You Could Be Next …

How to avoid being the victim of an office supply scam

by Matt Donnelly

The lowly urinal deodorant generally isn't known as a troublemaker, but don't tell that to Richard Powell, treasurer of Bloomfield United Methodist Church in Des Moines, Iowa. One day an office supply company sent Bloom field a shipment of 144 urinal deodorants, even though, as Powell says, Bloomfield is a small country church with only two stalls. He knew something had to be wrong. "I knew it was a mistake because I do all the ordering, and I didn't order any urinal deodorants," Powell says.

The church called the supply company and reported the mix-up. According to Powell, the company representative was "highly indignant" at the suggestion a mistake had occurred and informed the church that the matter would be turned over to a collection agency unless they paid.

After doing some quick research, Powell discovered that Iowa state law prohibited companies from charging for unordered merchandise. He also discovered that the church was not required to return the products, so he sent them to a neighboring church as a gift. Bloomfield has not heard from the office supply company again.

Jodie Bernstein, director of the U.S. Federal Trade Commission's (FTC) Bureau of Consumer Protection, testified be fore Congress in March 2000 that office supply fraud costs its victims, typically small businesses and nonprofit organizations, an estimated $200 million per year. The problem has reached such proportions that the FTC issued an alert to warn churches and other organizations about unscrupulous vendors, and to educate them about preventive measures.

According to the FTC, office supply scams date back to at least the late 1970s, when the Business Technology Association began to work with law enforcement agencies in prosecuting businesses making unauthorized shipments of photocopier toner. In the 20 years since, the number and variety of scams have increased. Between 1995 and 1999, for example, the FTC logged nearly 5,000 complaints about office supply fraud, and they estimate that there are many times that number of cases that go unreported. One illegitimate toner operation prosecuted by the FTC victimized 23,000 companies and nonprofit organizations over a four-year period.

According to Mike Cheney, sales consultant for the nonprofit National Church Purchasing Group, churches can spend as much as $10,000 a year or more on office supplies to maintain and operate equipment such as photocopiers, fax machines, and computers. Because of this spending churches are prime targets for scam artists.

Elena Paoli, an attorney with the FTC's Bureau of Consumer Protection, has been involved with a number of cases against unscrupulous office supply companies. "What we've found over the years," she says, "is that churches are a huge target for scam artists because they tend to rely on volunteers that pay any invoices they get."

She says that most of the church-related cases that the FTC has prosecuted involve unordered merchandise—light bulbs, computer maintenance contracts, computer cleaning supplies, and especially toner for photocopiers. And because the fraudulent invoices are typically for only a few hundred dollars at a time, Paoli says, they don't always alarm church workers.

1. Phony invoices. A disreputable office supply company will ship products that were never ordered, along with an invoice to be paid. To add insult to injury, the prices on the invoice are typically higher than those charged by reputable vendors. This scam fools some churches because the supplies are usually sent to a specific person at the church, thus making it appear that he or she actually ordered them.

2. Phony vendors. A con artist will call and pretend to be a representative from your usual office supply company or their authorized replacement. These criminals hope you won't call their bluff. A sure tip-off, however, is the fact that these people charge you much more than your usual vendor.

"We get calls every day about companies selling items for five times what we sell them for," says Cheney. The FTC warns churches to be especially wary of companies that use generic names or names that resemble those of reputable firms.

3. Phony freebies. An office supply company will call and convince one of your staffers to accept a free gift with unspecified strings attached. In this scam, the free gift will be followed by unordered office supplies addressed to the staffer who accepted the original gift. The scammer hopes that the church will pay the bill and blame the staffer for making a poor purchasing decision. Just remember there's no such thing as a free lunch.

1. Deal with reputable companies. Phil Setsma of ChurchPlaza says, "Be very careful of who you're doing business with." Churches should be especially wary of telephone or direct-mail solicitations from supply companies. A reputable company will stand behind their products with their own written warranty, in addition to the manufacturer's warranty. And, of course, they won't charge inflated prices.

2. Don't feel obligated to pay. Many churches that receive unordered office supplies either pay the invoice or pay to send the supplies back. But according to the FTC, if you receive office supplies you didn't order, you are legally entitled to keep them without paying. Treat any unordered merchandise you receive as a gift.

3. Order supplies through only one staff member. Like Bloomfield United Methodist, give one person on your church staff the authority to order and keep track of office supplies. Make him or her the only person with the ability to authorize purchases. In form your office supply vendor that you will only pay invoices that include purchase authorization numbers assigned by your staff purchasing agent.

4. Read the bill and check the merchandise. This is always good advice. If the merchandise listed on an invoice doesn't match any merchandise your church has received, call it to the attention of the company. Also, if the prices on the invoice aren't what you normally pay, check with your supplier. Fin ally, keep a copy of all invoices you receive.

5. Train your staff. Make sure everyone on the church staff knows who is authorized to purchase supplies. Ask the other staffers to politely refer all sales calls to that person. First Christian Church in Tulsa, Oklahoma, had a problem a decade ago when a new employee was talked into ordering photocopier toner at inflated prices. Since that time, Mary Byrne, business administrator at the church, has informed all employees that the church only buys from established local firms, and there hasn't been any problems since then.

6. Report fraud. If you think your church is the victim of an office supply scam, file a complaint with the Federal Trade Commission by calling 877-FTC-HELP. The FTC has attorneys, like Elena Paoli, who prosecute fraudulent office supply companies on behalf of churches and other organizations. You should also contact your local Better Business Bureau and your state attorney general.

Matt Donnelly (mdonnelly@truthmail.com) is a freelance writer living in Pacific Grove, California.

	Subcategories of Office Equipment
	Copiers & Duplicators Offering Envelopes Office Equipment Other Printing Telecommuncations