Global online furniture retailer Wayfair has seen the three suppliers it is suing lodge countersuits, denying all allegations of fraud.
Late last year, Wayfair filed a lawsuit against Rosevera Corp., Mulhouse Furniture and Fully Wind Co., as well as the former Rosevera CEO and Fully Wind vice president Ping Hua Hsu and Mulhouse employee Tzu Ju Huang.
Supporting the filing, Wayfair said that this is āmore than a simple breach-of-contract actionā, with the case also about an alleged āsophisticated fraudulent schemeā where ādefendants concocted and effectuated to defraud Wayfairā.
Wayfair said that the schemes, detailed below, has seen the company overpay by at least $1.5m.
However, in response all three suppliers have denied the allegations and said in court documents that Wayfair has allegedly been actively trying to āput US based suppliers out of business and replace them with smaller operations working directly with its office in Chinaā and actually owes the companies more than $873,000 for ārecent inventory purchasesā.
They said that the businesses have processed close to $180m in Wayfair sales since 2015 and are āloyal suppliersā with the sum Wayfair has said to be out of pocket deemed as ānegligibleā. Furthermore, the companies state that Wayfair did not reach out to āinquire about any of the allegations set forth in the complaint and/or hear their side of the storyā.
āTo the extent that any mis-shipments or incorrect ZIP codes were utilised, it was caused by mistake and inadvertence by their agent, however, not derived from fraud,ā the documents said.
Detailed in previous documents submitted to the US court, Wayfair alleges that one scheme involved the production of false shipping labels by āincorrectly entering all but the customerās ZIP codeā, which were then placed on āempty packages so that Wayfairās carrier still proceeded to deliver the empty package to the location (whether that location was real or fake)ā.
In a second scheme, Wayfair alleges that it has been defrauded as the defendants used Wayfair purchase orders to āgenerate shipping labels for their sales through to other retailersā, which means Wayfairās carrier accounts were charged for the associated shipping costs.