Off the shelves: Bogus ‘health supplement’ company shut down after Insolvency Service investigation
Birmingham-based company wound up for making false and misleading claims to vulnerable customers.
Elbon Wellbeing Ltd, a Birmingham-based company which made false and misleading claims in persuading elderly and vulnerable customers to purchase health supplements, has been wound up in the High Court following an investigation by the Insolvency Service.
The company purchased data lists containing details of UK-based individuals over the age of 65 with health concerns over arthritis, blood pressure and high cholesterol. It used a call centre in Goa, India, to make unsolicited calls to the individuals on these data lists to sell them a range of health supplements.
The investigation found that the company’s customers, many of whom were suffering from severe medical conditions including dementia, were subjected to lengthy telesales calls in which the callers gave the impression that they were healthcare professionals who were promoting an official healthcare campaign.
After customers had agreed with the telesales caller to purchase supplements, typically at a price of £25 per box, they were transferred to a manager at the call centre who would inform them that it was necessary to take a ‘course’ of supplements, for which they were charged some £200 - £300. Some customers were found to have paid several thousand pounds in separate transactions spread over one to two years.
Customers were falsely told that they would see a significant reduction in pain levels and improvements to their health and several complained that the company had made unauthorised deductions from their bank accounts by charging for more supplements than had been ordered.
The company was found to be operating in breach of consumer protection legislation by failing to disclose the commercial nature of the call at the outset of the telesales call and by failing to disclose the customer’s statutory cancellation rights.
Between April 2010 and Aril 2016 the company received an income from the sale of health supplements of £3.7m.
Commenting on the case, Colin Cronin, Investigation Supervisor with the Insolvency Service, said,
Elbon Wellbeing Ltd’s business was the sale of overpriced health supplements, specifically targeted to members of the public who are elderly and/or otherwise vulnerable due to their medical condition. The company’s sales representatives made claims about the health benefits and pain reduction qualities of the health supplements which had no medical basis and implied that they had medical experience when they had absolutely none.
The sales methods used by the company were manipulative, pressured, misleading and wholly unfair.
These winding-up proceedings show that The Insolvency Service will take firm action against companies which systematically mislead the public in this way.
Notes to Editors
Elbon Wellbeing Limited – company registration number 07013434 - was incorporated on 9 September 2009. The company’s registered office is at 289 Leach Green Lane, Rednal, Birmingham, West Midlands B45 8EB.
The petition to wind-up Elbon Wellbeing Limited was presented under s124A of the Insolvency Act 1986 on 22 June 2016. The company was wound up on 11 October 2016 and the Official Receiver has been appointed as liquidator.
Company Investigations, part of the Insolvency Service, uses powers under the Companies Act 1985 to conduct confidential fact-finding investigations into the activities of live limited companies in the UK on behalf of the Secretary of State for Business, Energy & Industrial Strategy (BEIS).
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