3 Direct Source Medical Under Fire
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Dynamic Chiropractic – November 8, 2006, Vol. 24, Issue 23

Direct Source Medical Under Fire

Supply Company Being Investigated by Postal Inspector for Mail Fraud

By Stephane Babcock
Editor's Note: Scott Malcolm is no longer the owner of Direct Source Medical (DSM).

Richardson, Texas-based medical supply company Direct Source Medical (DSM), which also does business as National Access Medical (NAM), Access Medical Supply and Direct Medical Supply, was served with a search warrant by the Fort Worth Division Postal Inspectors on Aug.

22, 2006. The investigation was spurred by more than 100 complaints filed with the Better Business Bureau (BBB) of Metropolitan Dallas.

"Inspectors were looking for information supporting allegations of mail fraud, e.g., invoices, credit card information, other financial documents, and additional victims of the scheme," said Amanda McMurrey, postal inspector/public information officer, Fort Worth Division, U.S. Postal Inspection Service. "The alleged parent company was Direct Source Medical, but billing was sent underneath the other three names, all allegedly involving [owner] Scott Malcolm."

Although it states on NAM's Web site that "We offer only the highest quality products ... at the lowest possible prices!" chiropractors across the country allegedly have been charged double, sometimes more, for orders that never make it to their offices. Other times, when orders successfully reach a DC, a dozen electrodes somehow manifest into 12 dozen along the way, at least according to one complaint. "I instructed a member of my staff, on July 27th of this year, to order one dozen interferential electrodes from DSM," said Randall Haas, a DC from Florida. "Within a few days, my bookkeeper asked me what I had recently purchased for $787.50. I told her that I had no idea. A few days later, their package was delivered to me with six dozen electrodes and a note stating that the other six dozen were on back order."

This is only one of 110 complaints that have been filed with the BBB of Metropolitan Dallas against NAM, with 40 more complaints filed against NAM's alter ego, DSM.1,2 While all of the DSM complaints and 56 of the complaints against NAM have been closed in the last year, this does not mean they have been resolved.

"The BBB uses a three-year (36-month) reporting period. BBB reports cover complaints closed within the last 36 months," said Jeannette Kopko, senior vice president of communications, BBB of Metropolitan Dallas. "Complaints are 'closed' when the BBB has gone through its process on a complaint. The BBB accepts customer complaints on businesses either over the Internet or in letters. Then the BBB forwards the complaint by mail or email to the company with a request for the company to respond. Then the BBB checks back with the customer, providing a copy of the company's answer or asking if the customer has heard from the company, and asking whether the matter is resolved. At the end of those steps, the complaint is closed as 'resolved,' 'unresolved,' 'unanswered,' or other, as appropriate."

The complaints filed against NAM/DSM address such issues as problems with delivery, billing/collection, sales practice, refunds/exchanges and customer service. "I spoke with at least four different men with DSM, all of whom promised to restore my funds within a day or two," said Haas. "The only name that I recall is Scott, but there were others. One of these people was very sarcastic when I asked him when or if they intended to restore my funds. I also asked him if they would do the right thing and he asked me 'what that might be.'"

Other DCs ran into similar problems when they attempted to communicate with the medical supplier. "Most calls were taken by different 'assistant managers' that promised they would take care of this. Numerous calls were unreturned," said Kevin Snyder, a DC from Lawson Chiropractic in Marion, Ohio. "When I asked to talk to someone in the 'refund department' they would tell me that they don't talk directly to customers. ... All in all, this company is blatantly stealing from good people."

DSM owner Scott Malcolm, who says he currently employs only five workers, blames lack of companywide organization. "We had a lot of problems in that area. The company really grew over the last two years with not enough [of a] sound infrastructure in the sales and customer service area, and we have created a lot of complaints for those various issues ... the company grew faster than the infrastructure."

In April, the Dallas BBB posted a release on its Web site that covered some of the issues DCs had been having with NAM/DSM.3 A few months later, in August, the Fort Worth Division of the U.S. Postal Inspector Service began an investigation after complaints were referred to them from both the Dallas BBB and the Richardson Police Department.

"The Inspection Service works closely with the BBB in many cases to identify victims and help warn consumers of potential scams," said McMurrey. "Right now, Inspectors are still analyzing evidence gathered during the search warrant. The next step in the investigation would be to present the case to the United States Attorney's Office, Northern District of Texas. Should Scott Malcolm be convicted of mail fraud, he could face both jail time and a fine. The penalty for conducting a scheme to defraud using the mail is up to five years in the federal penitentiary and/or a court-determined fine. If the defendant uses the mail to defraud a financial institution, they may be fined not more than $1 million or imprisoned not more than 30 years, or both. These penalties are for each count of mail fraud for which the defendant is convicted, so you can see that the mail fraud statute has big teeth."

"We've had slow shipping issues ... that is not anything that is new," said Malcolm. "We've been trying to rectify that over the last year and I think we've gotten a lot better on shipping. We really have slowed way down in the last two or three months to try to clean things up. I'm not sure what their [U.S. Postal Inspectors] whole investigation is [about]. I don't think there has been any intentional defrauding of customers. We're running at a very minimal level right now just to clean up the issues any customer might have; we're not proactively selling on an aggressive basis ... until we get everything handled to everybody's satisfaction. Any chiropractor in the U.S. that has an issue with us ... they need to call us so we can take care of it. Our mission statement right now is to take care of any customer who has an open complaint."

DCs who have been either overcharged or have still not received the products they ordered can still seek reimbursement for their losses. "Chiropractors that were overcharged by the DMS/NAM would be entitled to restitution should Scott Malcolm be convicted of mail fraud," said McMurrey. "If the victim was able to successfully get the charge(s) taken off their credit card, the credit card company would then become the victim for restitution purposes. Additionally, should any of the victims wish, they may either provide a victim impact statement before the judge at the time of sentencing or provide the court with their statement in written form. Of course, should Scott Malcolm be charged and choose to go to trial, the U.S. Attorney's Office will approach some of the victims to testify at trial. The Postal Inspection Service encourages people who felt they were defrauded by DMS/NAM to file a mail fraud complaint either through the web at www.usps.com/postalinspectors. Victims may also call (800) 372-8347 to file a complaint or go to a local post office for a Form 8165, Mail Fraud Report."


  1. BBB reliability report on National Access Medical Supply. Accessed Oct. 12, 2006.
  2. BBB reliability report on Direct Source Medical. Accessed Oct. 12, 2006.
  3. "Chiropractors Complain on National Access Medical Supply."

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