Deal that wasn’t costs business

A Dubious advertising invoices deal out of Queensland that cost the Smith family’s small Perth waterproofing business almost $10,000 was the final nail in the coffin for the fledgling operation. Already beset by the failure of a number of builders to pay on time, Hydrepel Pty Ltd closed its doors after two years. “They took us for $9,500 at a bad time. It was the final nail in our coffin,” company founder, 31-year-old Leon Smith, told WA Business News. Hydrepel, owned by brothers Leon and Aaron Smith and their father John, appears to have been the victim of a Gold Coast ‘blower’, posing as a reputable publisher of business directories. Blowers issue fraudulent invoices for advertisements in publications that either do not exist or would never be placed, then demand payment before receiving any signed authorisation. In a large number of cases – including that of the Smiths – victims paid the invoices after being misled into believing the publication was affiliated with government and community agencies, and charities, such as firefighters, police, emergency services and child protection. The Smiths believed their advertisement would appear in as many as six publications. Late last year, the Federal Court granted a nation-wide injunction against a Gold Coast-based blower alleged to have reaped $8 million from 33,000 fraudulent invoices over a four-year period. The successful injunctive action, initiated by the Queensland Office of Fair Trading, was the first taken by any state or territory fair trading agency under the federal Trade Practices Act 1974. The Federal Court restrained Power Pacific International Media Pty Ltd, Spacelink Holdings Pty Ltd, director David Robert Barrett, 54, his son and company manager Trent David Barrett, 22, and employee Francis Clarence Wilson, 83, from engaging in misleading and deceptive conduct. Queensland Fair Trading Minister Margaret Keech said the injunction could open the way for all the businesses conned to apply to the courts or Small Claims Tribunal for redress. It’s an option the Smiths will be pursuing. The scams started rolling into Hydrepel’s office in early 2004. The new company, naively hungry to build its clientele through advertising, responded to the faxed sheets headed: “This is a solicitation, not an invoice for a debt incurred by you”, usually asking for about $450 for a quarter-page advertisement. The solicitations began arriving at up to four a week, followed sometimes by advertising, layout for approval and inevitably, the invoices. But no copies of the publications, supposedly advertised in, ever arrived. Rapidly growing suspicions prompted phone calls that either rang out, had been disconnected or were hung up. A close look at the range of invoices and solicitations found the same 1800 contact number cropping up time and again, along with the same address on the Gold Coast. The penny dropped, but it was too late. “We never signed an advertising contract,” Mr Smith said. “I was eager to get the company name out there and advertise. I got bullied into paying the invoices. I guess I was afraid they could have launched legal action against us. “I should have checked out each and every one of those approaches more carefully, and will do so in the future.” Under the Fair Trading Act 1989, publishers are required to have written instructions for the placement of an advertisement and cannot rely on telephone approval. A publisher that initiates contact with a business to place an advertise-ment cannot demand payment unless the client has given signed authorisation before publication. If suspicions are aroused, contact the Australian Tax Office to check if the publisher has an Australian Business Number or via corporate and business name registrations at www.asic.gov.au. Also the WA Department of Consumer and Employment Protection (DOCEP), its excellent scam monitor WAScamNet at the same site or phone 1300 304 954 for a complete list of the latest scams. The Smiths have moved on and recently established waterproofing, sound proofing, bore water stain removal and limestone sealing company Akaroa Projects Pty Ltd. Mr Smith said business was good, with all previous Hydrepel debts paid off.