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ISSUE # 20
JUNE 2013
 
 
Equipment Fraud- Buyer Beware!
By Steve Tompkins, President
Tompkins Printing Equipment Company
 www.tompkins.com

 

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Over the past few years we've been hearing more and more stories about one kind of equipment fraud or another, and recently we have been dealing with some sort of fraud every single week!

 

Equipment fraud surfaces generally in two different ways. The first, and most common way, has to do with the equipment itself. The second, and much worse type of fraud, has to do with the person the equipment is purchased from.

 

Equipment fraud has evolved because of many reasons. Everyone wants a good deal. They don't appreciate that a good deal may not be a good value. Most equipment is complex, and its condition can be anywhere from completely worn out and useless to equipment which operates in excellent condition. It is definitely not a commodity, even though many people these days would like it to be. With all the equipment on the market because of people going out of business, or consolidating, there appears to be lots of good deals available. Our experience has been that the good deals are cheap for a reason. There are worn out parts, missing parts, parts that are no longer available, machines that are not as productive, and machines that need repair or costly servicing. You get what you pay for. Our technicians keep very busy servicing machines bought online through various web sites. You are gambling when equipment is purchased this way. Sometimes you win, but usually it will cost more than if you bought a machine that has already been serviced and guaranteed by a reputable equipment dealer.

 

The second kind of equipment fraud is becoming more and more common. This is where the equipment you receive is not what you paid for, equipment being misrepresented, or not getting any equipment after paying for it! These types of situations have become more and more common due to the challenging times of our industry and economy. Some equipment dealers, many equipment brokers, and printers too, are inclined to not be as honest as they should be. Desperate people do desperate things! We've heard many instances where someone had put a substantial deposit on a machine, only to lose it because the broker is just pocketing the money, or maybe he didn't really have the right to sell the machine in the first place and had already spent the money elsewhere. Again it's buyer beware!

 

So what do you do to properly research and check out the equipment you are considering? Don't just buy it off the computer, unless you really trust the seller. Go see it. Test it. Hire an expert to inspect it for you. We have been videotaping machines that we are selling to demonstrate its operation when a customer is in a different state or country and cannot inspect it personally. You should ask for the same.  

 

How can you be confident in who you are buying equipment from? Ask if they own the equipment or if they are brokering a third party's equipment. Do they have technicians that can service the equipment if necessary? How long have they been in business? Call Printing Industry Credit Bureau for a due diligence report. Ask the seller for recent references and call them. Do a Universal Commercial Code (U.C.C.) lien search to make sure that the seller has a clear title. If there is a bank lien on the equipment be sure to get a letter from the bank that states they will provide clear title upon receipt of payment.  

 

While there's never a 100% guarantee on anything in life, taking these steps will protect you from the obvious causes of fraud that, unfortunately, happen every day. Remember: BUYER BEWARE!  

 

Article written and submitted by Steve Tompkins, President of  Tompkins Printing Equipment Company, @ www.tompkins.com 

 DEWEY CHI'TING
LARSON  NY 

dewey 1   dewey 2

ORIGINAL ARTWORK BY MARC.ART, INC.
ASK AN ATTORNEY

 
 
Q: "How do we protect ourselves from individuals posing as used equipment resellers who request a substantial deposit via wire transfer, which is a standard practice by legitimate resellers of equipment, but unlike legitimate dealers these posers steal our money and disappear."

A: Have the deposit made through a middle man, such as a bank. Once the goods are received in good order, the funds are released by the bank to the seller. This is essentially the way a letter of credit works, and it avoids fraud. 

 

 

Steven A Harms 
Muller, Muller, Richmond, Harms & Myers   
Birmingham MI 
   
  
A: Get a letter of credit from a bank. The bank only pays, after the equipment is received and is accepted by purchaser.


Andrew Totz

Totz Ellison & Totz P.C. 

Houston TX 

 

 

A: The client should always identify who they are dealing with and obtain as much information and documentation as possible. It would be helpful if client can obtain references from the equipment reseller that they can follow up on and check. A background check is imperative. The client can use the resources of the collection agency to do background checking on the party they are dealing with, and find out who the seller is and if they are operating a legitimate business. Information such as the name of the business, the name of the principal of the business, along with the address, telephone number, e-mail, and website, all provide substantive information that can be checked.

If, when you request references and background information, the party you are dealing with becomes defensive or indicates they will accept a 25% deposit instead of a 50% deposit, that is a big red flag. Normally, if the business is legitimate, they will have no problem providing information to verify that fact.

 

Basically, it comes down to the old adage, if it appears too good to be true, it probably is, and it is a scam. It is better to be careful and lose one deal, than to not obtain the necessary information and have substantial financial losses.

 

 

William A. Rinehart

Rinehart, Scaffidi & Mathews

Milwaukee WI

 

 

A: Since this appears to be a source of internet scamming I suggest due diligence is conducted by the buyer prior to exchanging any money for the transaction.  Why not have a corporate search done?  Request information from the seller regarding prior deals including at least three of the sellers last transactions as trade references.  Make educated decisions as to who you are doing business with prior to wiring money to a unknown reseller.  Another good idea would be to remove any potential risk by having your attorney set up an escrow account and not release the funds until the goods are delivered.

 

Michael S. Baim, Esq. 

The CKB Firm 

Chicago IL 

 

LET PICB HELP YOU BE AWARE!


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RESOURCES: PICB's web portal to government websites that provide real-time, free information that can be helpful when determining a customer's stability or viability. These sites provide users an ability to verify business registrations, civil records, lien information and much more.


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