"False invoices", "proforma invoicing", "rogue publishing", and telefraud - it goes by various names, but it is all a scam that is costing New Zealand businesses millions of dollars a year.

Commerce Commission chairman Dr Alan Bollard said that it involves businesses being tricked or bullied into paying for goods or services - usually advertising - that they never ordered.

Businesses have had debt collectors set on them, have been taken to the Disputes Tribunal and have been threatened with legal action so that they would pay for advertising that they did not order.

The Commission will soon take court action against seven companies it alleges use this illegal practice. It has previously successfully prosecuted three other companies for similar breaches of the Fair Trading Act.

It is also working to help businesses protect themselves from being ripped-off with false invoices.

"If businesses pay on false invoices, then enforcement action can only come after their money has gone," Dr Bollard said.

"The best protection for businesses is to be aware and to take precautions. Be aware that there are people who set out deliberately to rip-off you and your business. Take precautions by ensuring that you have effective systems for ordering goods and services, checking that what was ordered was received, and authorising payments."

The Commission has just published guidelines to help businesses put in place systems to protect themselves against false invoices.

Included in the guidelines is information on how to deal with telephone calls, faxes, invoices, debt collectors, legal action and other tactics used by companies trying to rip-off legitimate businesses.

Also included is comment from the Magazine Publishers Association on how legitimate publishers suffer from this practice, and from a community group badly hit by false invoices, the Royal New Zealand Coastguard Federation.

A company was selling advertising by claiming it supported the Coastguard. The company had never been in contact with the Coastguard, and the Coastguard received no money from the company. However, businesses that previously supported the Coastguard stopped doing so because they thought they had already contributed by buying the advertising.

A two-page summary sheet (a copy of which follows) is attached to the guidelines. It summarises how to deal with telephone calls selling advertising, what to do if you want to advertise, how to authorise advertising and what to do about false invoices and threats. It also lists organisations that can provide further information.

Media contact: Fair Trading Manager Rachel Leamy

Phone work (04) 498 0908, cellphone 021 662 773, home (04) 479 6334

Communications Officer Vincent Cholewa

Phone work (04) 498 0908, home (04) 479 1432

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Checking Invoices

Have systems for: ordering goods and services;

checking that you have received what was ordered;

authorising payment.

Telephone calls selling advertising

· Be careful.

· Keep records of conversations, including date, time, names and important points.

· Ask for the callers name.

· Ask what publishing company they are from, for their street address and contact numbers.

· Ask for the title of the magazine.

· Ask for a copy of the magazine's latest issue and ABC circulation or AGB McNair readership figures.

· Independently check these details.

If they claim to support a charity, community group or other organisation:

· Ask for the organisation's name.

· Ask how the organisation benefits from your contribution.

· Check with the organisation: Does it exist?

Has it given authority for the publisher to sell

advertising space for it?

How will it benefit from your contribution?

If they refuse to supply any of the above details, don't deal with them.

If you want to advertise

· Before agreeing to anything, confirm the price.

· Ask for a proof to be sent to you before publication.

· Confirm the publication date.

· Instruct the publisher to send you a copy of the magazine as soon as it is published.

Authorising an advertisement

· Authorise advertising in writing only. NEVER authorise advertising over the phone or verbally.

· Use an order number system. Do not use date of birth, street number, initials etc. As order numbers. These may be used for other scams or passed on to others.

· Limit the number of people who may authorise advertising (one is best).

Invoices and threats

If told that you agreed to place an advertisement previously, ask for a written evidence of that. This evidence should show:

· what you will receive;

· the cost; and

· that you accepted.

If they do not supply this evidence, refuse to deal with them.

If you are invoiced for advertising that you did not authorise or were misled into authorising:

· Do not pay the account.

· Write a short note advising that you did not authorise the advertisement or you were misled into authorising it.

· If you receive threatening phone calls, hang up. Do not enter into any verbal arguments.

· If you receive a letter from a debt collection agency, write to it advising that the matter is in dispute and you did not authorise the advertisement.

· If threatened with legal action, get legal advice.

· If legal action is taken, get legal advice immediately. Do NOT ignore the action; the authority to whom the matter is taken might make a decision without hearing your side of the case.

Organisations that can provide further information include:

· Magazine Publishers' Association of New Zealand

Executive Manager Janice Boswell

PO Box 68213

Newton

Auckland

Phone (09) 358 3906, Fax (09) 308 9523

· Newspaper Publishers' Association of New Zealand

Executive Director Phil O'Reilly

PO Box 1066

Wellington

Phone (04) 472 6223, Fax (04) 471 0987

· Advertising Agencies' Association of New Zealand

Clara Puglia

PO Box 105052

Auckland Central

Phone (09) 303 0435, Fax (09) 303 0460

· Association of New Zealand Advertisers

Executive Director Jeremy Irwin

PO Box 3948

Newmarket

Auckland

Phone (09) 00 5932, Fax (09) 300 5931

· Commerce Commission

Fair Trading Act Enquiries Officer

PO Box 105 222

Auckland

Phone (09) 377 7316, Fax (09) 377 3561

PO Box 2351

Wellington

Phone (04) 498 0911, Fax (04) 471 0771

PO Box 25193

Christchurch

Phone (03) 371 0298, Fax (03) 366 1311

· Your Lawyer

· The Police

Officer in charge at your local Police station or CIB

The best defence

Do NOT pay on false invoices.

Once your money is gone, it is very hard to get back.