But he's not alone. I have heard and know other bike shop owners who do similar things, both to suppliers and to customers.

See my comments on "Broken Bike Shop Model" thread but LBSs taking advantage of systems the suppliers have to feather their own nest is VERY common. Normally customers NEVER find out about what happens behind the scenes but swapping components on bikes as they are being built, warrenteeing items and keeping the replacement item and passing on a older item, yeah there's a bit of corruption out there as they work the systems to their advantage.

And also reps often work it for both sides so to cozy up to a LBS so their sales increase. Find a loophole in a policy, and the rep will know about it.

This is the true dark side of the cycle store industry.