Office Supplies Scam Costly to the Unguarded
When a woman called to inform New York businessman Fred Goldsmith’s office of “price changes” on his photocopy supplies, secretary Liz Sheehan checked the copier’s model number for her, and got her boss’s OK to take advantage of the company’s thoughtful offer of four cartons at “the old price.” And when the bill came, from a supply center in California, they paid it--$722.
A month later, they got another call, announcing, apologetically, that only part of the order had been shipped and the balance was on its way. It came--six more cartons with an unexpected invoice for $1,280--at which time the startled Goldsmith determined that “Data Supply” had no connection with his regular supplier, had shipped much more than was authorized, was of inferior quality and, far from offering a saving, had charged $200 a pack, compared to $99 from his local supplier.
Thus proceeds one of the sharper scams in telephone solicitation, tried over and again on small businesses, libraries, schools, even churches and government offices--anyone likely to have a copier. The phoner, operating out of a phone “boiler room,” calls offices at random, identifies himself or herself by name, but not company, and acts “friendly and helpful,” says Larry Johnson of the Los Angeles division of the U.S. Postal Inspection Service. The caller “represents himself as a regular supplier or an affiliate,” if only by implication, Johnson adds.
Clear in Retrospect
The ruse is clear only in retrospect: “It’s not really a buyer-beware situation, someone calling to sell you something,” says Johnson. “This is someone identifying himself as familiar, someone with whom the victim has apparently done business before, so their suspicion isn’t aroused.”
So-called toner phoners have been around since the early 1960s, concentrated in Southern California. By 1986, when phone solicitors first had to register with the state, there were 150 specializing in office supplies, taking in about $350 million a year from all over the nation.
The Postal Inspection Service has vigorously pursued the frauds among them across state lines, and the Justice Department has prosecuted many, including, recently, what prosecutors call the biggest--Los Angeles-based Park Distributing, which grossed an estimated $35.4 million over the last four years. Postal inspectors gathered thousands of complaints, and put 10 Park boiler rooms under surveillance, with the result that 22 out of 24 defendants in the case have already pleaded guilty, facing big fines and five to 25 years imprisonment.
Only Refined an Art
Park’s toner phoners only refined an art already established. In such an operation, a crack salesman can make 300 calls a day, working from out-of-state phone books, and perhaps calling at lunchtime when managers are out. The first stage is an announcement that “your office was skipped over” in the original notification of a “price increase.” Therefore, says the phoner, they’ve “set aside,” and will send out some toner or developer or paper “at the old price”--a price shown to be inflated only if the victim knows the price structure well.
The phoner doesn’t actually claim to be from Xerox or Canon or Sharp, or even the victim’s regular distributor, but implies it. He, or she, even seems to know the brand of copier involved (a persuasive touch), having just elicited the information by asking: “What model number was that?” and checking the distinctive number against a master list of manufacturers, thereafter magically referring to “your Xerox” or “your Sharp.” There may even be persuasive reference to a computer, as in “let me punch that into the computer” to get specific price changes for that model.
The offer seems not just thoughtful but “banal and mundane,” says Assistant U.S. Atty. David Katz. “It’s no big deal,” says Johnson. “They’re simply buying office supplies, a consumable, which doesn’t undergo the same scrutiny as a major purchase. The people victimized aren’t ignorant dupes being sold a parcel of land up in Alaska, but normal people caught at an unguarded moment.” In fact, relatively few do accept--perhaps four in 100, and another two fall out the next day, saying: “Hey, I didn’t order anything,” when a supposed dispatcher calls to “verify” the shipment going out “on your standard 30-day billing,” checking number, price, and address. This reiterates the supposed routine nature of the arrangement; taped, it also combats later cries of ignorance and outrage, and intimidates victims into paying.
If all goes well, the fraudulent phoner assumes an acquiescent target and swings into the next stage--”re-orders,” which are not really re-orders, says Johnson, but “totally unauthorized merchandise under the guise of a ‘back order.’ ” This is the big money-maker: “The (Park) back order salesmen were taking home over $100,000 a year in commissions,” says Katz. For various reasons--shortage or accident--the original shipment was incomplete, says the phoner, but the balance is on its way. No charge is mentioned, and the victim assumes there’ll be none, this simply being “the completion of your order.” And out it goes, with a new invoice.
Incredibly, the re-order ploy may be practiced again and again, with the “last third,” then the “last quarter of your order,” then the news that they ordered not cartons but cases. If they balk at the flood of supplies, there’s always that tape recording of their original “verification.” What’s more, the price of the goods is bumped up with each invoice, until someone notices that the office is paying two or three times the former price, and looks into the authorizations.
Company to company, toner phoner frauds have been unusually faithful to this script, “because it works,” says Johnson. There are some extra possible wrinkles: The goods won’t be name brands, as implied, but generics labeled “for use in Xerox copiers”; invoiced supplies may be short-shipped; shipping and handling charges may be 10 times the actual cost. There may also be inscrutable charges, such as “CDA” or “STC,” explained (if asked) as taxes, or handling, or “Canadian Duty Act,” or “standard tariff cost.”
Despite the slick approach, in which all is implied and little said, the most uninformed employee is not without defenses. “You can call your regular dealer,” says Katz, “and if urged to order now, say you’ll take their number and call them back.” “If you ask a lot of questions, pretty soon they’ll get resistant and hang up,” adds Johnson. “And if you’ve already been entrapped, and they want their money, tell them to come and get their stuff or you’ll throw it in the dumpster.”
