Axis Systems Closes Shop, Strands Customers

Direct PC vendor posts gloomy Web site message and stops responding to new and existing customers.

Tom Mainelli, PCWorld.com

Small business specialist Joe Brockmann ordered a PC online from direct-PC vendor Axis Systems on January 15, then sat back and waited for it to arrive. And waited.

More than a month later, after his numerous Web site visits, e-mail messages, and phone calls, Axis sent finally him an e-mail saying it would not ship the system for which he paid nearly $1600 because the company was going out of business.

"It was the most horrible and sickening feeling," Brockmann says. "This is something that happens to other people and now it was happening to me. I'm just another statistic."

Luckily, Brockmann was smart: He ordered his system from Axis using a credit card. When he realized the company was closing he contacted his credit card company immediately.

The credit card company handled the situation very well, he says, and has already credited his account. He says he feels very lucky.

"That was way too close for comfort," Brockmann says. "I can't afford that sort of loss."

Site Says Company Is Finished

PC World has received numerous letters complaining about the company in the last week and has repeatedly tried to reach officials at the Orange County, California, firm for comment. These attempts have all been unsuccessful.

However, the Axis Systems Web site makes it clear that the company is in dire straits.

The site no longer promotes products or offers customer service. Instead, it bears only a plainly worded message in large type that says the company has "ceased operations and is currently in the process of being taken over by our lending bank." The statement also says that the bank will liquidate the company's assets, and notes that if there are remaining funds it will file for bankruptcy to pay creditors.

The Web site announcement concludes that the company is "no longer able to fulfill any unshipped orders or due refunds to our customers at this time. We are also no longer able to fulfill any warranty or support obligations. We apologize for this inconvenience."

It's unclear when the company actually stopped accepting orders and posted the note on its site.

Calls to the company's main number prompt brief recorded explanations that Axis Systems is no longer accepting orders and referred those with pending orders to the Web site. Calls to departments that handle canceled orders or credit on returned orders reached instructions suggesting that the caller an e-mail or letter. Calls to tech support receive a busy signal, and calls to accounts payable are directed to a voice mail box.

Repeated calls to two of the company's top officials, Leo Hsu and Willy Hsu, and to the company's public relations department also went unreturned.

Growing Problems

Despite the company's relatively small size (only 70 employees, according to Dun and Bradstreet), it sold nationally, and its PCs were once regulars on PC World's desktop charts. However, last summer PC World's staff stopped reviewing systems from Axis after downgrading the company's customer service status to poor because of repeated failed attempts to reach technical support. The last Axis Systems PC World review appeared on PCWorld.com in September and in the October 2000 print issue.

Further investigation of the company seems to indicate a downward slide over the last year. The Better Business Bureau of the Southland has received 433 written complaints about Axis Systems since 1997; a whopping 265 came in January and February of 2001 versus 152 in all of 2000.

The BBB report also gives the company an "unsatisfactory business performance record," and notes "many complaints remain unanswered."

Unfortunately, a situation like this leaves little recourse for customers. When a company stops responding to customer calls, things get problematic. What follows are some general tips on what to do in various scenarios when your PC vendor goes belly up.

PC World Troubleshooting Guide to AWOL Vendors

Here's a general guide to your possible recourses when you need support from a vendor who is unresponsive or nonexistent. Your options vary with your circumstances.

Your System Is Already in for Repair:

You may be out of luck until the company can release it to you or someone takes over the company. If you live in the area, it may be worth your while to visit company headquarters directly to try to retrieve your hardware. Otherwise, as unpleasant as it is, you may have to cut your losses. You can file an official complaint with your local Better Business Bureau or consider legal action by contacting the U.S. Bankruptcy Court or by seeking expert advice.

You're Trying to Get Tech Support:

Perhaps your calls to tech support go into an endless "hold" loop and eventually disconnect, and your e-mail goes unreturned. Unfortunately, that's a common pattern while companies are in disarray or on their way to closing their doors. Once companies have completed reorganization, things may improve. In the meantime, try this:

1. Check the vendor's Web site. You may not be able to reach a tech on the phone, but often drivers and pointers posted on Web sites can help you with some common problems.
2. Call the individual parts manufacturer. If you know your problem is with the hard disk or the CD-ROM drive, for example, you may be able to get service from the parts maker. Take note: Those warranties may be shorter than your system warranty, so check your documentation.
3. Try tech advice online. A number of Web sites such as AskMe.com let you e-mail or post a detailed description of your problem and get free instructions for a fix.
4. Look into a PC repair shop near you. You may find an independent store, or try one of the major chains such as CompUSA or Best Buy, which service even systems you didn't buy there. Choose your repair store carefully: Call around for prices, and ask friends for recommendations.
5. If you don't yet have a system, but the AWOL vendor has your money, you have several good options.

You Want Your Money Back:

Keep receipts and careful notes of your experience in case you want to sue in small-claims court if your loss is relatively small. Contact your local consumer affairs offices or county courthouse for guidelines. Your chances of getting your money back are slim, however.

"Often in cases of failed companies, there aren't funds for individual consumers, because the secured creditors get paid first," warns Sandra Michioku, a spokesperson for the California State Attorney General's office.

You may have some protection if you happen to live in a state such as California, where service contracts are regulated. There, vendors must back their service offerings with an insurer or put money in an escrow fund to cover obligations, according to Karen Skelton, program specialist for the Bureau of Electronic and Appliance Repair, a part of the California Department of Consumer Affairs. In California, this protection extends only to PCs sold into homes or home offices. Businesses are out of luck. "That's all handled through the court system," Skelton says.

Even if the company is based out of state, a California consumer still has protection, Skelton adds. Of course, if the company goes out of business entirely, the agency can do little but refer you to the U.S. Bankruptcy Court.

You've Recently Put in an Order:

If you've bought but have not received a product and want to change or cancel your order, try contacting the company first. If that fails, call your credit card company.

You can always cancel the purchase, Michioku says. Most major credit card companies have detailed policies that let you avoid charges in such cases.

If you suspect that your PC's vendor has closed up shop, you can take some steps to find out for sure. First, check the company Web site for any posted statements.

Then, check with your local Better Business Bureau. If the vendor is a publicly traded company, you can also try the Company Sleuth site to see if it has any information on your AWOL suspect.

Finally, try the bankruptcy court in the company's home state to see if you can get confirmation of the company's status.

You're Making Your Next Purchase

Because your odds of recovering costs from a bankrupt company are so low, your best bet is prevention.

"It's always a good idea to know the track record of the company," Michioku says.

Be sure to keep all relevant warranty and technical documents. It's always a good idea to review the coverage of a service contract and see what the terms are, Michioku suggests. Be warned, however. "Generally the warranty is good only as long as company is in business."

Back up your data so that if the worst happens, you still have all copies of your hard work. After that, just keep your fingers crossed.

Anush Yegyazarian, Cameron Crouch, Denny Arar, and Christina Wood contributed to this report.