Small Business
Small biz scams probed
March 28, 2000: 10:15 a.m. ET

'Paper pirates,' 'toner phoners' in spotlight at office supply scam hearing
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NEW YORK (CNNfn) - Concerned about the prevalence of office supply scams and their costs to small business, the Senate Small Business Committee is holding hearings Tuesday to discuss ways to combat the problem.
    The Federal Trade Commission has estimated that small business graphicowners are taken for over $250 million a year by unscrupulous telemarketers selling faulty equipment such as toner cartridges.
    Using the anonymity of the telephone to their advantage, the operators talk small business owners into purchasing office equipment from them that is usually reconditioned and sold at greatly inflated prices.
    Joan Bailey, an administrative assistant at Brownstone Real Estate Co. in Hershey, Pa., fell prey to scam artists who called her and represented themselves as her regular supplier of toner cartridges. She ordered a cartridge, but didn't catch on that she was ordering from some other company until the equipment arrived with a bill for $549. The company normally paid $371 for four cartridges.
    Other people get taken by special low price offers or when a telemarketer tells them the cartridge is a new style and available to new customers only for a short time.
Bond considering legislative solutions

    Sen. Christopher Bond, R-Mo., chairman of the Senate Small Business Committee, called for the hearing after learning of the persistent problem. Spokesman Craig Orfield said. Bond is considering introducing legislation that would help the FTC investigate and prosecute scam perpetrators.
    "One of the problems is that in many states, state law is not strong enough to penalize these operators," Orfield said. "Because of loopholes in state law they are able to reorganize under a new name even after they are prosecuted."
    Orfield said Bond's decision to introduce legislation will depend largely on what he learns at Tuesday's hearing and what the FTC determines will help it pursue scam artists. He said the FTC may ask for additional resources to conduct its investigations or may ask for Congress' help to strengthen federal laws against scam operators. Back to top


Beware bogus businesses - Feb. 18, 2000


Federal Trade Commission

U.S. Senate Committee on Small Business

The National Fraud Information Center

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