Do you remember the days of the ‘trade-in’ offer when you went to buy a car and the dealer gave you money back for your old car or reduced the advertised price of the replacement by the agreed trade-in allowance?

Over time and as more and more people financed new or replacement cars, a ‘trade in‘ was only ever a sum mentioned, it was never actually given you back as cash so, inevitably, the ‘trade in’ usually ended up being a sum added to the cost of the car before being taken off again on paper before the monthly payments were calculated. This is just one of the typical car scams people may have come across.

In the office equipment industry, we see these deals all the time, except ‘trade-in allowances’ are rarely mentioned. More often than not customers are charged to remove old equipment as opposed to receiving any money back.

Trade-in scam on office equipment is back doing the rounds

Most worryingly weve seen a dramatic increase in a revamped scam from around eight years ago.

We have received complaints about dealers who revisit their customers one or two years into a five-year lease term. Customers are lured into signing a new five-year lease with promises of cost savings and an annual  cash ‘rebate’ offer to meet the 3 or so years payments left on the original lease.

Sounds sensible right?

It’s what happens next that leaseholders need to be wary of.

Dealers are then selling that new five-year lease on to a leasing company. With the proceeds, the dealer then pays back the customer some of the overlap payments as promised (in the cases we’re aware of they have paid back just One or two years of the three years outstanding on the original lease agreement).

And, lo and behold, the dealer then goes cold.  No further cash advances are made – leaving the customer to pay the remaining overlap payments of the first lease PLUS all of the second lease payments, meaning the customer is left to pay twice for the same lease.

How to avoid falling for a trade-in scam on your office equipment lease

If ever you are offered a cashback offer similar to this, consider the risks to you and your business. The office equipment market is volatile right now, with many dealers going out of business. Can you guarantee your dealer will be around long enough to make the outstanding cashback payment to you a year or two down the line? What will you do if they disappear from the scene?

This whole cashback practice is unlawful because equipment owned by the original leasing company has, in effect, been sold to a second leasing company, without permission. To sell goods which you do not own is technically fraudulent, and certainly in breach of the terms of the original leasing company.

Before you sign any leasing contract, make sure you fully understand all the implications for your business. Fair Contract Associates has saved businesses, schools and charities £££ss with our low cost contract checking service. And, if you are in trouble, We won’t charge you a penny unless we know we can help you save money. Schedule a call and get peace of mind you’ve got a sound deal on your office equipment today.

Both instances are very risky and to some degree rely upon the dealer surviving for at least the period of the promised payment periods, although if a dealer has to stoop to these levels it is normal that events will overtake them in a relatively short period of time, leaving the customer with the bill.

But by far the biggest problem for the customer, is the breach of contract the dealer has forced the customer into.

Scenario One, is unlawful because equipment owned by the original leasing company has been sold to a second leasing company, without permission, to sell goods which you do not own is technically fraudulent, and certainly in breach of the terms of the original leasing company.

SCAM 2

In a similar scam to the above, two of our clients have also had their original 1-year-old machines replaced with second-hand equipment. In both of these cases the new lease was sold to the existing lease company as a second lease.

A less obvious problem with this scam is; in the first scenario, the dealer has sold the same equipment as new to 2 different leasing companies, bearing in mind the equipment is rented and must be returned at the end of the leasing term, the customer will have to pay to replace the equipment for one of the leasing companies.

In the second scenario, the dealer has removed the original equipment belonging to the leasing company and replaced it for the customer often with second-hand equipment with the same leasing company, but with two leases in operation, the customer will need to return the equipment from the first lease to the lease company at the end of the original lease term which will be 12 months before the then current lease will expire and the customer will not have it to return meaning they will have to pay to replace equipment.

Both instances are very risky and to some degree rely upon the dealer surviving for at least the period of the promised payment periods, although if a dealer has to stoop to these levels it is normal that events will overtake them in a relatively short period of time, leaving the customer with the bill.

But by far the biggest problem for the customer, is the breach of contract the dealer has forced the customer into.

Scenario One: is unlawful because equipment owned by the original leasing company has been sold to a second leasing company, without permission, to sell goods which you do not own is technically fraudulent, and certainly in breach of the terms of the original leasing company.

Scenario Two: the customer has allowed the dealer to remove equipment which is owned by the leasing company without their permission or knowledge, in breach of the terms of the agreement and technically unlawful.


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