Prosecutor who helped bring down disgraced Fleetwood Town FC owner Andy Pilley explains risks of verbal contracts

Andy Pilley was jailed for 13 years earlier this year for mis-selling energy contracts to the tune of £15m.

The owner of Fleetwood Town Football Club appeared at Preston Crown Court for sentencing on July 4.

He was joined by his sister Michelle Davidson, 49, and two other associates – 52-year-old Lee Qualter from Cleveleys and 38-year-old Joel Chapman from Willerby in Yorkshire.

All four defendants were charged with offences relating to a multi-million pound fraud involving the mis-selling of energy contracts at three companies.

They were found guilty by a jury on May 19 at the end of an eight-month trial.

Rachel Adamson, Director of Fraud and Regulatory at Adkirk Law, said: “I was a member of the prosecuting team for this case, affording me a firsthand view of the severe consequences of Mr Pilley’s fraud, which ensnared independent business owners in detrimental verbal agreements.

“While Mr Pilley’s conviction stands as a significant triumph for the local independent businesses impacted by his operation, it also serves as a stark reminder for all businesses, and particularly independent ones, of the potential hazards associated with verbal contracts and aggressive sales tactics.”

The salesperson call

Rachel says opening a business is an exciting journey, but stress and uncertainty could lead new owners vulnerable to fraudulent sales teams.

New business owners should expect to receive a wave of sales calls during their first days in business from keen, and sometimes bullish, salespeople.

Aggressive sales tactics often involve:

- rushing you through the call

- giving persuasive reasons why the issue has to be dealt with as soon as possible

- assuring you that they are providing you with the best rates available

In bad cases the sales patter will be confusing or misleading; in the worst cases, it will be outright lies.

“These tactics are designed to prevent you from being able to ruminate on the terms offered, research your other options, or consider whether what you are being sold is a good fit for your unique business needs,” Rachel said.

“Sometimes the salesperson will speak so quickly that you may not clearly hear or remember the terms to which you are agreeing.”

“Business owners who are rushed through the process and accept the words of the salesperson at face value may find themselves unwittingly trapped in a legally binding verbal contract.”

The call may follow this structure: the initial phone call, which involves a discussion led by the salesperson, which is not legally binding, followed by a second call, the ‘contract call’, often with a separate person, which is legally binding.

Taking action and stop the conversation if you feel rushed

The peril with verbal contracts lies at that juncture between the initial call and the ‘contract call’, which is often a grey area where a salesperson may not clearly indicate that you are no longer simply just talking through rates, you are entering the realm of legally binding words.

“Anticipating such calls is a must for all new business owners, and your safest course of action is to refuse to agree to anything over the phone,” Rachel said.

“Even if a salesperson is highly persuasive and claims that the rates are time-sensitive, you must resist the very human urge to agree out of panic or a desire to have the best ‘deal’.”

You should always feel empowered to slow things down and take stock of the situation.

There is nothing wrong with stopping the conversation if you feel rushed or uncomfortable, and either hanging up the phone or requesting a callback.

Just ensure that you have not agreed to anything during the second stage of the call.

Maintain detailed records

If you find yourself on the receiving end of one of these calls, it is always wise to note down as many details as you can.

Ask the speaker for their name, for the name of the person they are trying to pass you on to for the ‘contract call’, and the name of their organisation.

Then start your research. Look up the company and the names of the salesperson(s).

Fraudulent companies may act under aliases, so, if you are unable to find a company listed under the given name, the warning bells should be ringing.

While taking thorough notes of the entire phone conversation will be helpful, you could go one step further by recording the phone call yourself, if allowed in your jurisdiction.

Precaution is key

While honest businesses actively work to prevent misrepresentation and fraud, unscrupulous enterprises like those run by Andrew Pilley will overlook or even enable such activities, and sometimes it may be difficult to decipher which kind of business you are speaking to.

Taking vigilant precautions during any sales calls is an imperative step to protecting your business.