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Quatloos! > Other Scams & Frauds > Bogus Invoices/Office Supplies Office Supplies Frauds & Scams Material provided with the permission of Les Henderson & crimes-of-persuasion.com
Bogus Invoices / Office Supplies Businesses, churches, and fraternal and charitable organizations are being bilked out of millions of dollars by bogus office supply firms. You can protect yourself by learning to recognize the scams and understanding your rights. The typical office supply scam involves goods or services that you routinely order: copier paper, toner and maintenance supplies, equipment maintenance contracts, or classified advertising. When fraudulent telemarketers call, they often lie to get you to pay for items you didn't order, or to get you to pay more than you agreed to. They take advantage of holes in your organization's purchasing procedures or of unsuspecting employees who may not be aware of office practices. What's worse, the office supplies peddled by these bogus firms are often overpriced and of poor quality and the services are usually worthless. Schemers know that a business sometimes makes mistakes or can be careless in its accounting, so they prey on these weaknesses. Lifting names from mailing lists, business registers, the Yellow Pages or published advertisements, swindlers send "pro-forma" invoices for supplies and services. However, the invoice may be a solicitation in disguise and in very fine print contain the following disclaimer: "This is a solicitation. You are under no obligation to pay unless you accept this offer." Although the law states that it is illegal to send such a solicitation without the disclaimer being conspicuous and in large print, there are those who flout the regulations and send disguised solicitations. One goal of the phony-invoice scam is to get the name of an employee before your organization is shipped and billed for unordered goods or services. They use various ploys to do so such as asking for help completing an order, claiming that "the accounting department lost the name of the person we should send these supplies to," or they may ask for the name of the person in charge of your advertising or purchasing. The phony invoice, which includes the employee's name as the "authorized" buyer, arrives a week or so after, for two reasons. First, the inflated price, as much as ten times what you'd pay for the same goods from a legitimate supplier, is less obvious if the invoice arrives after the merchandise has been received and stocked. Second, the chances are good that you've used the merchandise before the invoice arrives. Many organizations mistakenly believe that they must return unordered merchandise or pay for unordered merchandise before they've used it. In the pretender scam, the caller may pretend to be your regular or previous supplier, a replacement, or an "authorized" supplier. By convincing you that the goods or services and prices offered are the same as before, the caller hopes you won't bring up prices, quantities, and brands. Even if you do, the seller may try to brush you off by saying, "We've supplied you in the past, but it's been a while," or "The price is the same as last time." If you insist on a price quote, the seller may give a price that sounds reasonable for one carton but is actually for a single unit, such as "$19.95 in a carton of 10," meaning the carton price is 10 times $19.95, or $199.50. They can misrepresent the quality, quantity, type, price, or brand name. For example, the toner for your Xerox copier may not be Xerox brand toner. Some scam artists try to duplicate brand name packaging; others sell half a carton of merchandise at the full-carton price. In another twist, the caller uses high pressure tactics to rush your purchase decision and dodge questions about price, quantity and brand names. The seller may falsely claim that prices are going up soon, someone was forced out of business, a warehouse is overstocked, or a limited inventory of government surplus is available. Or that a computer glitch delayed notification of a price increase, but, as a courtesy, an order has been reserved for you at the "regular" or "old" price. He may misrepresent the purpose of the call, saying that he's calling to send you a promotional item such as a cordless screwdriver, free samples, or a catalog so you'll "think of him next time you order." If you send back the single toner cartridge they sent uninvited, they may call up and say you kept one of the two they sent, so pay up. Or the seller may claim that he's conducting a survey of office equipment or updating company records, leading you to believe that he's the regular or previous supplier. Before hanging up, the caller may mention, in passing, actual merchandise. "I'll send that screwdriver to you right away … and while I'm at it, I'll throw in a few deodorant blocks." Soon, a shipment arrives, matching your equipment supplies, followed by a bill. The gift-horse scam tries to create mistrust within an organization. The scheme starts when the caller tricks an employee into accepting a gift or a free promotional item, with a passing reference to merchandise or services. You then receive overpriced, unordered merchandise, followed by an invoice with the employee's name. When the organization questions the employee, the fraudulent seller is betting that the employee will be nervous about the gift when he denies placing the order. The hope is that the organization will doubt the employee. When this scheme works, the organization believes that the employee blundered into ordering something that must be paid for. They may also target a person with the authority to sign cheques, then work on their fear of job loss, while sending escalating and persistent invoicing, despite continued "last one" promises. They may even threaten to notify higher-ups of the personal gifts if the false bills are not paid. Though they rarely blackmail people in this fashion, one scammer's efforts eventually had several bookkeepers charged with embezzlement with the continued use of the phrase "You still have a balance due on your account!" One group was charged for sending invoices to organizations, including churches and non-profit organizations, for unordered computer repair service contracts. Their mailings indicated that they were "renewals" or "upgrades of service" to previous contracts, or warned that an account was "past due." Their solicitations also provided an 800 number for consumers to call for "unlimited maintenance and repair services" including assistance by telephone. The FTC alleged that the defendants rarely, if ever, provided the promised services to consumers.
