The phony invoice scam
Frank Warrens of Frank Warrens Automotive in Portland, Oregon, recently encountered a scam attempt on his business. Warrens received a multi-page credit application along with an invoice for $6,000 from a "Forsythe Data Equipment Co."
A quick check on the internet found several articles warning about this scam from Better Business Bureaus around the country. An Illinois company with a similar name (but not located at the address used on the fax) says it receives up to 40 calls a day about the phony invoices but that it is in no way affiliated with them.
While not many businesses would make a $6,000 payment to a company in error, it seems more likely that an employee could fill out and return the credit application, giving the scammer lots of valuable information as well as permission to investigate the company's bank accounts.
Losing 'custody and control'
Another Oregon mechanical shop owner's recent experience with allowing a customer to test drive vehicles after repairs should serve as a warning for both automotive and collision repair shops around the country.
The shop owner, who asked that his name not be used, said one of his customers recently refused to pay any more than $800 of a repair bill totaling more than $2,000, and because the customer parked the car on the street after the test drive, the shop owner couldn't prevent the customer from leaving with the vehicle.
"The police did warn me that if I walked across the street to get the car, they could put me in jail for stealing it," the shop owner said. "The thing I've learned is that the vehicle should never leave your possession as the shop owner. You do the driving if the customer wants a road test. You bring the car back on your lot. Do not let the customer get behind the wheel of the vehicle until it's paid for."
The shop first worked on the car, a Corvette, months ago when the person who owned it at that time had the shop install a rebuilt engine. After leaving the shop, the car sat for months before the vehicle owner decided to sell it. The new owner of the Corvette brought it back to the shop believing that problems he was having with the rebuilt engine should be covered under the engine rebuilder's warranty.
"I told the customer it would be $600 to $800 to R&I the engine and get it to the machine shop that rebuilt it, which isn't the machine shop I use," the shop owner said.
That machine shop said the 12-month warranty had expired and that the customer would be responsible for any additional work. At that point, with the customer's permission, the shop owner took the engine to his preferred machine shop. They diagnosed the problem, and the shop owner called the customer and got the work authorized.
When the customer arrived to pick up the vehicle, he asked to take it for a test drive. The shop owner agreed and got into the passenger seat.
Pulled the wool over my eyes
"He drove about five blocks and turned around and started back to my shop," he said. "I thought, This is crazy. He's so concerned about driving it and he only drives it five blocks? But the wool was being pulled heavily over my eyes."
The customer parked the car across the street and refused to pay any more than the original $800 quoted, denying to both the shop owner and the police, who arrived at the shop's request, that the shop owner had called and gotten his authorization for the additional work needed.
"Since I didn't get his name signed on an invoice, and he said he couldn't remember the conversations he and I had, the police said there was nothing they could do," the shop owner said. "I've been in business at this location for 35 years. This just doesn't happen. This guy knew exactly what he was doing. He was out to rip me off."
The shop owner said he's out about $1,900, the first time in his career he's been taken for anywhere near that amount.
A happier ending
Shop owners in several parts of the country have warned against falling for a scam involving a company attempting to sell shops a start-up kit to perform spray-on bedliner work.
The company claims to do the marketing work for the shop and send the shop referrals for his or her area. The shop is then told that a referral has come in for a fleet of trucks that will require the shop to pre-purchase a large order of material to perform the work that is pre-scheduled on a rush basis. The fleet of trucks never show up, and the pre-purchased material is not usable or returnable.
At least two shops were out about $3,500 each because of this scam, which has been operating using the company names Ocean Spray Technologies or Neptune Products, out of Hicksville, New York.
But there is good news. This past December, postal inspectors along with investigators from New York's Nassau County District Attorney's office arrested Julius Lupowitz and conducted a search warrant at his place of business in Hicksville. He was charged with grand larceny and a scheme to defraud. Authorities say he was running the bedliner and other scams using a salesforce of 10 telemarketers.
John McDermott, a team supervisor for the postal inspectors, said any other victims who have not notified the postal inspectors may do so in writing, along with copies of proof of payment (credit card statements or copies of checks), and a brief outline of what transpired. Send the information to Bill Hessle, U.S. Postal Inspection Service, P.O. Box 160, Hicksville, New York, 11802.
John Yoswick is a freelance writer based in Portland, Oregon, who has been writing about the automotive industry since 1988.