Supply scams

Small businesses are often victimized by scam artists and may never even know they have been scammed. Here is one common scam and tips on how to protect your business.

Office supplies

"My office manager received a call from what she thought was our regular copy machine supplier. The caller said that she had some surplus inventory and she'd sell at last year's prices. When we got the supplies, they were not from our regular supplier, were of poor quality and very expensive."

This business was victimized by what has come to be known as a "toner phoner" scheme. The callers often have different stories to tell, but the outcome is always the same -- the business pays high prices for low-quality goods and legitimate suppliers get cheated out of business.

The product being pitched isn't always copy machine toner. It might involve computer supplies, paper for facsimile machines, or light bulbs. Promoters who pitch inferior paper at inflated prices have earned the nickname "paper pirates."

Your firm usually receives a telephone contact first

Sometimes an advance call is made to find out what brand of supplies or equipment the business uses. On the return call, the caller claims to represent a reputable company with which the firm often does business. The caller often states that surplus merchandise is available at a reduced price due to a cancellation or over-order by another purchaser. Sometimes, callers may offer free gifts to employees to induce sales. However, accepting the gift may mean other obligations have been accepted as well. Regardless of the sales pitch, the results usually mean:

  • The business receives a shipment of poor-quality merchandise, with an invoice that often demands more money than what was stipulated in the original agreement.
  • Products are delivered not as ordered or expected. The supplier then refuses to accept returns or provide refunds.
  • No products are ever delivered and there is no sign of the supplier who has already gotten your money.
  • An invoice or shipment is sent even though you clearly refused to place an order with the company. The supplier demands payment and threatens to turn your account over to a collection agency or an attorney.

Protect your business

The following procedures will help keep your business and employees from being victimized by phony office supply schemes:

  • Assign one person or department to handle sales calls and approve all purchases for office supplies.
  • Instruct employees not to give out information on office machines and copiers, especially when responding to telephone sale solicitations.
  • Check out unfamiliar companies and offers before placing an order. Remember, if it sounds too good to be true, it probably is.
  • Keep a list of regularly used vendors as protection against schemers who claim the order is a "renewal."
  • When you do place an order, ask for confirmation in writing with all conditions clearly spelled out.
  • Compare prices and quality of products with other suppliers.
  • If the company claims to have a tape recording of the order, insist on hearing it.
  • Notify the supplier in writing of unauthorized shipments or invoices immediately. Clearly state that you did not place an order and will not accept delivery. If the goods have already been delivered, notify the company you will not pay and that the goods are available for pick-up.