North American Supply, Inc.

The Federal Trade Commission has obtained a court ordertemporarily halting the allegedly deceptive sales practices oftwo companies and four individuals selling photocopier tonerand other office supplies by telephone to businesses and non-profit organizations across the country. The FTC alleged thatthe defendants falsely represented to businesses that theywere their usual supplier of office products, and in numerousinstances threatened to institute lawsuits against consumerswho refused to pay the defendants' invoices. At the FTC'srequest, the court has frozen the defendants' assets topreserve funds for consumer redress, and appointed a receiverto take charge of one of the companies. The FTC's complaint detailing the allegations names asdefendants North American Supply, Inc. and American ComputerIndustries, Inc., both of North Hills, California. The FTChas alleged that North American Supply is the successor toAmerican Computer Industries. The four individual defendantsare Larry Ellis, former director of American ComputerIndustries, and currently operating another company thattelemarkets office supplies; Harold Moskowitz, President ofAmerican Computer Industries; Ron Moskowitz, President andmanager of North American Supply; and Otis Brown, atelemarketer for North American, and formerly for AmericanComputer.

The complaint alleges that North American Supply, RonMoskowitz and Brown telephoned prospective customers andclaimed to be representatives of their regular office supplieror original equipment manufacturer. According to thecomplaint, typically the sales representative told thecustomer that there had been a price increase in the productor that a price increase was imminent, and would urge thecustomer to place a last order at the "old" prices. Manybusinesses allegedly ordered toner or other supplies to obtainthe lower, "old" price. In fact, the Commission charged, thedefendants had no affiliation with the customer's regularsupplier or original equipment manufacturer, and typicallycharged prices several times higher than the prices chargedfor comparable products.

In their pitch to sell computer printer and other officesupplies, the FTC's complaint alleges that American Computerand all four individual defendants typically represented thatprospective customers could try American Computer's productson a free trial basis for 30 days, and could return theproducts at no charge if customers were not satisfied. Innumerous instances, according to the complaint, the defendantsrefused to accept returns from dissatisfied customers withintheir free trial period.

In addition, the complaint alleges that all of thedefendants represented to customers that their office productscost a certain amount but failed to disclose that asubstantial charge would be added to the invoices for freightand handling. The complaint alleges also that all of thedefendants billed consumers for merchandise that was notordered.

Finally, the complaint charges that the defendantsfalsely represented they would institute lawsuits againstcustomers who refused to pay their invoices.

The FTC's complaint asks the court to order a permanenthalt to the alleged deceptive practices, and to order redressfor injured customers. The asset freeze and receivership donot apply to American Computer Industries as the companyrecently filed for bankruptcy.

The FTC filed its complaint under seal in the U.S.District Court for the Central District of California, in LosAngeles on June 27. The seal was lifted late yesterdayafternoon. The Commission vote to file the complaint was 5-0. A hearing on the FTC's request for a preliminary injunctionhas been scheduled for July 3.

The FTC was assisted in its investigation of this matterby the Better Business Bureau of Southern California and theCalifornia Attorney General's office.

NOTE: The Commission files a complaint when it has "reason tobelieve" that the law has been or is being violated, and itappears to the Commission that a proceeding is in the publicinterest. The complaint is not a finding or ruling that thedefendant has actually violated the law. The case will bedecided by the court.

Copies of complaint are available from the FTC's PublicReference Branch, Room 130, 6th Street and PennsylvaniaAvenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY forthe hearing impaired 1-866-653-4261. To find out the latest FTCnews as it is announced, call the FTC's NewsPhone recording at202-326-2710. FTC news releases and other materials also areavailable on the Internet at the FTC's World Wide Web Site at: http://www.ftc.gov

(Civil Action No. 95-4264 LGB (AJWX))
(FTC File No. 952 3012)