Photocopier Lease/Service Scam

[davypete]

Is anyone here stuck in the same boat as us with a company called DTS over your photocopier lease/service?

[NikChillin]

Is anyone here stuck in the same boat as us with a company called DTS over your photocopier lease/service?

 

Is that the one I have heard has high toner/service charges or ropes you in for several years?

[david_tulip]

Hi guys - I am not stuck in a DTS or LTM lease - or indeed any of the "Phoenix from the Ashes" companies that have or will no doubt rise from these organisaions (as they always do) - but I'd be happy to share my knowledge with you.

 

Nik your comment of the "high service/toner charges or ropes you in for several years" is somewhat vague - price is relative - what is a high service charge - I'd say (depending upon machine type, age, volumes used and probably more important(?) quality of service and level of SLA, whether dealer or direct manufacturer support) that education establishments would typically pay circa 4p for colour and .4p for mono - I guess with a 10% variation on that - I do hear of things much higher and sometimes much lower! In terms of being "roped in" I guess a finance agreement is typically between three and five years in length. There have of course been stories of Evergreen contracts (here on edugeek) from Danwood where the rental period doesn't start until you serve notice - so stories of leases that have people committed for much longer terms! I believe this agreement is a Managed Print Service - which is interesting as it is interchangeable with the terminology for the technology - these companies provide "Managed Print Services" so maybe a little sneaky in naming it as such.

 

I have always told people that they are buying an agreement first and foremost (BUYER BEWARE: check and know what you are signing), secondly a service and finally a piece of kit! It shouldn't be about price - it is about value. There is an argument that says if someone will pay £50m for Torres then he's worth £50m - I guess it's all relative - or in other words maybe he is if someone will pay £35m for Andy Carroll - as that is what the Liverpool Chairman based his spending on - he said "I will sell Torres for £15m more than I have to pay for Andy Carroll - so the winner - Newcastle and Demba Ba!!!

 

Sorry I digress to another love - footie. The love I refer to previously is trying to highlight "crooks" or unscrupulous individuals - it's a bit of a crusade of mine - I did set up a consultancy around it (here) but sadly it was not successful - it seemed people were happy to keep paying over the odds, or opting for things that were too good to be true, which Nik is what the chap was talking about here BBC News - Schools kit scam 'could cost schools millions'- see link to BBC 5 live investigation

 

Happy to share my knowledge / opinions if required.

 

All the best

 

David Tulip

[davypete]

Thanks for the 5 live link david, seems like there are much worse cases of this than us after reading that. hell of alot of money going down the pan there!

 

Good to know we are not the only ones out there trying to get out of this though.

 

Would be interesting to hear some other stories if anyone's got some to share.

[david_tulip]

There are some terrible situations out there - many of them are so embarassing that they do not want to talk about them!

 

I guy told me a story today of a similar time (late 80's I think) and a lease agreement which allegedly had a large amount of influence on a Bursar committing suicide somewhere in Essex!

 

I was thinking that I would be happy to host or be a part of a workshop or to discuss stories - because it does help if we know there are others in the "same boat" - because as long as we are in denial we cannot address this - there isn't necessarily any easy way out - sometimes there are "mistakes" by these dodgy individuals / companies and we can find loopholes - but it does need a business-head to look at and take an objective view - which often is to DO NOTHING or rather do something AT THE RIGHT TIME - because a lot of the issues here are caused by exponential costs of "rolling up" leases.

 

Do you think there would be mileage / interest in some face to face forums / workshops - war stories - explanations - advice on the tricks and scams?

[Heebeejeebee]

Do you think there would be mileage / interest in some face to face forums / workshops - war stories - explanations - advice on the tricks and scams?

 

Yes. I think everyone should be aware of the pitfalls of not thoroughly detailing their specifications and then reading the fine print and then getting the companies to actually do what you asked for in the first place rather than their often perverse interpretation of what you wanted. A salesman will tell you anything to get a contract signed then point at the small print (which may not have been read) to get out of actually delivering the goods.

