Sharon Rowlands and Reachlocal Inc have been reported to the United States Securities and Exchange Commission after going on record and filing a quarterly report stating that the companies problems in the UK were unique.

Reachlocal UK recently went into Administration in the UK with declining revenues and claims of mis-selling to customers. The joint administrators proposals report has stated that Reachlocal UK had “Alleged Mis-selling To UK Companies”

Reachlocal had around 100 clients that were all sold to on the pretence that their budgets would be spent on Google AdWords. The sales staff then explained that Reachlocal would charge a small management fee (10%, which is below industry rate) to manage the AdWords campaigns for these clients. The clients were then given a login to a platform that showed the budgets being spent. Unbeknownst to the clients the data shown was skewed, the real data was hidden from them.

When the real data was shown to the clients they realised that they had been mislead and mis-sold to by Reachlocal.

During a quarterly call in February 2016 to Kerry Rice, Managing Director, Senior Equity Analyst Internet and Digital Media at Needham and Company asked Sharon Rowlands some questions one of which was;

You’re exiting of the UK are there any other markets that you are still evaluating any short list of markets that you may be leaving, we thought that you were pretty much past that (leaving markets)

Sharon responded saying that they “had some unique challenges in the UK market, the customers in that market were very different to the sort of segmentation of Reachlocal, and soo you know we really felt as to change and pivot that business and get back to profitability would take too much investment and we would not get the return on it, so its been very unique issues.

We have evidence to suggest that the same problems that were in the UK are also in the US and Australia. Australia in particular has seen some very well respected Doctors and Surgeons voicing the same concerns, Reachlocal told them that all of the budgets would be spent on Google AdWords and that they would charge them a small management fee of just 10%.

We are in the process of gathering more evidence and have handed over all our evidence to the United States Securities and Exchange Commission in the hope that they will step in and investigate what appears to be more mis-selling to unsuspecting businesses.