Finance company doesn’t even know it funds telco bundles
A national lender claims that it has no idea it has been involved in financing telco bundling deals.
Nope, it says, we only finance equipment. We have nothing to do with any bundled telephone services. Dunno what you’re talking about.
We wonder if they will wake up after they see a copy of one of the telco services contracts that was paired with one of their own finance agreements. Or will they just revert to their ‘We want money! You gotta pay!’ mantra ?
Finance company dumb not dishonest
At least at its higher levels, the finance company is probably genuinely ignorant. But what happens at lower levels is less clear.
The scenario is typical of boom times when banks and finance companies can’t lend fast enough. To increase the rate at which they write out loans, they get involved with ‘brokers’ or ‘agents’ or ‘partners’ who can get even more borrowers signed up.
Problem is that they don’t always pick their ‘partners’ carefully. Even if the ‘partner’ is honest, they can well be careless. In many cases, the honest but careless ‘partner’ engages with its own ‘partner’ who promises to deliver a steady stream of business … and therefore commissions … to the first partner.
The telco bundle scenario
In one all-too-familiar telco version of this scenario, our finance company (we’ll call them MoneyCo) engages with a well known broker (we’ll call them EquippiRent) which in turn engages with a dodgy telco (we’ll call ScamTel One).
Now, EquippiRent doesn’t monitor ScamTel One very closely. Basically, it just hands them a stack of equipment finance and rental applications and agreements, and leaves ScamTel One to get the public signed up to them.
So Gung Ho Garry from ScamTel One hits the road, offering complex telephony ‘solutions’ (aka ‘bundles’) involving equipment (often misrepresented as ‘free’) and call services and call cost rebates. It’s offered as a single package.
And remember, those equipment finance and rental applications and agreements are ultimately contracts with MoneyCo. Yes, the noble and reputable MoneyCo is having its money flogged in the marketplace by Gung Ho Garry, from a company MoneyCo has never heard of.
What can go wrong ?
Garry gets the paperwork signed up
Once he’s sold the bundled deal to a customer, Garry gets all the paperwork signed up. (Actually, there are a disturbing number of cases where customers claim their signatures were forged. And in almost every case, customers find they were outrageously misled into signing the documents. )
Then MoneyCo is sent only the equipment finance documents. Is EquippiRent in on the scam ? Don’t know. But certainly, MoneyCo is only supplied with the part of the paperwork that it suits ScamTel One for it to know about. It seems hard to imagine that somebody in EquippiRent doesn’t know what ScamTel One is doing with MoneyCo’s contracts.
So MoneyCo sees a stream of equipment rentals coming from EquippiRent. How good is that ?
It’s ScamTel One that collects most of the funds
Poor old MoneyCo may believe that it is paying, say, $80k for the purchase of new telephone hardware that the end customer is hiring. In fact (using various devices, at least one of them criminal) ScamTel One artificially inflates the supposed value of any equipment involved and uses the inflated value to extract a nice fat cheque from MoneyCo.
So customer may indeed get a cheapo PABX worth $15k. But the debt against it is $75k and ScamTel One has pocketed most of the difference.
Then ScamTel does a runner
Surprise, surprise. Having collected a fat cheque from MoneyCo and other finance companies, ScamTel One just happens to go into liquidation. So by the time the whole arrangement blows up and customer stops paying heavy monthly amounts, ScamTel One and MoneyCo’s cash are gone.
MoneyCo sues customer
When customer stops paying, MoneyCo gets out its paperwork file and gets its lawyers on the job.
Do they know anything about ScamTel, Gung Ho Garry or how their contracts were weaved into a dodgy bundling deal ? No, sir, we know nothing about any of that. Your client must be a desperate debtor, sir, to be making such extraordinary claims.
No, sir, all that’s on our file is a standard equipment finance agreement, signed by your client.
Deliberate blindness ?
After a certain point, you start to think MoneyCo is being deliberately blind to the facts. Simple Google searches reveal that:
- The TIO was warned against such scams in 2007.
- ACCC has taken massive legal action in one case of alleged scamming.
- Whirlpool users report specific companies using specific dirty tactics to capture dodgy deals.
- CSP Central has analysed the scams in detail.
Yet all MoneyCo wants to know about is the partial documentation it was supplied with by its ‘partners’.
Now, at least one ‘MoneyCo’ knows the facts
At least one financier has been supplied with the other half of the documents, the telephony services sold as part of the equipment rental deal. Same dollar amounts, same term, same time, same salesman.
It was the deal they said they had never been involved in.
But here’s the lesson, MoneyCo: If you let third parties run around in a boom time using your contracts and your money without careful supervision, they’ll involve you in all sorts of things. Heard of the sub-prime crisis ?