One "toner bandit" scheme defrauded numerous medical and dental providers who were induced to pay false and fictitious invoices for high priced, unordered and undelivered copy machine toner. Supply Distribution Center set up customer service telephones and mail boxes through which to operate the false billing scheme. Fictitious invoices charging $274.95 or $283.92 for one carton of unordered copy machine toner were printed and mailed out to various businesses and institutions. About $14,000 in victims' checks were deposited into their account while about $140,000 worth were cashed at a liquor store. Victims who complained about the invoices to them or to consumer protection agencies had their invoices canceled in an effort to reduce complaints and hide the scheme. No toner was ever shipped to victims who paid the initial invoices. Instead, they simply received another invoice billing them for another shipment of unordered toner. Perpetrated through a company that used the names of Sharp Industries, Saturn Industries, Polaris Industries, Trans-America, and Chem Tech, one telemarketing scheme defrauded thousands of victim companies including nursing homes, churches, hotels, schools, hospitals and other organizations nationwide out of over $12 million during a five year period. They caused the victim companies to pay exorbitant prices for maintenance supplies such as penetrating oil, silicone spray, trash bags, and other products they ordered. For example, a case of penetrating oil (12 cans per case) was commonly charged to the victims at approximately $420 for one case (12 cans - $35 per can), when the same product was purchased wholesale for approximately $30 ($2.50 per can). In addition to charging grossly inflated prices to unsuspecting customers they would also send gifts or kickbacks to the home addresses of purchasing agents to induce them to pay the exorbitant prices charged on the sales invoices. Complaints from a real estate firm, a trucking company, a hospital, a school district, and a non-profit agency describe phone calls from a young woman, claiming that her father is closing his office supply business in a nearby town and moving the business. She claims the supplies are offered "at cost" or "very cheap," and quotes specific prices. The supplies are shipped, but the invoice amounts are higher than expected. Totals have been reported of $292 to $1,922. In some cases the original price quoted turned out to be "per item," rather than "per box" and did not reflect the price quoted over the telephone. Scam artists can spend significant time and energy on collection efforts. They will send as many invoices as it takes to get your money. Invoices often are stamped "Past Due." In extreme cases, they'll resort to real or bogus collection agencies and threats of legal action, preceded by dunning letters. An organization that pays for unordered goods or services also may be targeted for additional scams or "reloaded." For example, the seller may send a second shipment of "back ordered" merchandise and another bill, or bills for service upgrades. Additional invoices follow as long as you continue to pay. The con artist also may sell your organization's name to other scam operators, or convert to another bogus operation and target you with a new scheme. When organizations complain that they didn't order the merchandise or services or that the price is too high, the scam seller reacts in some predictable ways:
You can protect your organization from paying for unordered goods and services. Here's how:
Buy from people you know and trust. Authorized employees should be skeptical of "cold" or unsolicited calls and feel comfortable saying no to high-pressure sales tactics. Legitimate companies don't pressure you to make a snap decision. Finally, consider asking new suppliers to send a catalog first.
