Security & Fraud

FTC Refunding $2.6M To Companies Duped By A-1 Janitorial

FTC Refunding Companies Duped By A-1 Janitorial

The Federal Trade Commission (FTC) is refunding over $2.6 million to small businesses that were scammed by A-1 Janitorial, a New York-based office supply company, the FTC said in a press release on Tuesday (Dec. 17).

The FTC is mailing 30,374 checks averaging $86 each to victims of the alleged scheme. The refunds are the result of the FTC’s 2017 suit against A-1 Janitorial.

The FTC accused the defendants of offering businesses in the U.S. and Canada a free sample of either a cleaning product or office supply item. After sending the sample, the companies would get billed for the full cost. The defendants’ invoices to various firms usually called out an employee by name, making it more likely the recipients would pay, the FTC alleged. Whenever a payment was sent by a targeted company, A-1 Janitorial often sent more unordered products and subsequently sent additional invoices.

In April, a U.S. district court judge permanently halted A-1 Janitorial from doing business.

“The defendants tricked small businesses into paying for products they didn’t order and free samples that weren’t free,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. “We’re committed to taking action against schemes that target small businesses, and we have free – actually free – resources to help them avoid fraud at”

The court order bars A-1 Janitorial defendants from misrepresenting the facts about free samples, orders and billing. It also prohibits the defendants from misrepresenting the total cost to buy, receive or use the goods; making false and misleading statements; and failing to disclose that the purpose of the call is to sell goods or services.

“Consumers who complained were told the extra shipments were part of the initial order. Some consumers paid just to stop the defendants’ repeated contacts, but more shipments then followed,” noted the FTC. “The defendants often denied refund requests, claiming that, as chemicals, their cleaning products could not be returned,”

In the U.K., invoice scams have gained traction – significantly so among smaller firms, according to Barclays. As many as one in seven small businesses have been victimized by invoice fraud within the past 12 months.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.