Toner Pirates

The Federal Trade Commission estimates that office supply fraud costs its victims (typically small businesses and non-profit organizations) an estimated $200 million per year. What can you do to protect your business? Here are our suggestions (you might want to copy these into an email and share it with your staff):

5 Steps to Avoiding Office Supply Scams

1. Know your rights.
The FTC's Telemarketing Sales Rule offers protection in business-to-business sales of non-durable office or cleaning supplies and most sales of goods or services to individuals, groups or associations. According to the Rule, telemarketers must tell you it's a sales call — and who's doing the selling — before they make their pitch. And before you pay, they must tell you the total cost of the products or services they're offering, any restrictions on getting or using them, and whether a sale is final or non-refundable. In addition, it's against the law for telemarketers to misrepresent any information about the goods or services they're offering.

2. Assign designated buyers and document your purchases.
Designate certain employees as buyers. For each order, the designated buyer should issue a purchase order to the supplier that has an authorized signature and a purchase order number. The purchase order can be electronic or written. The order form should tell the supplier to put the purchase order number on the invoice and bill of lading. The buyer also should send a copy of every purchase order to the accounts payable department, and keep blank order forms secure.

3. Check all documentation before you pay the bills.
When merchandise arrives, the receiving employee should verify that the merchandise matches the shipper's bill of lading and your purchase order. Pay special attention to brands and quantity, and refuse any merchandise that doesn't match up or isn't suitable for your equipment. If everything is in order, the receiving employee should send a copy of the bill of lading to the accounts payable department. Reconcile bills for services the same way. That is, don't pay any supplier unless the invoice has the correct purchase order number, and the information on the invoice matches the purchase order and the bill of lading.

4. Train your staff.
Train all staff in how to respond to telemarketers. Advise employees who are not authorized to order supplies and services to say, "I'm not authorized to place orders. If you want to sell us something, you must speak to ______________ and get a purchase order." Establish a team that includes the employees who buy and receive merchandise or services, and those who pay the bills, and develop some standard operating "buying procedures." For example, buy only from people you know and trust. Be skeptical of "cold" or unsolicited calls and practice saying "no" to high pressure sales tactics. Legitimate companies don't use pressure to force a snap decision. Finally, consider asking new suppliers to send a catalog first.

5. Report fraud.
Report office supply scams to the FTC, or your state Attorney General, local consumer protection office or Better Business Bureau. In addition, consider sharing your experiences with other businesses in your community to help them avoid similar rip-offs.

If you receive supplies or bills for services you didn't order, don't pay. Don't return the unordered merchandise, either. Treat any unordered merchandise you receive as a gift. It's illegal for a seller to send you bills or dunning notices for merchandise you didn't order or ask you to send back the merchandise — even if the seller offers to pay the shipping costs. What's more, if the seller sends you items that are different from your order in brand, type, quantity, size, or quality — and hasn't gotten your approval first — you may treat the substitutions as unordered merchandise. Treat unordered services the same way. At the same time, you should consider the possibility that the seller has made an honest mistake.