POLICE are investigating allegations of a telecommunications fraud which has targeted North-East small businesses.

Northumbria Police confirmed last night that several arrests had been made by officers investigating two companies, One Cloud Solutions Ltd and Sumlock Electronic (North East) Ltd.

It is understood police launched an investigation after receiving reports through Action Fraud, the national reporting centre for fraud and internet crime.

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Complaints have also been to other police forces including Durham Constabulary.

The Devonport Hotel, in Middleton One Row, near Darlington, has made a report after signing up for a phone system from One Cloud in December last year.

Director Kathleen Tillbrook said they were shown a document which stated that the hotel would save around £37 a month for their phones and internet.

Mrs Tillbrook said the One Cloud salesman assured the business that if they signed up to a five-year phone rental contract, they would benefit from cheap line rental and broadband costs.

However she claims One Cloud never arranged to take over the phone line and broadband service, meaning they are still having to rent this service from their previous supplier.

Mrs Tillbrook said they are now taking legal advice after being chased for payment by a leasing company that was never mentioned in the original agreement.

"It's just immensely worrying that small businesses can find themselves in this situation when you don't know who to turn to."

One Cloud Solutions is based at Newburn Riverside Industrial Park, in Newcastle.

The Northern Echo contacted One Cloud on Tuesday (August 19) to discuss the police investigation and Mrs Tillbrook's complaints but were told there was nobody available to speak.

According to Companies House, Sumlock, based at Northumbrian Way, Newcastle, is being wound up by liquidators.

A spokesman for Northumbria Police said officers had made a number of arrests in connection with an investigation into two companies, Sumlock and One Cloud, and inquiries were continuing.

Anyone with possible information should contact their police force on 101 or Action Fraud on 0300-1232040.