Federal Court Temporarily Shuts Down Office Supply Scam

Federal Court Temporarily Shuts Down Office Supply Scam
Image: Pixabay
December 29, 2015

The Federal Trade Commission (FTC) has filed a lawsuit against an office-supply-scam operation that bilked millions of dollars from nonprofit organizations and small businesses.

In response to the lawsuit, a federal court has temporarily halted and frozen the assets of the company.

According to the FTC's complaint, individuals from Liberty Supply Co., also doing business as Omni Services, initiated calls to churches, schools and businesses, stated that the company was going out of business, and offered pens, paper clips and other office supplies at low prices.

The FTC complaint alleges that the defendants quoted a per-unit price even though they only sold multi-unit quantities, causing consumers to believe that the quoted price applied to a package of items, instead of an individual item. The defendants did not disclose the final price, quantity or shipping cost, even when asked. For example, the complaint alleges that if a consumer asked for a purchase order for their organization to approve, instead of sending a purchase order, the defendants sent unordered merchandise and an invoice.

The FTC says that the company also aggressively sought payment for unordered merchandise. When consumers paid the full amount, the defendants called to thank them, and then offered and sent a free gift, along with more unordered merchandise and an invoice for it. When consumers questioned the invoices, the defendants said they had a transcript of the conversation in which the order was placed, but refused to produce the transcript to the customer.

Consumers who wanted to return merchandise learned they had to pay a restocking fee, typically 15 percent of the invoice amount. Some consumers paid for the products in order to avoid the burden or expense of the defendants' onerous return policy, but the prices they paid were typically higher than the amount the defendants had stated in their initial phone call.

The defendants Liberty Supply Co., Mia McCrary and John B. Hart, are charged with violating the FTC Act, the Telemarketing Sales Rule, and the Unordered Merchandise Statute. The FTC complaint also names Nor-Jay Enterprises Inc. as a relief defendant who profited from the scheme.

To learn more, read the FTC's Small Business Scams.