Churches, charities hit in office supply scam

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via Churches, charities hit in office-supply scam, clarionledger.com

PDF: OfficeSupply1OfficeSupply2

If you run a small business or nonprofit organization, you already know it’s tough out there. Besides working in a tough economic environment, charities and small businesses find themselves having to look for ways to save a buck every way they can. Unfortunately, that can make them targets of scammers, promising amazing deals that never pan out or even trying to collect money for orders that were never made.

This week, federal regulators announced they’d put a stop to an office-supply scam that allegedly swindled child care centers, educational institutions, churches, hospitals and other nonprofits by calling them and tricking them into paying for overpriced supplies they never ordered.

The Federal Trade Commission got federal courts to freeze the assets of several companies based in Maryland and California that are accused of using a variety of tactics to get companies on the hook for unordered merchandise. The agency announced the action in a news release this week.

“The defendants lied to small businesses, charities and churches to get them to pay for overpriced supplies they didn’t order,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “That’s not only shameful, it’s also illegal.”

In the California case, Beverly Hills-based Telestar Consulting Inc. (also doing business as Kleritec and United Business Supply, and Karl Wesley Angel) allegedly used a variety of tactics to persuade consumers to pay for unordered merchandise. For example, the FTC alleges the defendants called the consumers to offer supposed deals on, or free samples of, items like art supplies and cleaning products.

They also asked consumers to accept an additional shipment by falsely calling it a ‘backorder’ that was supposedly part of an order the consumer had already paid for, and then billed them for the so-called ‘backorder,’” noted the FTC. In other instances, the defendants claimed consumers had agreed to multiple shipments, when at most they had agreed to only one shipment. In addition, in instances in which consumers agreed to make a purchase, the defendants allegedly failed to disclose the total cost and quantity of goods, and the terms of the sale.

If the invoices were ignored or not paid promptly, the companies allegedly threatened to send the organizations to collections agencies. “Consumers who paid under a mistaken belief that they had to do so — some paid thousands of dollars more than what they were legally obligated to pay — often received more unordered merchandise and bills for payment,” the release noted.

In the Maryland case, the FTC charged six companies and three individuals around a scheme involving light bulbs and cleaning supplies. The scheme allegedly hired telemarketers who “falsely indicated that they had done business with the consumers earlier and that they were offering a free sample or catalog, without properly disclosing that they were making a sales call.”

The scheme allegedly relied on the fact the person ordering merchandise and the person processing invoices didn’t know what the other was doing. If invoices were paid, the company received future shipments of unordered merchandise.

This type of scheme is successful for several reasons. For one, many people believe unordered merchandise must be paid for (the law says that, in most cases, you don’t have to pay for anything you didn’t order). Secondly, scams use smooth-talking telemarketers, who trick people (on a recorded call) into answering “yes” to an unrelated question, doctoring the recording and using it as evidence the order was made. And finally, there is often a lack of good communication between those making purchases and those paying the invoices.

To read the complaint in its entirety, visit http://bit.ly/2utdLhC.

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