Trade Safe

Client Experience

Examples of Fraud

Client Experience

Quality Fraud:

To whom it may concern:

Our company is an experienced import and marketing firm in the United States and we used to source new products on-line. Approximately 4 months ago we placed an order for 1 container of gas and electric scooters from a China company. When this container arrived every single scooter was broken.

The damage was as follows: the body of the scooters was cracked and many of the scooters were scratched. Many of our customers told us that the scooters looked like they have been used. The damage was so bad that it could not have possibly been caused during shipment.

We have then contacted the company to describe the problem and they refused to cooperate with us and refused to reimburse us for the costs of the products. I received an e-mail from the company representative stating that the company owner did not want to refund us the money.

We have documented evidence of the damage and a picture of the scooters. We use Price Transfer Inc. in Long Beach, CA for storage and customs clearance and they have also confirmed that the products have been sold to us damaged.

A United States Company

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Money: Fraud/Trade Dispute:

1st example

Dear Sir,

Hi,

Two months ago I contacted this supplier from Anhui requesting toys. He agreed and told me that he needed to have some up-front payment to be able to produce the requested products. I was supposed to transfer 2000USD via Western Union to the name of Mr. Wang who was the general manager at this time. I transferred the money and waited for a reply from Mr. Wang, which I never received, I called several times but there wasn't a Mr. Wang in this company and suddenly no one spoke English even though I had received much English written e-mails before.

I want to warn you of this company and hope you pass that warning on to all other global buyer members on your website.

A UK Company

2nd example:

Dear Sir,

After been contacted by a supplier , I forwarded $US337 to obtain a sample of a motor mower, which I believed was being supplied by the above member. As soon as the money was received, they said no longer could supply the sample and refuses to refund the money. I see this as fraud.

New Zeeland Company

There are many Internet business frauds between buyers and sellers. Most people who complain about sellers, report the following problems:

Fail to send the merchandise
Send something of less value than agreed upon
Fail to deliver on time
Fail to disclose all relevant information about a product or terms of the sale.

Some experienced 'fraud' may not be actual fraud but problems occurring due to misunderstanding and miscommunication and the lack of understanding each others culture. Much of these issues can be avoided by seeking trade information from China related government institutions beforehand and apply for trade support from MIC ( please refer to our trade services ) .

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Examples of Fraud

Trade with Fake Companies

Doing business with strange companies is a big risk in trade. Perhaps, your partner is a fake or cheating company, they would disappear after you made your payment. In order to avoid being cheated by these companies, you can order a background check from independent third-party sources including a search for legal registration and credit record.

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Payment Risk

Many buyers have failing experience on payment. They would not receive products after cash or T/T payment has been made. Using a Letter of Credit (LC or L/C) or Escrow service are the recommended payment methods. If the seller seems more focused on payment than any other issue, or indicates that cash payment must be made urgently, more caution should be given to the transaction. Be extra cautious when the seller asks you to send money to an account whose real owner cannot be traced.

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Fake Check Scams

There are many variations of the fake check scam, but the common thread is a stranger proposing to send the victim a check and have the victim wire money in return. It may start with someone offering to buy something you promoted for sale, pay you to work at home, or give you an advance on a sweepstakes you won. Whatever the bottom line is if someone you don't know wants to pay you by check but wants you to wire money back, it's a scam.

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Be aware sending free samples (Buyer)

This concerns a supplier requesting a sample from the buyer to produce the product according to the client's requirements. Sometimes the supplier uses these samples without delivering the actual product to the buyer. In this case, when samples are required for production, the supplier should pay for the samples and the shipment cost. Once the product has been delivered and the sample returned to the buyer, the money for the sample and shipment may be returned to the supplier.

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Be aware sending free samples (Supplier)

The buyers request a nominal payment for samples. When an unknown buyer requests samples while hinting at a large order, it is always wise to request at least a nominal pre-payment. Otherwise, the supplier requests samples to check the quality of the product. Order a sample before committing to a significant purchase order, to make sure that the product meets your requirements. Always ask buyers to pay for samples - including shipping costs.

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Poor Quality of Product

Sometimes a buyer receives poor quality products after payment has been made, but the supplier refuses to compensate the importer or does not even respond to complains. In order to avoid poor quality, you can use Pre-Shipment Inspection Services and demand the inspection as a condition of payment. Sometimes a supplier sents high quality samples to the buyer but the quality of the real end product is very poor. In order to avoid poor quality, you can use Pre-Shipment Inspection Services and demand the inspection as a condition to payment.

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Long Time Firm Fraud (Supplier)

This kind of fraud aims to obtain large amounts of merchandise without paying for it. The swindler orders merchandise from a few suppliers and pays promptly. These suppliers are then used as credit references for larger and larger orders. The bogus company soon becomes a slow-payer and then a non-payer. At some point in the future, creditors are stuck for "the last payment".

This type of fraud is often well planned, highly organized and involves substantial financial backing. The fraudsters can provide references from concerns controlled by themselves or simply prepare false references using modern desktop publishing methods. They may operate from rented premises or accommodation addresses. Many of these frauds investigated by the police, illustrated a basic failure by the suppliers to carry out checks on the creditor for creditworthiness and details of an established trading history.

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Be Wary of Over Generous Offers

Be wary of potential partners who offer an especially high or low price. It is easy to be tempted by such offers, but they are often attempts of fraud. In business, the expression "you get what you pay for" is often painfully true. Be especially diligent to check the contact information, identification and any claims a suspicious trade partner makes. If it sounds unbelievable, it probably is.

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Tips: How to Avoid Fraud

If most of your orders are obtained through your sales people, pay special attention to the unsolicited order. Here are some "red flags" to watch out for:

Use Escrow Services!
Use L/C (Letter of credit)
Search related government websites for information and help (Please Click Public Trade Organizations)
Ask MIC when you are unsure about supplier or when you need professional assistance to conduct business with China suppliers ( fee based service )

Request A&V and credibility reports from MIC (a simple A&V report will be enough to find out if a supplier really does exist. In case the supplier does not perform well he/she is traceable and taking him off our website will harm his business)

Negotiation support : helps to avoid miscommunication between global buyer and the China supplier.

Be suspicious when:

The supplier/ customer avoids giving you hard information about its company. They may act excited but vague, emphasizing what a great opportunity this is for you. ( Solution: credibility check and A&V reports available through MIC )

Since other payment possibilities than T/T and Western Union are limited in China and therefore a Western Union account is not always a reason to be suspicious about, it is still important to recognize that fraudulent suppliers have used Western Union accounts for money scams! Once the money is paid, it becomes difficult to follow up where the money actually went to and it is impossible to get the money back.

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Client Experience

Examples of Fraud

Tips: How to Avoid Fraud