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Can you provide some examples and advice to help me avoid fraud?

1. Fake Verified Gold Suppliers

Background

A buyer received an email from a supplier called Mike from ABC Electronics Company. Talking on Alibaba.com, Mike told the buyer that he could supply a PS3 unit at a lower price than usual.

The buyer had some doubts. However, after Mike told the buyer that he was a Gold Supplier, the buyer felt confident enough to place an order for 10 PS3 units.

After paying for the order, the buyer didn’t receive his products and lost touch with the supplier. The buyer filed a complaint against Happy Electronics Co. to the Alibaba.com Service team. After an initial investigation, the buyer was informed by Alibaba.com that Mike is not an employee of ABC Electronics.

Advice

This is a typical example of Gold Supplier identity theft, where scammers pretend to be representatives of legitimate companies to cheat unsuspecting buyers.

1. Ask the suppliers to provide their Alibaba.com minisite address. Search their company name on a regular search engine and compare the contact info they provide with the information published on Alibaba.com. If it’s different, you need to be cautious.

Use TradeManager to contact Alibaba.com suppliers and ask them to verify that your contact person is actually their company representative.

2. Be careful if the quoted price is extremely low  - anything more than 50% off the listed market price. If the quotation seems to good to be true, it probably is.

3. Visit our Wholesale page to buy from Chinese Gold Suppliers. Payment will only be released to the supplier after you confirm satisfactory delivery. If a dispute arises, Alibaba.com will mediate.

More about Wholesale market. 

4. For help with verifying Alibaba.com suppliers, contact us directly.  

2. Low Price Trap

Background

A buyer contacted a seller to buy 100 Nokia 8800 mobile phones. The price offered by the supplier was US $20/set. After paying $1,000 upfront, the supplier refused to sent the goods unless the buyer agreed to buy more products. The supplier also threatened to raise his unit price.

Advice

1. Some suppliers will offer extremely low prices to attract buyers looking for their first deal. After receiving payment, they will raise their price or demand buyers place a larger order.

2. Making full payment upfront is risky. 

3. Note the market price of the products you are looking for. You should reconsider the deal if the price offered is 50% lower than the current market price.

3. Demanding More Money After Order Payment

Background

A buyer didn't receive his products. The supplier said the goods were detained at customs because they couldn't find the original invoice attached to the goods. The supplier explained his company policy was to issue original invoices only for quantities above 5 units. He told the buyer to pay for another 2 units for US $150. The buyer refused.

The buyer paid the original payment using Western Union. The supplier registered on Alibaba.com as an American company despite turning out to be a Chinese company. All the information the supplier provided, including his company’s name, was false.

Advice

1. If the seller requests you send payment to another country instead of his registered country on Alibaba.com, it may be a case of fraud - though it may be for good reason too, as they could be living in another country on a temporary basis, etc.

Nevertheless, it’s best to be cautious. So, if the company claims to be registered in the UK and requests you to send payment to France, you should confirm the reason.

2. If you think the supplier’s price is very attractive and want to make a deal, we strongly advise you verify they are a legitimate company. Make sure their contact information is correct.

In this case, the fraudster pretended to be a US company but all his registered information is false. This can be easily verified by calling his company or by searching the company name on state government websites.

3. It is possible to distinguish a real company from a fraudulent one. The fraudster will find excuses to get the buyer to add more money to the original order value. This could include saying their products were detained by customs and asking the buyer to pay more to have the products released.

They may claim your order hasn’t met their MOQ (Minimum Order Quantity) and ask you to order more. Be careful and use common sense to make your own decisions when you are confronted with such situations with your seller.

4. Receiving Malfunctioning Goods (inc. heavy machinery)

Background

A buyer ordered two used trucks from a supplier in China. Prior to the trucks being shipped, the buyer inspected the goods at the supplier’s factory and found they matched the online product description. But the trucks the buyer received were different from those that he had inspected. They didn't work at.

After complaining to the company, one of their employees told the buyer they had replaced the good trucks with bad ones before they were loaded onto the container. He called them numerous times, but they wouldn't listen and refused his requests to replace the malfunctioning trucks.