 

I had this recently when a specific and rather unique requirement popped up in a project we were about to embark on. I asked the sales guy if it could be done and 'yes' was the answer. I later asked the same question and still got a yes. At the end of the meeting I asked again (because I'm like that ) and he said he'd confirm with his technical people and guess what! They came back and said it couldn't be done under any circumstances. My advice - always know exactly what you want and keep asking for it, build it into the specification and make them work for you and not the other way around.

 

HBJB

[SUPER8]

Thought you might find the following interesting.

 

To keep you up to date with all developments.

 

BBC Panorama investigation announced.

 

The long awaited BBC investigation into copier companies selling into schools has been announced.

 

Broadcast set for Monday 24th September at 8.30pm the program will be called

 

"Reading, Writing and Rip offs”

 

The program will provide insight into the world of companies who force schools into debt through miss selling

[browolf]

On tonight.

 

BBC News - You paid how much for that photocopier?

[Garacesh]

I don't get it - how exactly does this scam work?

I'm pretty sure that, due to the fact I don't control the budget here - I couldn't go and agree to any contract I felt like (even if it EARNT us money, I still wouldn't have the authorisation to do it) and when said contractor showed up at my school with a brand new photocopier, they'd be told by the head, NM or ICT Manager etc "Sorry, he wasn't allowed to agree to that. Sling y'r 'ook!" and I'd be fired.

 

Does nobody ever think to go "Okay, so we want a photocopier. XYZ company with that lovely-manned cold-caller can lease it to us for 3 (or 5) years, overall cost of £170,000. That sounds fine." (as maybe it would sound fine - after all, these salespeople will be making it sound like the deal of a century!) ".. but how much would it cost if I were to just buy one outright? Wow.. £15,000 tops? Really?" and then fob off said leasing company. Not to make you (or anybody at your establishment) sound like an idiot, @davypete, but why on this green earth did nobody think to look around a little bit, first? Who agreed to the lease, and why?

 

I just really can't grasp how this kind of scam happens..

1) If you want a product, source it yourself. Google. Shop around. Speak to other people in similar situations. Phone companies of your own accord. I've worked as a cold-caller before and I quit after 2 days. I've seen first-hand how bad it can be, my colleagues told many lies and 'forgot' details when it suited them.

2) Never deal with cold-callers unless you've put in some serious research into the company and the products.

3) If you're agreeing to a contract, run it through some other people first. Ask them to spot anything that seems dodgy. (Granted, often might not work, but always worth a try.)

4) If you haven't been able to source it yourself and have expressed interest in a specific product a company has offered you, you now have the specific name/product number of something you feel would work. Look into it! (Ties in with #1)

[rich_tech]

the scam comes up from the over inflated price that they value the equipment at instead of its cost price, i.e. a laptop valued at say £2500 a unit instead of the £250 cost price, which the leaser is left paying when it all goes wrong (something to do with the type of lease as well I believe), they basically gain the credit for that from a bank as its secured on the leases if I am right then they as a company.

 

I am looking forward to the documentary tonight myself to see whats going down with it all and how exactly it works though.

[Garacesh]

I'm tempted to watch it myself to figure it out, but it seems just.. Odd for me.

If they're marking up a £250 laptop by 250%, for example, a simple checking Scan/Dabs/Aria/Misco/Google/Your kitchen spice rack would find that it, in fact, isn't worth that much. Ergo, you buy it from a supplier at decent price and fob off the leasing company.

 

The mind boggles.

[Roberto]

I'm tempted to watch it myself to figure it out, but it seems just.. Odd for me.

 

Not that I disagree with it being odd, but how many posts have we seen here over the years from people frustrated that someone in upper management has purchased something at the behest of a salesman with the gift of the gab without consulting the IT people?

 

Schemes like this are clearly going to be targeted at people with all the authority to sign bits of paper on behalf of the establishment and none of the understanding of what it is they're signing.

