I was chatting with a friend recently about what I do—interviewing office technology dealers—which prompted her to tell me that in her previous job as facilities manager for a New Jersey university the university’s purchasing manager once told her that copier salesman were the sleaziest people he’s ever had to deal with.
I wasn’t shocked to hear that, but I was taken aback a bit because I know a fair amount of copier salespeople and I certainly wouldn’t paint them with such a broad brush. But it did get me thinking, along with a story by Art Post in his Print4Pay Hotel blog, that there are some folks out there whose questionable business practices give even the most professional and honest dealers a bad name.
No one wants to see their profession bashed even if the stories and incidents are true and Post’s blog elicited a comment from an angry dealer who felt that it created a negative impression of all copier dealers. His concern was that potential customers would read the post and then lump honest sales people like himself into that unscrupulous category. This may sound idealistic, but my feeling is that good will triumph over evil and one way to do that is to expose the bad apples and questionable practices that occasionally take place in the business. And dare I quote that awful Osmond’s song from the ‘70’s, “One bad apple don’t spoil the whole bunch?” There I said it and it’s true.
To get a better idea of what the good apples are facing out in the field, I contacted a few definitive sources, including the always vocal Andrew Ritschel of EOS in Fairfield, NJ; Ray Belanger of Bay Copy in Rockland, MA; Al Scibetta of Copier Fax Business Technologies in Buffalo, NY; Frank Grasso of TGI Office Automation in Brooklyn, NY; and Mike McGuirk of Pro Copy in Tempe, AZ. They shared their experiences along with tactics they use to help undo the damage caused by the industry’s bad apples.
Ritschel recently celebrated his 33rd year in the industry. As a sales rep and now as the owner of his own company, Electronic Office Systems (EOS), he’s witnessed a lot. “I have met and worked with smart, dedicated, hardworking, honest, caring and talented industry professionals,” he says. “These people account for 97 percent of the people working in our business. However, the remaining three percent cause chaos, immense costs, and harm to our businesses, our clients, and our industry’s good name.”
What I found when talking to these good apples was that the biggest issues center around leasing. Ritschel recalls reps who’ll ask the customer to sign a lease while telling them they’ll fill in the lease term later. That’s when a 60-month term becomes a 36-month term. Or they’ll tell the customer they’ll pay off the balance of their old lease and return the customer’s old equipment to the leasing company, and then not do any of those things.
He’s also seen sales reps inform the customer about their monthly lease payment while neglecting to point out the 15 percent yearly payment escalation clause in the fine print of the lease.
Another tactic he’s familiar with is when a sales rep tells a customer, “This is a great once in a lifetime deal, but I need your order by tomorrow or my (150% above retail) pricing will go away.”
“Our industry has enough people in it who work hard to give us a bad name,” acknowledges Mike McGuirk, president of Pro Copy. “But I do believe it’s a minority.”
He’s been in the industry for awhile and has seen a few shady deals go down around him.
“We had a couple of dealers out here doing a 3/5—a five-year lease with three years worth of maintenance included. So the 60-month lease would include three years of maintenance or 300,000 copies, and when the client had to buy maintenance [after three years] their payments almost doubled.”
One of the worst things he’s seen is similar to what Ritschel talked about, getting someone to sign a lease without noting the term or penciling it in, writing 39 for example, and then later turning into 63. “That’s a blatantly dirty practice,” says McGuirk.
Some leasing companies don’t allow dealers to return products early, which can lead to questionable behavior. “We’ve heard one dealer in one market that didn’t pay the lease off,” recalls McGuirk. “What we’ll do is tell the customer you have 20 months left, let us cut you a check for those 20 months and you continue to make your payments to the leasing company, but you’re not making two payments. That’s what we think is the right way of doing it. And we return it.”
One of the dealers in McGuirk’s market wasn’t doing that. What they did was set up a P.O. Box and was pretending to be the customer and make payments for the customer. Meanwhile the customer was getting bills for a lease that never got bought out.
“We just reviewed our leasing portfolios and one of the companies that we chose to do business with is Everbank because they are specifically encouraging early returns,” reports McGuirk. “Their position is if you bought out one of our leases, it’s better off in our hands than in your warehouse. That’s the first common sense thing I’ve heard in a long time.”
The scam that Post wrote about is also worth repeating. In that situation the sales person told the customer that they would remove and store the old device (no notification was sent to the leasing company about the device being removed nor was a letter of intent provided if one was needed at the time the device was removed). Of course the dealer told the customer that they would make the remaining payments on the old lease.