MoneyCo: Act honourably
MoneyCo’s of the world, your argument is with EquippiRent, for letting scammers like ScamTel One act as your public face. Your argument is with ScamTel One, which pocketed most of your ‘equipment purchase’ money. Your argument is with whoever in your own business allowed EquippiRent to write deals without adequate supervision. Your argument is with yourself, for greedily taking business without any real idea how it was being written.
But your argument certainly shouldn’t be with Joe Customer, who was misled and scammed by a dodgy phone bundling company that you financed.
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6 Responses to “Finance company doesn’t even know it funds telco bundles”
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Surely the bank or whoever do their due diligence to make sure all the equipment is for real and actually delivered?
Good scammers beat entire systems, not just bits of them. ScamTel one has few techniques for fooling financiers into releasing funds way in excess of any equipment that’s actually been supplied.
For instance, some customers report that the ScamTel One / EquippiRent rep asked to take a list of serials of existing PCs, copiers etc already owned or rented by the customer. They’d offer some lame reason for doing this like ‘It’s for security reasons.’
Then that list was sent to EquippiRent, and then to MoneyCo – sometimes with a forged customer acnowledgment signature , sometimes with a genuine signature by a customer who was just told to ‘sign here and here and here and here and here’. You have to remember, these customers trusted the scammer at this point.
So MoneyCo will later swear black and blue that it was involved in a genuine deal. It can ‘prove’ it, because look, it has all these serial numbers of the equipment.
We’ve seen a case where EquippiRent did actually call the customer and asked for confirmation that all the equipment on the inventory had been delivered. ‘No,’ said the customer, ‘most of it was already mine and here. It hasn’t been delivered by ScamTel One.’ So what did EquippiRent do in light of this information ? It released the full funding, as if the customer had said, ‘Yes, it’s all good. I have received that full list of lovely new equipment all in good order and condition.’
So, between scammer tricks and boneheaded due diligence processes by EquippiRent, ScamTel One found plenty of room to get its hands on MoneyCo’s cash without providing equipment to equal value.
I am caught up in one of these scams and need a Lawyers advice and assistance. There are many breaches of the contract. I am based in Sydney. Is there someone out there who has experience in these cases?
Dear Mr Moon, you have written an excellent piece above so obviously you know this problem quite well. So please advise what we poor victims can do to extricate ourselves from this dilemma we find ourselves in. I have yet to hear on any forums regarding this, that any victim has had any real success. In my and dozens of others, we have since found that EquippiRent and ScamTelOne were tied in financially with another PHComm P/L formerly known as Nationtel, something like over $1million, all of whom are creditors for the defunct LinesConnect formerly ForteConnect. It appears to be quite a web of companies involved in lies and deceit .
But how do we rid ourselves of the leftover rental?
At the time of signing the contracts, they get you to sign a “Delivery Acknowledgement” form and leave it undated. They say this is needed to get the ball rolling and when the goods are delivered you will get a delivery docket. This is later used by the Finance Company to say you have received all of the goods on the Rental Contract.
Usually, the salesman says he will post out a copy of the contract and doesn’t leave you with one. After they have left, they then add extra equipment onto the contract without you knowing, and get paid by MoneyCo at inflated values.
Quite often this equipment is $49 telephone diallers, which they charge to MoneyCo at $1000 each, and there is always way more than what you have telephone lines.
If you are caught in a scam like this, get a copy of the contract from MoneyCo and compare it to the copy you have (most don’t have a copy) and compare the equipment listed to see whether you received it or not.
If you do a google search for a forum called aussielegal there are many others in the same situation and we are trying to find victims so that you don’t face MoneyCo by yourself.
The battle has to be fought in the Federal Court so that fraud can be considered as part of the fight. If you go to the local Court, you have signed a contract with MoneyCo and are not paying, so they will win. They will deny any responsibility for providing telephone services, or equipment. All they supplied is the money – and you are not paying the contract you signed. Even if you sue Scamtel, EquippRent, and MoneyCo, the only people that will show up in Court are MoneyCo. There have been several of these cases lost already.
MoneyCo is supposed to verify the true value of the equipment. In my case I was told I was receiving $4000 worth of free equipment from EquippRent. I can buy the same equipment new for $1800. This equipment was invoiced to MoneyCo for $7500 plus after I signed the contract they added $11000 worth of telephone diallers.
Everyone is under the impression that the majority of the money they paid each month was paid to Scamtel to cover the telephone rebate. No-one new that Scamtel was taking out Finance in Joe Customers name, or the value of this Finance they were being signed up for.
These Scamtel and Equipprent Companies, of which there are many, close the doors and re-open as a new name. One even re-opened with the same ACN number until it appeared on the forum and then they closed it as well.
One Scamtel company changed its name, closed down, but reserved the scamtel name so it can use it again.
There are lots of these horror stories out there, so make sure you do a Google Search on Scamtel complaints and you will find out more info.
I found this link on the forum mentioned above.
[...] yes, when we wrote (months ago) about a major lender that flatly denied that it had ever been involved with telco bundles, that was [...]