Cisco VARs want vendor to police fraud, unfair pricing in the channel
Value-added resellers (VARs) in the networking channel don't shy from competition, but what happens when partners, or people who look like them, play dirty? Corruption hurts vendors and honest VARs, who are forced to compete with bogus pricing standards -- such as those set by a North Carolina couple who flooded the gray market after defrauding Cisco Systems' SMARTnet program, according to the FBI.
"We can't compete against creative pricing," said Gary Berzack, chief technology officer and chief operating officer of TribecaExpress.com, a Cisco-partnered solution provider in New York City. "Hardware customers buy on the lowest price, squeezing one or two percent as the difference between us and the next guy."
The issue came to light last week when the FBI arrested a North Carolina couple on suspicion of defrauding Cisco of $23 million in a replacement parts scam and reselling those parts on the gray market between 2003 and 2005.
The couple allegedly defrauded Cisco's SMARTnet program, which allows partners to obtain advance replacement parts without having to return the defective parts first.
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