Advice

1. Perform a detailed inspection of the company before you start trading with them. It’s best to check the goods at a third-party site such as a customs warehouse. This will protect your interests and reduce the risks involved in international trade. It's why many buyers use local inspection companies.

2. Use a secure payment method, such as L/C for shipping. Sign a business contract with your trading partner. Ask for a written guarantee ensuring the products you order will be of the same quality as the samples you received. If you have to request a refund or file legal charges against the company, this will be strong evidence.

3. If a trade dispute occurs, communicate effectively with your trading partner to avoid misunderstandings. Most disputes are solved after direct discussion. Negotiate with your partner and try to find a reasonable solution. If the dispute cannot be solved after negotiations, get legal support.

5. Avoid Email Account Theft

Background

A buyer ordered a large quantity of corn powder from a Gold Supplier. They agreed to pay 30% of the order value in advance and the remainder on receiving a copy of the Bill of Landing (B/L). The buyer paid the deposit to the supplier's company account on 5 May and on 1 June they informed him they had loaded the goods (with B/L as proof).

The buyer later received an email from the supplier saying that because their company’s accounts were being audited, he should pay the balance to their boss’ personal account instead.

The buyer followed their instructions and paid as requested. A week later they asked the buyer to pay the balance he had already paid.

Advice

1. The recipient’s name should be the same as the company name. The bank accounts for deposit and balance should also be the same. If the bank accounts are changed, contact the supplier by TradeManager before making any payments.

2. Be careful of any small changes in the email address. Hackers can access your email, watch the online activity between you and your supplier and then use a different email address when it comes to payment. The hacker may ask you to pay the money to a different bank account.

6. Receiving the Wrong Products

Background

A buyer ordered 10 mobile phones for a total US $1,370, including shipping. The payment was made by Western Union. When his order arrived it contained two pairs of counterfeit Adidas shoes.

Advice

1. Always pay attention to the price that your supplier quotes you. If the price is extremely low compared to the market price, generally 50% lower than the market price, then you should be extremely careful.

Do checks on the company's background including their website, email address, phone, fax number and company registration certificate. You can also contact your country's embassy in the supplier's country. They will provide further information on the supplier.

2. Communicate with the supplier to confirm whether they have sent this order by mistake. Keep all the evidence and, if necessary, take legal action. You should also report it to the Alibaba.com Service team who will assist you.

7. Chemical Products Fraud

Ordering chemical products online is a complicated matter. Claims of fraud often occur in two situations:

1. The buyer receives an item that is completely different from the item they ordered. For example, a buyer might purchase hydrochloric acid and receive pure water instead.

2. The goods received are of an unacceptably low quality. For example, a buyer might order pure chemicals and receive impure chemicals instead.

Safety Tips

1. Ask for a sample. Keep a sample and an analysis confirmed by both parties. Ensure products follow all laws and regulations of both import and export countries. To avoid issues at customs, remind the supplier to prepare all necessary certificates.

2. File a complete pro forma invoice. File a pro forma invoice and describe the products clearly, including chemical composition, concentration percentage, efficiency, guarantee period, etc. Include other agreements like delivery, payment, inspection parties and methods, replacement and arbitration.

3. Inspect chemical products carefully. Check chemical products before shipping. Never approve customs clearance before you are sure the goods are correct. You can arrange for customs officers or third-party inspectors to make an onsite inspection and issue the certificate - it's usually worth the expense.

4. Do not pay 100% in advance. 

8. Steel Products Fraud

Fraud cases involving steel products are especially serious because of the capital involved. Look out for the following to spot fraud involving steel products:

1. The prices are normally lower than the suggested retail price to attract buyers.

2. Many fraudulent suppliers are from the same areas.

3. Most of the fraudulent suppliers are trading companies, without their own factories.

4. Fraudulent suppliers usually provide bad quality goods.

Safety Tips

1. Check the supplier's business license.

2. Ask the supplier for certification.

3. Arrange an onsite visit with the supplier.

4. Never clear customs until you are sure what you receive is correct. You can arrange for customs officers or third-party inspectors to make an onsite inspection and issue the certificate. Legally, you will have a much stronger case if you perform inspection before customs clearance.

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