Author: Azizur Rahman
10 July 2014
4 min read
A recent court case highlighted how mis-selling of goods and services is carried out on a high tech level. But it also showed the need for company owners to be fully responsible for legal compliance in their companies.
Investigators are celebrating what is believed to be the first successful UK prosecution of someone involved in the Microsoft computer scam.
Just over a month ago, Mohammed Khalid Jamil, was sentenced to four months imprisonment, suspended for 12 months, and fined £5000. Jamil was also ordered to pay £5665 in compensation to his victims and £13,929 in prosecution costs. He had been in court because of the way his company Smart Support Guys had duped consumers into handing over money by charging them for Microsoft services that were free after falsely telling them they were certified engineers authorised to work for the American software giant.
Specialist e-crime investigators from the National Trading Standards eCrime Team (NTSeCT), worked closely with Action Fraud, the UK’s national fraud and internet crime reporting centre, and trading standards departments to investigate and prosecute Jamil. York Crown Court heard that customers of Smart Support Guys discovered that programmes already installed on their computers to protect them were removed by the Indian call centre operators working for Jamil; leaving them in a worse state. These cold callers falsely claimed there were faults on their victims’ computers which could, if not fixed, cause them to crash. They would persuade people to let them have remote access to their computer so they could fix the problem and would install anti-malware software that Microsoft makes available for free. Victims, many of whom were elderly, would then be charged anything from £35 to £150.
Jamil aged 34, of Luton, pleaded guilty to unfair trading by allowing his staff to make false claims regarding computer support services. He claimed to have tried but failed to control his call centre staff and admitted not supervising them adequately.
What he pleaded guilty to is a practice that has been going on around the world for a number of years. Although it involves abuse of Microsoft’s reputation and is a landmark case because of this, Jamil’s conviction is, in effect, gold, old-fashioned mis-selling. Trading standards departments will often tell you they are overworked and cannot respond to every single allegation brought to their attention but when it comes to mis-selling they often pursue the cases with zeal. This is usually done for two reasons. Firstly, if someone has been sold something that is clearly not what was advertised it can be a fairly straightforward prosecution for the trading standards officer looking to boost his conviction rates. Secondly, such a prosecution can act as a deterrent to anyone else thinking of running a similar kind of operation which, in theory, can help lighten the future workload of trading standards departments.
When it comes to mis-selling, it is worth noting Section 1 of the Fraud Act 2006, which covers fraud by false representation. The Act defines this as a person dishonestly making a false representation with intent to gain or cause loss to another, or to expose another to risk of loss. The Act requires there to be no actual loss, risk of loss or even the ability to prove the alleged victim believed the false representations. For a representation to be false in accordance with the Act, the person making that statement must “know that it is or might be, untrue or misleading”. This definition covers every situation where the person making the claim knows or merely believes there is a chance that it is misleading. It was created with boiler room operations, mortgage frauds and other operations in mind that promised unrealistically high returns on investment. In Jamil’s case it was even more straightforward as his workers’ claims to be Microsoft engineers were quite clearly making a false representation.
One aspect of Jamil’s case that is worth dwelling on, however, is his claim that he had tried to control his call centre staff but had failed to supervise them properly. Whether he was unsuccessful because these staff were 4,000 miles away from him in India has not been explained in court reports. It says a lot about the global nature of modern-day business (and business crime) that Jamil’s workforce, whom he blamed for the wrongdoing, was based thousands of miles away from him. But regardless of the distance, the principle remains that senior company figures are responsible for the behaviour of their employees.
Some company directors seem bemused about how to ensure their workforce is acting responsibly when they work 40 feet away from them, never mind 4,000 miles away. They ask what can be done and imply some sort of supernatural powers of influence are required. They are not.
Compliance can be a major asset when it comes to companies reducing the risk of acting in a way that leads to prosecution. This is the case whether the workforce is all under one roof, at a number of sites or even scattered around the world. Whatever your business sector or trading location, there is no magic touch or requirement to be at the cutting edge of technology. In fact a lot of compliance boils down to good common sense, knowledge of the relevant law and the introduction of procedures to prevent any breaches of that law. For example, if your staff work abroad, what measures has the company taken to ensure it complies with UK law and the law of the country in which they are trading? Have thorough checks been carried out on people the company deals with, such as suppliers, agents and third parties? Is precautionary, ongoing monitoring in place?
As established business crime solicitors, Rahman Ravelli assists and advises all types of companies on compliance matters. It will only ever be successful if a company introduces proper, appropriate compliance systems and takes the time and effort to maintain them and adjust them when necessary. We are aware that some companies regard compliance as an unnecessary cost. But we area also well aware of many such companies who have come to regret having held that opinion by the time they have suffered the convictions, fines, imprisonment, legal costs and loss of reputation, business and working hours associated with an investigation and prosecution that compliance could have prevented.
The UK prosecution over Microsoft was a first and Jamil now has the dubious distinction of making unwanted legal history. But while the case was the first of its type and dealt with issues that have only become reality in the computer era, the legal points it raises and the need for compliance it emphasises have been around for many years.
Aziz Rahman is Senior Partner at Rahman Ravelli and its founder. His ability to coordinate national, international and multi-agency defences has led to success in some of the most significant corporate crime cases of this century and top rankings in international legal guides. He is recognised worldwide as one of the most capable legal experts regarding top-level, high-value commercial and financial disputes.