Edward Tunick, who faces seven to 10 years in prison for his January conviction on nine counts of mail fraud in federal court, was involved in telemarketing maintenance supplies for 12 years. By his own admission, his companies, which ran under multiple names, tallied gross receipts of more than $10 million in that period. Suggesting that it took a jury trial to make him realize the error of his ways, Tunick said he did not realize until after his conviction that what he was doing was against the law. He and his employees would call businesses offering products -- in his case, light bulbs and janitorial supplies, while avoiding the subject of price during their calls. Posing as longtime suppliers to the victim companies and often offering gifts to employees to help persuade them to place an order, Tunick then would send the products to one address and the invoice, with marked-up prices, to another. The scam works because large companies often fail to question invoices below a certain dollar value, usually $500. Fraudulent telemarketers know this so they keep sending bills for $200 or $300. 27 Apr 2001 Thank you for having this web site! I just got hit with this again today, and it's prompted me to write, warning everyone about this telemarketing scam. Several years ago, I was working as an office manager for an architectural firm. One day I received a phone call from a guy who asked me if I could confirm the model number of the copier in my office. He acted very casual, as if he had been dealing with our company for years. Not knowing any better, I gave him the information. Shortly thereafter, boxes upon boxes of copier toner arrived at my office. I had never authorized the purchase, but they had my name, and sent the product anyway. The boxes weren't marked distinctively, so I opened them to see what was inside. Mistake. As soon as you open a box, you cannot refuse it to the shipper. So I was stuck with a bunch of high-priced toner that I didn't want or need. Let anyone who answers the phone for your company know about this telemarketing scam. There are two approaches the scum-suckers usually take:
As soon as you reply with, "What is the name of the company you are calling from?" or "What information do you have on our copier?" or anything that requests information of them, they will hang up on you. I've tried to bust these people, but have not yet been successful. I've tried to do a "*69" (call back) on the phone, but they always have their number blocked. I've also checked my caller ID, but again, the number is always blocked. When I got the packages that time, I tried tracing the return address - it was a fake address. They must have gone into a postage service center, used cash to pay for the shipping, and given a false return address. And what about the invoice? A P.O. box. Not sure what would have happened if I hadn't paid the bill, but I DID give them my name and I DID give them my copier model number. They could have argued that it was an authorized sale. My point is, don't get yourself into this situation. If anyone
calls you asking you for ANY information - personal, business or
otherwise - DO NOT GIVE IT TO THEM! Ask for them to put their request
in writing. If they're legit, they'll do it. Let's beat these scumbags at their own game! Melissa Hertzler Vermont Attorney General William H. Sorrell announced that his office has settled a consumer fraud lawsuit against Merchant Product Services (MPS)(3522318 Canada, Inc.), a telemarketing company based in Montreal, Quebec run by its president and director, Misha Artzy. MPS, a seller of paper and ribbon for credit and debit card machines, had solicited orders by telephone from businesses all over the country, using the Vermont address of a mail handling facility in the town of Derby. The Attorney General alleged that the defendants violated the Vermont Consumer Fraud Act by:
Although the defendants denied these allegations they agreed to a permanent ban on doing any business in or into Vermont, including using a Vermont address. They are also required to pay $21,000 in full refunds to all of their Vermont customers; full refunds to all non-Vermont customers who have filed-or who may in the future file-a complaint with the State; $60,000 in civil penalties to the State; and $12,500 to reimburse the State for its fees in litigating the case-for a total of at least $93,500. For further information on the settlement, businesses can contact the Attorney General's Consumer Assistance Program at 1-800-649-2424. October 9, 2001 02/02 - James W. MacDonald, pleaded guilty to mail and wire fraud conspiracies involving a $6 million dollar fraudulent telemarketing company in Boca Raton and New Jersey and was sentenced to nearly 10 years in prison. He told his telemarketers to offer businesses free samples of cleaning and lighting supplies then later billed the companies for the supplies at prices inflated up to 4,500 percent, according to the U.S. attorney's office. While the companies operated from 1989 to 1994, MacDonald was arrested in 1999. Three others, Darren Sturtevant, Philip Lynch, and Steven Green also pleaded guilty to the scheme and are awaiting sentencing. © 2002- by Les Henderson. Reprinted with special permission by Les Henderson. |
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