Schemes, Scams, Frauds.

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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.

Phony-invoice Scams

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.

Authorized Buyer Fraud

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.

The Pretender Scam

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

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!"

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24 Hour Scamming

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.

Paper Pirates and Toner Phoners

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.

Willing To Clean You Out

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.

We Have To Keep Moving

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.

After the Invoice Arrives

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.

The Brush-off

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:

	Bullying. The seller argues with you if you express any uncertainty about whether the supplies or services were ever ordered: "They were ordered. We have a recording of Mr. Jones. If you don't pay, we can take you to court."
	Negotiating. Here, the seller agrees to accept a lower price. After all, the goods and services are so grossly overpriced that almost anything the seller gets is profit. If you complain about price, the seller may say, "You were charged what? They must not have given you the discount for ...." The seller then tries to negotiate "a better deal." Sometimes, the seller appeals for sympathy: "We really need the business. I'll let you have it for...."
	Charging for returned merchandise. The seller claims you can return merchandise if you pay a "restocking fee." In fact, the fee is often more than the goods are worth. Similarly, the seller may try to get you to pay shipping charges to return the items.

How To Avoid Supply Scams

You can protect your organization from paying for unordered goods and services. Here's how:

1. Know your rights. If you receive supplies or bills for services you didn't order, don't pay, and don't return the unordered merchandise. You may treat unordered merchandise as a gift.

By law, it's illegal for a seller to send you bills or dunning notices for unordered merchandise, or ask you to return it, even if the seller offers to pay for shipping.

Further, if the seller sends you items that differ from your order, you may treat the substitutions as unordered merchandise. Unordered services are treated the same way. However, first consider the possibility that the seller made an honest mistake.

2. Assign designated buyers and document your purchases. For each order, the designated employee should issue a purchase order, electronic or written, to the supplier with an authorized signature and a purchase order number.

The order form should instruct the supplier to note the purchase order number on the invoice and bill of lading. The buyer should send a copy of every purchase order to your accounts payable department. Keep blank order forms secure.

3. Check your documentation before paying bills. When merchandise arrives, the receiving employee should verify that it matches the shipper's bill of lading, paying special attention to brands and quantity, and your purchase order. Refuse merchandise that doesn't.If everything's in order, the employee should send a copy of the bill of lading to your accounts payable department.

Bills for services should be reconciled the same way. A supplier should not be paid unless the invoice has the correct purchase order number and the information on the invoice, the purchase order and the bill of lading match.

4. Train your staff.Train everyone in how to respond to telemarketers. Advise employees who are not authorized to order supplies and services to say, "I'm not authorized to place orders. If you want to sell us something, you must speak to that person and get a purchase order."

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.

Ten Million Reasons Not To Realize

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.

Office Supply Outrage

27 Apr 2001

Thank you for having this web site!

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.

1) A person will call and say something like, "Hi. This is Brian from the office center. Could you confirm the model number of your copier for me?

2) A person will call and say something like, "Hi. This is Jen from your supply center. I wanted to let you know that we just got a major price hike on your copier toner. But since you're such a good customer of ours, I'll make sure you still get it at the old price. Do you still have the Canon M217 (they'll just make up a copier model)?

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.

Please forward this to anyone who works in an office. I think this is important and could save people a lot of money and hassle (and possibly save someone their job!).

Let's beat these scumbags at their own game!

Melissa Hertzler

No Fixed Address

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:

	failing to disclose important terms of MPS' offer, namely, the price and quantity of the supplies that the defendants wished to sell.
	failing to provide required disclosures of customers' three-day right to cancel their purchase over the telephone.
	charging unconscionably high prices for their products-between 5.4 and 11.0 times the prices of comparable products sold by others.
	misrepresenting that MPS was affiliated with the manufacturer of credit/debit card machines or served such machines, rather than that it was actually a seller of machine supplies.
	misrepresenting the purpose of the defendants' telemarketing sales calls by creating the impression that their calls were intended to check on how potential customers' credit and debit card machines were working.

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

Free Can Be Expensive

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.

Clean up or Expect Abrasive Words

I received an invoice from a company that is suppose to be based in Philadelphia, the invoice does not even have a telephone number. The amount of the invoice is $ 408.91 for abrasive paper and HD cleaner. I can see that the invoice was printed on a laser printer.

I tried the yellow pages, the web etc.. to locate this company but unfortunately with no luck.

The company name is "Penn Paper Products" PO Box 11537, Philadelphia, PA 19116

I contacted the Post Office here, they referred me to the Postal Inspectors in Albany NY. The inspector did not want to know the name of the business he only answered that it could be a scam and to mail the invoice to his office which I did.

Danny Lafrance 02/04

One Percent Fine Not Likely to Deter Career Crook

MONTREAL -- (CP) 05/07 - A Montreal man was fined $1 million Tuesday for his role in a telemarketing scam that generated more than $136 million in fraudulent sales.

Michael Mouyal, 53, also received two years' probation and 240 hours of community service when he appeared in Quebec court.

Mouyal operated the scam under a number of names - Commercial Business Supplies, Merchant Transaction Supplies, Merchant Supply Services and International Business Directories -- in the six years it operated.

The case went to court following an investigation by the Competition Bureau of Canada under the deceptive telemarketing provisions of the Competition Act.

The scam operated from boiler rooms in Toronto, Montreal, and St. John's, Newfoundland and Labrador.

As part of the scam, not-for-profit organizations, businesses and government agencies in Canada, the United States and Britain were contacted by telemarketers who claimed to be their regular supplier of office supplies or business directories.

The callers they were contacting the victims to renew previous orders.

Telemarketing Fraud Ring Selling Toner Office Supplies That Never Arrive

04/06 - OTTAWA - Criminal charges have been laid against two Toronto-based telemarketing operations accused of billing businesses in Canada and the U.S. for toner products that they never ordered.

The companies accused of the offences operated under the names Lexan International Corp. and H&P Communications. Additionally, Calcom Business Centre, Lexam International Corp. and MPL were also business names used by the accused. Operations owner Edward Harry Leefe, and office manager Shirley Herrell have been arrested and charged with violating the Competition Act and the Criminal Code of Canada.

The arrests were made with the help of the Toronto Strategic Partnership, a group of policing organizations throughout North America, which includes the Competition Bureau, Phonebusters, and the U.S. Federal Trade Commission.

Individuals who think they may have been a victim of this crime or any other deceptive telemarketing operation are encouraged to contact the Competition Bureau at 1-800-348-5358 or online at http://www.cb-bc.gc.ca.

CanadaOne Magazine

Federal Trade Commission v. General Supply Centers, Inc., et al.
The Federal Trade Commission announced a settlement in this matter. The settlement permanently bars the defendants from collecting on past shipments and requires them to fully repay customer claimants through a court-appointed receiver. The settlement also permanently bans one defendant from engaging in telemarketing and from selling non-durable office supplies. The complaint alleged that the defendants failed to disclose their true identity in telephone solicitations, and misrepresented, among other things, that they were the consumers' regular supplier of photocopy toner. This case was filed as part of "Operation Misprint."

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