Credit, Collections & Insolvency News
Three connected debt collection companies, which kept more than £50,000 in client funds they collected on their behalf, have been shut down.
Sunderland-based EDC Group NE Ltd, UK EDC Ltd and UK TCF Limited falsely presented themselves as professional agencies with decades of experience while taking money from both clients and their debtors.
The companies targeted small businesses through unsolicited phone calls, using misleading information to convince them to sign contracts for debt collection services.
Victims reported paying instruction fees and then being unable to contact the companies, despite assurances that collected funds would be safeguarded. At least £54,847 in funds was collected and retained by the companies without being passed back to their clients.
The three companies were all wound-up at the High Court in Manchester on Friday 15th August. All three companies falsely claimed to have “been collecting unpaid debts, resolving disputes and carrying out investigations and research for more than 25 years.”
EDC Group NE Ltd was only set up in March 2022, with UK EDC Ltd incorporated in August 2023, and UK TCF Limited in December 2023. The companies operated using nearly identical websites, with UK EDC Ltd and UK TCF Limited sharing the same website.
False claims on the websites included descriptions of the companies as ‘market leader’ with ‘cutting-edge collection activity technology’ and 65 positive testimonials, which presented an inaccurate picture of the companies as having a successful track record in debt recovery. Insolvency Service investigations revealed sophisticated, deceptive tactics, with the companies operating interchangeably to maximise their improper conduct.
One victim paid £750 to UK EDC Ltd for the collection of a debt of more than £20,000, but when the debtor made a payment of £12,143 it was collected by the connected company UK TCF Limited operating as ‘The Creditor’s Friend’. The victim was never informed of this collection and never received any of the money recovered on his behalf.
In another example, a woman who paid £600 to recover £15,000 in debts described how EDC Group NE Ltd claimed to have quickly found the debtors’ addresses and new business locations, even boasting of posing as a tax officer to obtain information.
Complaints to Action Fraud saw one business owner report that the companies had taken payments estimated at £30,000 – £50,000 from his clients alone.
Other victims reported paying instruction fees ranging from £350 to £750 before the companies became completely uncontactable, with phone lines permanently engaged and no voicemail facilities.
Analysis of EDC Group NE Ltd’s bank account revealed that of the £347,837 in total payments out, almost £160,000 went directly to the director, with an additional £78,071 paid to various individuals as salary, gifts and commissions.
Investigators also found payments of more than £17,000 to various bookmakers, £9,679 to football clubs, and £21,362 to hostelries, hotels, restaurants and supermarkets. No payments to clients for debts collected on their behalf were found.
Bank accounts for the other two companies showed similar patterns, including unexplained payments to EDC Group NE Ltd.
All three companies failed to provide any accounting or financial records to the Insolvency Service. The registered company director failed to co-operate throughout the investigation, ignoring all attempts by investigators to locate and communicate with the companies and those in control of them.
The failure to provide financial records also prevented investigators from establishing whether the companies operated independently or used phoenix practices – repeatedly closing and reopening under new names to evade responsibility and confuse clients.
The Official Receiver has been appointed as liquidator of EDC Group NE Ltd, UK EDC Ltd and UK TCF Limited.
David Hope, Chief Investigator at the Insolvency Service, said “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.
“The victims trusted these companies to collect debts on their behalf but instead found themselves unable to contact anyone after paying upfront fees, while money that was collected was kept by the companies.
“We will continue to take robust action against those who prey on both creditors seeking legitimate debt recovery services and debtors who believe they are making payments to settle their obligations.”