That is actually not true. If the customer can prove utilization to ARIN's satisfaction then you can sell them what they want.

I recently intercepted a customer

We don't generally have that problem because our sales people not only try to sell them Internet connectivity but service on their internal network as well, and as a result the sales people at some point in the sales process have had a discussion with the customer as to exactly what they are putting on there.

Also it's important to keep in mind the judicious use of contracts. Your customer contracts should include boilerplate that states in effect that the customer cannot lie to you - "any misrepresentation on the part of the customer may result in penalties or termination of service" is usually how it goes, along with about a paragraph that makes the customer agree to pay for any legal defense you need to put up because of their actions, etc. etc.

And, your IP allocation form should explain in plain language that additional IP allocations require justification, and that BECAUSE of the contract that they ALREADY signed, that they are required under contract to supply ACCURATE utilization information, and that if it's not accurate then they are required by contract to pay for your legal defense if ARIN should decide to pull your block.

The fact that ARIN has never sued anybody for this is of absolutely no consequence. The customer isn't going to know that, and the type of customers that are too lazy or disorganized to bother justifying IP allocations are easily cowed by the hint that they might have to pay a lawyer for anything.

Ted