The Australian Competition and Consumer Commission last week obtained a Mareva* order from the Federal Court, to freeze the funds in L&L Supply Pty Limited's Australian bank account over an alleged office supply scam.
On 10 March 2005 the ACCC instituted legal proceedings against L&L Supply alleging it engaged in misleading and deceptive conduct and other contraventions of the Trade Practices Act 1974 in connection with the supply of packing tape.
The ACCC alleges that L&L Supply has been operating an office supply 'scam' from two locations, Wickham in Newcastle, NSW and Miami, Florida, USA.
The 'freeze order' was the first step in the proceedings and L&L Supply has not yet had the opportunity to contest the ACCC's claims in court.
The alleged scam came to the ACCC's attention in late 2004 when it received a number of complaints.
In pursing its investigation the ACCC obtained evidence and information from various L&L Supply customers and the ACCC's international (US Federal Trade Commission) and domestic (NSW Office of Fair Trading) counterparts.
The ACCC alleges that L&L Supply operates an offshore call centre in Miami, Florida which target Australian business consumers with an offer to supply them with packing tape either for free or at very low prices.
The ACCC alleges that the L&L Supply offshore sales representatives telephone an employee of Australian businesses, who is usually employed in the purchasing or accounts area, and represent that they are calling on behalf of their recently deceased parent who was the former owner of L&L Supply, a small office supply company.
The ACCC alleges that L&L Supply has been misleading Australian business consumers into believing that packing tape orders have been approved by a senior manager of their company.
The ACCC alleges the L&L Supply sales representative claims that the deceased was a very good friend of a senior executive of the target company. At this stage, it is alleged that the L&L Supply sales representative seeks the customer's agreement to either accept some packing tape for free or to acquire some packing tape at a very low price.
The ACCC alleges that, after speaking to the target company, L&L Supply in Miami will forward details of the Australian 'customer' to its warehouse in Wickham which then despatches packing tape with an invoice (usually for an amount of about $2000) to the so-called customer. Some 'customers' have unwittingly paid the invoices. The packing tape which has been supplied has been poor in quality.
The ACCC also alleges that L&L Supply's representations concerning the death of the owner are intended to garner sympathy for L&L Supply from the target business, thus making it more likely that an order will be placed. The ACCC alleges that this conduct contravenes sections 52 and 53 of the Trade Practices Act 1974**.
The ACCC has also alleged that L&L Supply has engaged in conduct in contravention of section 64 of the Trade Practices Act 1974 by asserting a right to payment for the supply of packing tape in circumstances where the packing tape has not been ordered by the 'customer'.
The ACCC sought a Mareva order from the court on the basis that the funds which L&L Supply has in Australia should be frozen pending the ACCC pursing an action to obtain compensation for those Australian business consumers which have suffered loss as a consequence of L&L Supply's conduct.
In this regard, the ACCC invites any company which believes it has been misled by L&L Supply into acquiring products, primarily packing tape, to contact its InfoCentre on 1300 302 502.
The ACCC is seeking a range of other orders against L&L Supply, including injunctions, declarations, findings of fact, compensation and various non-punitive orders.
The matter has been listed for a directions hearing before Justice Jacobson in the Federal Court, Sydney, on 17 March 2005.