Edited September 24, 2012 by Roberto

[browolf]

Sounds like it would have been cheaper to employ the expertise required to make an informed decision and then buy the stuff themselves.

[Roberto]

Sounds like it would have been cheaper to employ the expertise required to make an informed decision and then buy the stuff themselves.

 

Yes, but try telling the sort of people who fall into that trap in the first place about that...

 

These are the sort of educators (thankfully in a minority) who won't ask their own technical staff for help, let alone an outside expert, because in their mind a person with a degree in teaching woodwork and a text book with the answers to the GCSE ICT(*) course really does know more than any IT(*) professional. They have their counterpart in the IT person who thinks the IT tail really should be allowed to run the organisation/business dog, and either way they're a true menance to any place that employs them.

 

(* Substitute 'ICT' and 'IT' for 'Economics' and 'Accountancy/Finance', etc. as required).

Edited September 24, 2012 by Roberto

[Ketlane]

Well, just watched the programme. As presumably the BBC's legal eagles have crawled all over it, I assume that at least most of the allegations against the companies and the directors are true. Absolutely shocked by the fix that schools have got themselves into.

I'm afraid I'm rather less sympathetic than the reporter, though. If my reading of the stories is right, it goes like this: HT or similar has dealt with cold caller; has been persuaded to sign up there and then; has done no research, no comparison shopping, no legal checks. HTs are paid to manage - and there is a string of management failure. (1) HTs shouldn't be meeting cold callers, they should be making appointments; (2) for a commercial lease there is AFAIK no cooling-off period as with a consumer contract - therefore signing on the spot is a serious failure, exposing yourself to risk; (3) research into product, true price, track record of company, and legal consequences of the contract is all part of due diligence, another management responsibility. That's not to say that the HTs concerned aren't victims, but they do have some responsibility. As for the reporter's theme that making schools more autonomous removes the lines of support from local authorities, that's true, but schools are free to buy in whatever advice and support they decide they need, and independent schools have been doing this since ever.

I'm fascinated by the banks' involvement, though. Looks like they didn't do due diligence either as the leases were clearly scams. Good for the Clydesdale for signing up to wipe out their debts.

[david_tulip]

I'll think you'll find that yes the reports allegations are true; however it is a shame that in only covered the now-defunct companies (LTM & DTS) there are still quite a few others out there (and if not toxic from the top down - there are the individuals that worked for these organisations - where are they now!?!).

 

I understand injunctions may have stopped other stories making the show!

 

With regards to this scam the real thing was nothing to do with price i.e. a laptop that should of been x hundred costing y thousand - the schools took them on the understanding of them being "free" - no cost!!! Very naive - too good to be true always is that! They signed a document as far as they were concerned to say they "received the goods" not to pay for them - of course it was exactly that - LTM or DTS would pay for a while and then stop - having taken the lease capital upfront from the bank(s).

 

I was approached by Panorama, Matthew Chapman (Producer) and met with them at the start of the summer and was looking forward to this show with excitement - I must say I've been left disappointed. Although the very least is that people will now be more aware!

 

So if you need any advice - I'm happy to help - it'll be free! - Or will it, remember you get nothing for free, but if you need some help just get in touch. There are a lot of good companies and people out there, just take the advice I see previously, rely upon your IT and make a business decision based upon at least 3 quotations - remembering that cheapest isn't always best.

[david_tulip]

What did you think of the show - I was rather disappointed?

[Roberto]

What did you think of the show - I was rather disappointed?

 

In what way? There was a lot of rumours and sharp practice from other places that they could have covered but as they've got to keep out of the court room they were always going to limit their accusations of criminality to people and companies they could actually prove were criminals. They were never going to name names on anything subjective like value for money.

 

And lets be honest, while there's no excusing the behaviour of the firms discussed at all, their 'victims' didn't exactly come out of this smelling of roses (claiming the salesman "refused to leave" until the deal was signed indeed. Love to see them try that where I work...)

