-operate fully with the investigation and operated with a serious lack of transparency as to who controlled the companies.  The investigation found that all three companies were controlled by a company registered in Malta.  Throughout the enquiries the Maltese company described itself as a third party payment processor, but provided no evidence to the investigators to show on whose behalf it was acting.

The petition to wind up Trading Planet Limited in the public interest was presented on 27 January 2010; an order placing the company into provisional liquidation was made on 05 February 2010; and it was wound up by the High Court on 09 April 2010.  The petitions to wind up Viv3lab Limited and Vivera Limited were presented in Livingston Sheriff Court on 04 March 2010; orders placing the companies into provisional liquidation were made on 05 March 2010; and they were wound up on 22 and 23 March 2010 respectively.

Notes to editors

1 Trading Planet Limited was incorporated on 04 August 2009 and its registered office was at Ordman House, 31 Arden Close, Bradley Stoke, Bristol, BS32 8AX.  On the application of the Secretary of State the Official Receiver was appointed by the Court as provisional liquidator of the company on 05 February 2010.  The role of the Official Receiver was to protect the assets and financial records of the company pending determination of the petitions.  On the making of the winding up order the Official Receiver was appointed as liquidator.

2          Vivera Limited was incorporated on 06 February 2009.  Viv3lab Limited was incorporated on 18 February 2009.  Both had their registered office at Unit 5, Mill Road Industrial Estate, Linlithgow, EH49 7QY.  On the application of the Secretary of State William Cleghorn and Emma Porter of Aver Chartered Accountants Limited were appointed as joint provisional liquidators of the companies on 05 March 2010.  On the making of the winding up orders, Mr Cleghorn and Miss Porter were appointed as joint interim liquidators.

3          The Insolvency Service administers the insolvency regime, investigating all compulsory liquidations and individual insolvencies (bankruptcies) through the Official Receiver to establish why they became insolvent. The Service also authorises and regulates the insolvency profession; deals with disqualification of directors in corporate failures; assesses and pays statutory entitlement to redundancy payments when an employer cannot or will not pay employees; provides banking and investment services for bankruptcy and liquidation estate funds; and advises ministers and other government departments on insolvency law and practice.  Further information about the work of The Insolvency Service is available from http://www.insolvency.gov.uk

3          All public enquiries concerning the affairs of the company should be made to: The Official Receiver, Public Interest Unit ,  Tel No 0207 637 1110: Email: piu.or@insolvency.gsi.gov.uk

4          Media enquiries should be directed to: - 

Denise Rawls,           Press Office Manager          020 7674 6910
Ade Daramy,            Press Officer                      020 7596 6187

Contacts

NDS Enquiries 
Phone: For enquiries please contact the above department 
ndsenquiries@coi.gsi.gov.uk