Office supply fraud is one of the most significant business-to-business telemarketing frauds according to the Federal Trade Commission. Industry estimates that telemarketing fraud is costing the legitimate toner industry $100 million in retail sales. "Operation Misprint," a multi-agency effort, is cracking down on bogus office and maintenance supply telemarketing schemes targeting large and small businesses and non-profit organizations. The FTC has cracked down on fraudulent business supply companies in the past as well. Ten cases were announced today by the FTC following issuance of court orders directed at ending these allegedly fraudulent operations.
"Fraudulent telemarketing calls are as common at the workplace as they are at home, said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection, "and they're costing American business big money." "The FTC and its enforcement partners are shutting down office supply scams and helping businesses recognize the telltale signs of a telemarketing fraud. But in the end, the best protection against an office supply rip-off is to assign purchasing decisions to designated staff." Bernstein went on to say, "Companies that receive goods they haven't ordered have no obligation to pay for them or to return them."
In the cases announced today, the defendants allegedly peddled nondurable office supply products, particularly laser printer and photocopier toner, light bulbs, or urinal deodorizers. According to the FTC, the bogus business supply companies typically operated out of telephone boiler rooms, placing calls to businesses and non-profits. The scam artists used a variety of deceptive techniques to get the name and address of the right person to list on the invoice. Some scammers said they were calling to inquire about the type of supplies the business uses; some implied that the defendants have done business with the company before, and that they are calling to offer a special sale or to resupply stock. In one case, the defendants allegedly sold their re-manufactured toner cartridges as "new" cartridges made by reliable manufacturers in the industry. They made false "extended life" and "print quality" claims and used misleading promises, such as "free trial kit" and "no obligation to pay," and then shipped their toner and demanded immediate payment at prices substantially higher than retail prices for new cartridges. Most of the cases involve the sending of unordered merchandise followed by invoices that charged dramatically inflated prices for the products.
When victims of the scam complained that they have not ordered the merchandise or complained about the cost of the merchandise, harassing calls and credit threats were sometimes made, the FTC charged. Typically, when victims tried to return unordered goods, they were told they would have to pay substantial "restocking" fees and shipping costs.
The complaints in the FTC cases have been filed in U.S. District courts in California, Tennessee and Chicago. As part of this crackdown, members of the Boiler-room and Telemarketing (BAT) Task Force have also executed search warrants at eight locations gathering evidence of possible wire fraud. The BAT Task Force members include the California Attorney General's Office; the California Dept. of Justice; the FBI; the FTC, the Internal Revenue Service; the Los Angeles City Attorney's Office; the U.S. Attorney's Office; and the U.S. Postal Inspection Service. In addition, the Illinois Attorney General's Office has also filed actions against two Chicago-based companies. (see attached list)
All of the FTC cases charge that the defendants violated the Telemarketing Sales Rule (TSR) and laws that prohibit deceptive and misleading practices. The TSR requires that telephone sellers disclose, among other things, that they are calling to sell something, prohibits collecting payments for "awards" or "prizes," bars misrepresentations about goods offered for sale by phone, and prohibits false and misleading claims to induce payment.
The defendants in the FTC cases announced today are:
International Business Network, Inc., based in Tarzana, California; Danny Yahalom and Oren Ben Elkanah
Laser Express of Tennessee, Ltd., Inc., based Nashville, Tennessee, doing business as Laser Express Limited, Data Supply International, Cartridge Express Limited, International Cartridge Supply, International Data Supply Company and International Supply Company; and Jeff Richfield;
Modern Concept Marketing, Inc., doing business as Central Data Supply, based in Reseda, California; and Joseph Moadeb;
National Supply & Distribution Center, Inc., based in Canoga Park, California; Data Distribution Services, Inc., and Steven Rayman;
General Supply Centers, Inc., based in Northridge, California; and Mark E. Gershick;
David Moreno, d/b/a Continental Business Systems, d/b/a United Products, based in Huntington Park, California;
Business Services Center, Inc., Central Imaging Systems, LLC,, based in Laguna Hills, California; and Thomas B. Ford and Prudence C. Ford;
Quality Maintenance Supplies, Inc., based in Chicago, and its principal Joanne M. Drobut;
United Maintenance of Illinois Corporation, also know as Maintenance Supplies, Inc., based in Alsip, Illinois; Sonia Pisano, Armando Piemonte and Daniel Martino; and
Nationwide Industrial Technologies Co., Inc., based in Midlothian, Illinois, and Darrell J. Clark.
