Channel laughs at Compaq $20m rebate fraud lawsuit

Compaq accuses brokers of $20m rebate fraud

Compaq's decision to sue a handful of brokers after they allegedly defrauded the company out of $20 million in rebates ruffled a few feathers in the channel.

Angus Dorbie seemed to find Compaq's approach a little cheeky:

This is funny. Companies have no problem trying to stuff the channel with unsold kit to inflate their numbers for a dry quarter, or spin customers and channel partners all manner of bullsh*t about prices & schedules, but when the channel gets a bit inventive with the truth in order to negotiate the price down this is fraud?

What happened to the rough and tumble of a free market?

Meanwhile, Wolfram Hauk threw these comments in:

This practice is actually fairly common, even if not on this large scale of a couple of millions.

But a good purchasing department of a reseller's always orders some more (resellable to others) kit than needed for the fulfillment of a large contract in order to resell the surplus at discount prices to anybody.

Makes the other resellers always wonder how you manage to obtain these prices and helps your own profits quite a bit, as the discount which you receive from the manufacturer is invariably larger than the discount which you pass on to the end user (or it should be if your sales staff is worth a dime).

But this of course only works on really large contracts, not on one-shot-deals, where the manufacturer can supervise nearly everything.

And one former Compaq authorized service provider also found the article amusing:

You might find this interesting. After being a Compaq authorized service provider for 2 years (this ended 3 years ago) Compaq had yet to pay my company, Columbia Photy & Video, for ANY labor done for them. In fact they have never paid. My company did not sue because recovering $7-8000 from a company that large usually takes more money than we could have possibly won. To add fuel to the fire of incompetence my company... is still listed.

This is after literally dozens of phone calls to get our name removed. To this day I still get 1-3 calls a week concerning Compaq's warranty service. I always make sure I tell them about our experience w/ Compaq and unsurprisingly no one is surprised.

My point with this story is...Compaq doesn't have a leg to stand on integrity wise. It's the equivalent of the prosecutor who regularly takes bribes getting VERY upset about the judge who did also. Of course in the world of the WIPO and DMCA nothing a corporation says or does surprises me anymore....unless it's ALTRUISTIC (which would kill me from shock). ®