 

It kinda harps back to my point about people who are ill-equipped to take those decisions taking them without reference to their advisors... and even for primary schools, it is perfectly possible to have good technical staff around to give advice - some of the high profile members of this forum are from primary schools and very much prove the point about the quality of technical advice that could be available to primary school head-teachers if they looked for it.

Edited September 25, 2012 by Roberto

[rich_tech]

I watched it with interest myself last night, but I just don't know how in this day and age these educated people, actually believed that these computers were completely free to begin with and then did not read through or mull over what they were signing, like has been said, I wouldn't be pressurised into anything especially given the obvious financial implications, I have had cold callers at the office once or twice and they get nothing, be it over the phone or in person where I previously worked.

 

The old adage in that "if it sounds to good to be true, it probably is" and "theres no such thing as free", I mean you only have to watch things like watchdog or any consumer show to see that these types of scams happen all the time, yet people still get sucked into them.

[GrumbleDook]

Actually, there are plenty of things that are free out there, whether run as Social Enterprises or even stuff as simple as Open Source software ... telling schools that nothing is free (ie it has a direct financial cost for hardware / licence) is not that same as saying that there may be other costs / risks associated with it.

[Garacesh]

So if these computers/laptops/photocopies/pet dogs were 'free'.. What on earth did the contract-signers think they were paying for?

(I missed the show D: I was busy.)

[rich_tech]

Actually, there are plenty of things that are free out there, whether run as Social Enterprises or even stuff as simple as Open Source software ... telling schools that nothing is free (ie it has a direct financial cost for hardware / licence) is not that same as saying that there may be other costs / risks associated with it.

 

Of course there are things that are free and worthwhile in terms of software, actual physical hardware though is not so massively available that I am aware, obviously things like social enterprises, grants and schemes do exist, but in terms of this program last night, it seemed fairly obvious from the interviews featured that the people involved did not carry out a lot of Due Diligence to roll out the buzzword/cliche, it was clear watching it that the people felt pressured or just signed stuff without failing to go through it all I felt, looking at the costs involved with it all seemed to be very excessive, i.e. a photocopier being priced up at £174k should have set all manner of alarm bells ringing for some of the people involved I felt.

 

I am just glad from watching it that a lot of people will get some sort of education of the practices involved, I know a lot of LEAs are issuing guidelines and rules now about leasing of IT equipment, which can only be good going forward.

[tmcd35]

The scam itself was pretty ingenious, I thought. It prays on the greed of the HT seeing the word free and not reading the small print. I can see how a lot of Primaries could get suckered in, but how does it get past a competent bursar in a secondary school?

 

I understand how the scam works and where, initially, the money was actually coming from to pay for the laptops so they at least appeared free in the beginning. What I don't understand as where the schools thought the money was coming from to pay the leasing cost? I'm also unsure of the schools relationship with the bank, who did the school sign the lease with? I know the bank want their money back but surely the schools were never customers of the bank in the first place?

[AngryTechnician]

I'm also unsure of the schools relationship with the bank, who did the school sign the lease with? I know the bank want their money back but surely the schools were never customers of the bank in the first place?

The way leasing often works is that the school/business signs up to take a loan from the bank, but the principal is paid to the arranging company who then use it to supply the equipment.

 

Our printer lease - which our accountant and Bursar went through with a fine tooth comb and are 100% certain is not a scam - works this way. We pay the lease repayments direct to the bank, not to the company who supplied the equipment. If that company goes under, the printers are still ours and we still make the repayments. The problem is when schools are told that someone else is making the repayments but then sign a document that says the opposite.

[NikChillin]

I wouldn't betoo harsh on the schools staff who fell for these scams, these were cunningly thought out, divulging only the information necessary to do the deal. The costs were not pointed out, probably hidden in the small print. I do think that the contract should have to have approval through the governing body prior to being entered into, with this being backed up by some legislation perhaps. That might deter the stubborn salesman who threatens to stay put unless he got a signature.

Also, going by the property these people owned, I think they 'got' quite a few deals done.