The Commission vote to authorize staff to file the complaints in the appropriate federal district courts was 5-0. All of the complaints except one were filed on December 7, 1999. The complaint against Modern Concept Marketing (Central Data Supply) was filed on December 10, 1999. The Commission vote to refer the two complaints (United Maintenance and Nationwide Industrial Technologies cases ) to the Department of Justice for filing was 5-0. They were filed in the U.S. District Court for the Northern District of Illinois, Eastern Division, on December 16, 1999.
The Commission received assistance in Operation Misprint from the Illinois, Iowa, and California Attorney Generals' Office, the Better Business Bureau of the Southland in Colton, California, the Better Business Bureau of Placentia, California, the Hewlett Packard Corporation, the Xerox Corporation, the Imaging Supply Coalition, the U.S. Department of Justice and the U.S. Postal Inspection Service.
The FTC has published a free Facts for Business brochure, "Avoiding Office Supply Scams," that provides tips for recognizing office supple scams and suggestions on how to avoid them. The brochure says:
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.
Assign designated buyers and document your purchases.
Check your documentation before paying bills.
Train your staff.
Companies can complain to the FTC by calling a toll-free number - 1-877-FTC-HELP (877-382-4357), to the Better Business Bureau, the National Fraud Information Center at 1-800-876-7060, and their state and local law enforcers. Companies can also complain to the FTC through the Internet, using the online complaint form. The complaints are logged into the FTC's "Consumer Sentinel" - a secure Internet website - which law enforcement agencies throughout the United States and Canada use to access the database. Consumer Sentinel is a joint project of the FTC and the National Association of Attorneys General, in cooperation with Canadian partners Canshare and Phonebusters. The database includes complaints not only from the FTC and other law enforcement agencies in the U.S. and Canada, but complaints from private entities such as the National Fraud Information Center, Better Business Bureaus and the AARP.
NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.
Copies of "Avoiding Office Supply Scams," are available from the FTC's web site at http://www.ftc.gov and copies of the complaints are available from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
Andrea Foster, Southeast Region
(Laser Express of Tennessee)
Charles A. Harwood, Northwest Region
(Modern Concept Marketing/Central Data Supply)
Elaine D. Kolish, Bureau of Consumer Protection
(National Supply & Distribution Center)
Jeffrey Klurfeld, West Region
(David Moreno d/b/a Continental Business Systems)
(General Supply Centers)
Thomas B. Carter, Southwest Region
(Business Services Center)
C. Steven Baker, Midwest Region
(Quality Maintenance Supplies)
(United Maintenance Supplies)
(Nationwide Industrial Technologies)
(International Business Network, Inc., FTC File No. 992 3217; U.S. District Court, Central District of California; Civil Action No. 99-12831 R(RZx))
(Laser Express of Tennessee, Ltd., Inc., FTC File No. 992 3235; U.S. District Court for the Middle District of Tennessee, Nashville Division; Civil Action No. 3:99-1135)
(Modern Concept Marketing, Inc., FTC File No. 992 3233; U.S. District Court, Central District of California, Western Division; Civil Action No. 99-13003 HLH(Mcx))
(National Supply and Distribution Center, Inc., FTC File No. 992 3229; U.S. District Court, Central District of California; Civil Action No. 99-12828 HLH (AJWx))
(General Supply Centers, Inc., FTC File No. 992 3232; U.S. District Court, Central District of California; Civil Action No. 99-12827 MMM (RZx))
(David Moreno, d/b/a Continental Business Systems, FTC File No. 992 3234; U.S. District Court, Central District of California; Civil Action No. 99-12837)
(Business Services Center, Inc., FTC File No. 992 3197; U.S. District Court, Central District of California, Southern Division; Civil Action No. SACV99-1513 DOC(ANx))
(Quality Maintenance Supplies, Inc., FTC File No. 992 3278; U.S. District Court for the Northern District of Illinois, Eastern Division; Civil Action No. 99C-7946)
(United Maintenance Supplies, Inc., FTC File No. 992 3312; Civil Action No. 99C-8163)
(Nationwide Industrial Technologies Co., Inc., FTC File No. 992 3279; Civil Action No. 99C-8164)
Federal Trade Commission
State Case Filings
|State||Case Caption||Press Contact|
|Illinois AG||State of Illinois vs Tech/Maintenance Supply Inc.||Lorie Corral
|State of Illionois vs Tri-Star Industrial Lighting, Inc.||Lorie Corral