Adam Rutherford, who founded boutique Alexander PR in 2011 and has worked with the World Music Awards, Samsonite and Chivas Regal, has been in dispute with the London start-up Luvsense for a number of months.
Luvsense, which was set up in August 2015 by Neil Schofield and his partner Elizabeth Gordon, first started to work with the agency in January 2016.
During the summer, Rutherford informed Luvsense that his agency would not be able to continue working for it, due to commitments with other clients.
Luvsense then requested that Rutherford return a payment of £1,500 it had made to the agency. Gordon told PRWeek that Luvsense understood it had agreed to pay Alexander results-based fees in line with sales of its mirrors, and that that payment had been made in order to initiate that partnership.
Luvsense then complained to the PRCA, of which Rutherford was at the time an individual member.
A PRCA independent professional practices committee concluded that Rutherford had breached clause 1.1 of its Professional Charter, which requires members to "deal fairly and honestly" with everyone who they engage with. Its decision, delivered to Luvsense and Rutherford last month, said there had been a "clear misunderstanding" as to the nature of the £1,500 payment, with Rutherford seeing it as a fee for work undertaken, rather than the beginning of a longer-term partnership.
The committee concluded that at the heart of the issue was the "lack of proper contract", and "strongly" warned Rutherford that a contract would have avoided the issue.
It also said that Rutherford should refund the £1,500 to Luvsense as a "requirement of continued membership", and that he should take a PRCA ethics course as soon as possible.
Rutherford did not respond directly to PRWeek's question of whether he would pay back the money, but statement from his lawyers said: "The PRCA decided that it was an oversight of both parties not to record our working relationship formally in a contract. Whilst the basis of our working relationship had been well documented, unfortunately, on this occasion, it was not in a formal contract. This created a misunderstanding as Luvsense believed that it did not have to pay for the significant amount of work that we had undertaken."
According to the PRCA, Rutherford confirmed to the organisation that he would not be renewing his membership the week after the decision was delivered.
The case was the first time such a committee had been called since the PRCA introduced a new code of conduct in September.