Counterfeit corporations con real money out of unwary Canadian companies

In these basic scams, one of your employees is misled into purchasing unwanted office supplies, advertising at exorbitant prices or renewing a domain url unnecessarily.

Usually, this scam has three parts - a set-up call, in which the company is contacted for key information about the office equipment it uses or the person to address, followed by an invoice or the unwanted product addressed to that key individual. Lastly, a collection notification is sent which is designed to pressure your company into paying for what was never wanted or needed.

Spotting Office Supply Scams in Canada

Could your organization be a victim of an office supply scam? Probably so, if you don't have adequate purchasing controls. Businesses, churches, and fraternal and charitable organizations are being bilked out of millions of dollars in Canada 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 consumable goods or services that you routinely order: copier paper, toner/ink cartridges, maintenance supplies, equipment upkeep contracts, classified advertising or website domains. 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.

How? The caller may falsely claim to be your "regular supplier" or to tell you that the offer is "special" or "good for a limited time only." Con artists 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 often are overpriced and poor quality; the services usually are worthless.

Office supply scam artists generally use three ways to take your money - the phony-invoice, the pretender, and the gift-horse.

Phony-invoice Scams

The goal of the phony-invoice scam is to get the name and address of an employee so your organization can be shipped and billed for unordered goods or services. The invoice includes the employee's name as the "authorized" buyer. Scam operators use various ploys to get an employee's name: They may call 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 Yellow Pages advertising. In the case of phony Internet registrars, they simply copy the administrative information that must be legally attached to your domain.

Once the con artist has an employee's name and address, he'll ship the unordered merchandise. The phony invoice arrives a week or so after - for two reasons: First, the inflated price - as much as 10 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 if they've used it.

A twist on this approach may have the fraudulent seller timing a phony invoice to match your purchase of legitimate services from another vendor. For example, the seller sends you a bill for unordered classified advertising soon after your ad runs in a legitimate publication. The scam operator hopes you'll be confused and pay his bill instead of, or in addition to, the one from the legitimate company. The same thing occurs when your domain URL is set to expire. The phony registrar sends an invoice just before the expiry date offering to renew the website name at a much higher rate than necessary.

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." Translation: the carton price is 10 times $19.95 - or $199.50.

In one variation on this scam, the caller misrepresents the quality, quantity, type, price, or brand name. For example, the ink cartridges for your Hewlett-Packard or Canon inkjet printers will not be HP or Canon brand replacements, or the toner for your Xerox copier may not be Xerox brand resupplied. Some scam artists try to duplicate brand name packaging; others sell half a carton of merchandise at the full-carton price. Similarly, sellers of Yellow Pages advertising may actually represent fly-by-night outfits that distribute few, if any, telephone directories.

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.

Or, the seller 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." 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, followed by the 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 - a free promotional item - with a passing reference to merchandise or services. You 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.

Business fraud in Canada a growing problem for Canadian companies ... continued