“The bottom feeder of a dealer cuts a check back to the customer either monthly, or quarterly, or in some cases they don’t make any payments,” explains Post. “But the real scam is the copier. Remember the copier that is supposed to be sitting in the dealer’s warehouse? (Keep in mind that the copier may have to sit in the warehouse for 6, 12 or even 24 months). The bottom feeder of a dealer then takes the leasing company’s property and rents it to another company for a term that is shorter than the term that is left on the lease.”
In this case the leasing company is getting hosed because instead of getting a system back early or getting a system back with a low meter read, they get the system back with higher usage. The customer is in violation of their lease and could be called into default. “And what happens if the dealer goes out of business like that dealership did here in New Jersey?” asks Post. “The customer is left holding the bag for the remaining stream of payments, probably no copier to be found, a legal mess, and they’re still making payments on the new copier.”
Al Scibetta, owner of Copier Fax Business Technologies, offers three classic examples, again related to leasing. “They’ll tell the client they’re going to include service in the lease, they write a 60-month lease, they cash out $15-$20K worth of service up front, and the leasing company never knows that service was built into the lease,” explains Scibetta. “The company goes belly up and the client is left holding the bag.”
He’s seen that happen twice in Buffalo with two big dealers. Fortunately for the affected customers, they were Konica Minolta clients so Copier Fax was able to step in and strike a deal with the leasing companies, saving those clients thousands of dollars. “Now they’re our clients,” reports Scibetta. “We build service into the lease, but do it as a monthly pass through, and the leasing company knows what we’re doing. Unscrupulous dealers hide it.”
The second classic rip off is when the dealer agrees to pay off the existing lease the customer has and raises the payment to cover that cost, but never pays off the old machine. Meanwhile the client continues to pay invoices on their old machine.
“The third and craziest one of all is when they change a 36-month lease to a 63-month lease,” observes Scibetta. “That’s when a $15,000 lease becomes something like a $100,000 lease. Clients are none the wiser, they keep getting the bill from the leasing company and they keep paying it.”
He’s found that astute customers will catch these discrepancies, but these are things the bad apples tend to bury or forge, which ultimately creates a bad name for all copier dealers.
On a more positive note, Ray Belanger, president of Bay Copy in Rockland, MA, feels that in general the industry has become more professional. “In the past it was a lot like that,” he says about sleazy sales reps. “We still see some, but I don’t think it’s anything like it was years ago.”
The issues he sees most often are sales reps who neglect to clean up old leases, doing a deal and not figuring out the buyout, low balling the buyout, or not including the customer’s service obligation in the new contract.
“It’s someone not doing their due diligence and informing the customer about all the costs if they want to make a change,” states Belanger. “Once in a while you’ll end up on the short end of that; a competitor will look like they’re cheaper, but there’s a whole bunch of things such as switching costs and backend buyout that weren’t [factored in]. That’s the most common thing that you see.”
Belanger says it’s difficult to tell if these issues are deliberate or incompetence on the part of the sales rep. In some instances, it’s customer incompetence. “These are issues that typically occur in larger accounts with poor internal controls,” notes Belanger.
He’s seen large accounts with multiple leases being double billed or billed for assets that weren’t there, or billed for the same asset twice. “We’ve seen leases in place that the customer was paying for and you couldn’t even tell if they’d received the equipment. A lot of that was on the customer, and unscrupulous sales reps can just go to town on someone like that.”
When it comes to undoing the damage of incompetent sales reps or clueless customers who enable incompetent reps to flourish, the best way according to Belanger is being professional, having a good reputation, tenured sales people, references, and being a local business with a rich history like Bay Copy.
“Usually we’ll expose it we find something that was real slimy and explain to them how they can protect themselves,” adds Belanger. “Honestly you don’t see that as much as you used to. Most of those guys are gone.”
Frank Grasso, CEO of TGI Office Automation in Brooklyn, NY, agrees that most of the individuals and companies who excelled at tarnishing the reputations of office technology dealers have left the business, at least in TGI’s market. “It’s not as prevalent as it once was,” he opines.
But pockets of incompetence and questionable practices still exist ready to take advantage of naïve customers. “It’s unfortunate because you find a lot of that behavior with companies that don’t deserve it, mostly non-profits and churches, believe it or not,” says Grasso. “We help them out of those messes.”
What works in TGI’s favor for helping get customers out of trouble are the relationships it has with leasing companies. The issues Grasso has seen are many of the same ones noted earlier, streaming out buyouts or the dealer not satisfying the old lease obligation and pocketing the money, for example. “Some of these buyouts are huge and the customer is left holding the bag,” laments Grasso.
Again, that’s rare in the New York market. “There’s more of an educated buyer here and it’s not the first lease they signed so the experience level negates a lot of that,” states Grasso.
As does TGI’s reputation. “We try to elevate ourselves amongst the competition and our reputation and words are the only thing we have to stand on at the end of the day,” concludes Grasso.
