Scam Debt Collection firms shut down

Three connected debt collection agencies in Sunderland have been closed by the High Court after an investigation found they kept over £50,000 of funds collected for their clients.

The companies, EDC Group NE Ltd, UK EDC Ltd, and UK TCF Limited, were found to have deceived small businesses by taking upfront fees and then failing to provide the promised services. They falsely claimed to have decades of experience and used fake testimonials on their websites to appear legitimate.

After clients paid instruction fees, often thousands of pounds to recover overdue invoices, the companies became impossible to contact. Investigations by the Insolvency Service revealed that the agencies collected at least £54,847 on behalf of their clients but never passed the money on.

The firms targeted small businesses with unsolicited calls, persuading them to sign contracts for debt recovery. However, instead of helping, they kept the collected money for themselves. Bank records showed large sums were paid directly to the company director, as well as to bookmakers and football clubs.

One victim paid £750 for help recovering a £20,000 debt. The agencies collected over £12,000 from the debtor but never informed the client or handed over the funds. Another victim described being given “false hope” by the companies, calling their methods a “confidence trick.”

David Hope, Chief Investigator at the Insolvency Service, stated: “These companies systematically deceived their clients by presenting themselves as professional debt collection agencies when they were nothing more than operations designed to take money from clients.”

Despite claiming over 25 years of experience, the companies were all recently established, with the oldest being set up in March 2022. The director of the companies failed to cooperate with the investigation or provide any financial records.

The Official Receiver has now been appointed as the liquidator to wind up all three companies.

Spot the scammers – Only work with Accredited Professional Debt Collection Agencies

If you need to hire a debt collection agency in the UK, always check that the agency is registered with the Financial Conduct Authority (FCA) and has a clear track record of ethical conduct. Look for agencies that are members of recognized industry bodies, provide verifiable testimonials, and offer transparent terms and pricing.

It’s also wise to verify their registered company information and ask for recommendations from trusted business contacts to ensure you are working with a reputable, professional firm.

A quick scan of the internet will show that there are still scam debt collection agencies operating in the UK. Only work with reputable debt collection companies who are established, have a solid track record and appropriately licensed and accredited. Ensure you check out online reviews!

Do not be fooled by the ‘No win – No fee’ debt collection label either. They often claim you have nothing to lose. Well you do, the value of the debt you’re owed for a kick off not to mention the brand and reputation of your business.

It is also recommended that they are members of the Credit Services Association.

Victim of a Scam Debt Collection Agency?

If you believe you have been scammed by a debt collection agency, there are important steps you can take:

• Report the Scam: Contact Action Fraud, the UK’s national reporting centre for fraud and cybercrime, to provide details about your experience.
• Contact the Insolvency Service: If the company is already under investigation or has been shut down, get in touch with the Insolvency Service for guidance and to share relevant information.
• Seek Legal Advice: Consider consulting a solicitor to understand your rights and explore any potential options for recovering lost funds.
• Notify Your Bank: Inform your bank or financial institution if you made payments to the company, as they may be able to provide support or take action.
• Warn Others: Share your experience with business networks or online platforms such as Trustpilot and Google, to help protect other potential victims.

Taking these steps can help authorities investigate the scam, support wider enforcement action, and possibly assist you in recovering your money.