Business owners in Northern Ireland have revealed how a “no brainer” finance deal has turned into a nightmare.
Several businesses were among more than 1000 across the UK which signed advertising deals they believed would not cost them anything.
The owners were told they would sign two deals. They would pay Viewable Media UK Ltd, which was based in Bangor, Co Down, £299 a month for a digital screen to be placed in their premises.
A second associated company, the Shoppers Network UK Ltd, then rents the screen for advertising, paying the shop owner £299 a month.
The deal would run over three years, meaning businesses would have to stump up £11,000 for a screen they have said was worth around £1000, while the repayments for advertising were not guaranteed.
Alfie Murray, who runs a family butchers in Killyleagh said that it seemed like a “no brainer” but, as the same sales representative sold him both the advertising and the screen leasing, he wasn’t aware there were third parties involved, in this case, financial company Grenke, based in Dundonald.
“It was sold to us as costing no money,” he said.
“You can see how we’ve been caught out but the sales reps have admitted to me that they weren’t FCA registered. The company was but they weren’t.
“That means the contract should be null and void as they’ve mis-sold it.
“They’ve preyed on small well-established businesses. Grenke only took people with good credit rating.”
The BBC reported that most businesses did initially receive payments from advertising, but these stopped when Viewble Media collapsed in June.
Rhino Media Group (RMG) took over the clients, with the intention of paying the businesses back, but has now told customers it cannot do so unless it sells more advertising.
Mr Murray is one of several business owners who have stopped their direct debit payments to Grenke.
“I’ve stopped paying and a group of 200 to 300 businesses have stopped direct debits. A solicitor’s letter has gone to Grenke, which has 28 days to reply to,” he said.
“More small businesses that have been affected need to come forward and take a stand."
Colin Mulligan, who runs Elaine’s Day Today store on Tennent Street, Belfast, also purchased a screen and believes there should be a Government taskforce set up to investigate.
“When you have a sales rep telling you it becomes a zero cost contract then for small businesses it's something we couldn’t pass up.
“It seemed too good to be true and it obviously was. We’ve now given Grenke a chance to null and void the contracts but we will be proceeding to court if they fail to do so.”
Federation of Small Businesses NI Development Manager Mairaid McMahon said that several businesses in Northern Ireland had contacted them in recent months with concerns about the deals they entered and the costs they were incurring.
“We have encouraged those who have contacted us to seek and follow the legal advice in their own individual circumstances, as each of their contracts may differ slightly and the status of the parties involved will also impact on the rights that they have,” she added.
“Looking at the broader picture, there may be potential to enhance the legal protection available to small businesses regarding potentially mis-sold goods and services, and we will look at whether those gaps can be addressed in the future.
“In the meantime we would urge small businesses to be vigilant and take care when signing up to contracts or finance deals, and to avoid being coerced into making a quick decision.”
RMG told the BBC that there had been clear communications with customers at the point the screens were sold and that the documents customers signed were marked as loans.
The firm added it was going to work to remove the burden of lease payments from customers if it secured further funds.
Grenke have been contacted for comment.