How to avoid Internet Fraud

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Check the credentials of potential partners before engaging in business

Be sure to check the background of all potential partners before engaging in any business over the internet.

Payment

Letter of Credit (L/C)

A Letter of Credit is the preferred payment method. However, there is some possibility of fraud due to incorrect or forged shipping documents. Minimize the potential for fraud by contacting the L/C issuing bank.

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How to avoid Payment fraud？

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Many buyers haven’t received products after payment advance. Using a Letter of Credit (LC or L/C) or Escrow service are the recommended payment methods. You should investigate a company before doing business with them. For example, Check their website carefully and contact a chamber of commerce or government trade office to verify their legitimacy.Be extra cautious when the seller asks you to send money to a personal account. 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. If done correctly, pre-shipment inspection will help you from receiving the wrong goods. 



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What Kinds of Fraud should We be Looking out for?

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The following are three common internet scams in international trade. When you encounter the following situations, you must be careful .

· Pro forma Invoice (to get your personal information)

Some fraudsters may ask for a pro forma invoice when they do business with you, and then after you provide this, they may attempt to withdraw your funds, and purchase samples using your good name and business reputation. Your stolen identity may even be used to help con the fraudster's next victim!

· Credit card

Be very careful if a business partner you meet through the internet informs you that they can only send you payment by check or credit card...If you accept these payment methods you are running a risk that the checks have been forged, or the credit card numbers stolen, and ultimately you may have to bear the loss. There are many credit card number generating programs available online which also generate fake addresses and pins numbers which conform to the banks algorithms.

· Free sample fraud

We often find cases where a fake importer writes to many hundreds of companies asking for free samples to be sent to them with the fake promise of big sales once they have inspected the goods, in reality these are usually aimed at easy to resale electronic items such as mobile phones, laptops and personal audio electronic produces which they then resell at their local market. While we encourage discount samples to be sent to potential buyers, the buyer should be requested to pay for shipping and most of the cost of the item.  



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Fake brand name commoditys

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There are many fake brand shoe , handbag and accessories manufacturers in China . They send many inquiries to importers by B2B website. Fake goods with trademarks such as Adidas, Puma, Nike, Gucci, Prada, Chanel, Louis Vuitton, Christian Dior, Versace, Boss etc are advertised heavily on large trade networks such as Alibaba.com and EC21.com . Many fraud operations are using this widespread way to take advantage of the compromised legal and moral position of the importer once they have been scammed or blackmailed during the transaction. They are fully aware of the importers limited options for legal action.



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Tips to Avoid Fraud

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Fraud is especially easy on the Internet. Scam artists can set up websites, post messages on trade boards, and send unsolicited email to your business. How do you judge the fraud？How do you minimize the risks of business fraud?Here are some tips for your reference:

1. Get customer, supplier, and bank references for all new business contacts. Face to face contact is needed.

2. Be sure you have a verifiable physical address for the company.

3. Be careful of anyone using a free e-mail account. These accounts can be opened without a credit card. If a person is legit, they will gladly send you their company e-mail address such as name@company.com

4. Verify telephone numbers by using directory assistance, telephone books, and online directories.

5. If possible, make purchases directly from the company that holds the trademark, copyright or patent for an item.

6. Never pay for products upfront.

7. Never extend credit to new business customers.

8. Much foreign trade is done with a Letter of Credit. Don‘t ship goods until you have received an Irrevocable Letter of Credit, confirmed by your bank.

9. Make sure your bank is one of the top 100 international banks.

10. Make sure that bank drafts have cleared before you ship merchandize.

11. Verify credit card information through Visa, MasterCard, or AMEX. Check with the bank that issued the credit card to be sure that the card has not been reported stolen. Get the three-digit security code on the back of the card. Have a signed credit card authorization faxed to you.

12. Hire an independent agent to control the shipment of goods to you. Get a third party certificate prior to shipment. That way, you are guaranteed full shipment.

13. Never send free samples. Insist on payment, including shipping & handling costs.

14. Check with the Better Business Bureau to see if there are complaints lodged against the company.

15. Make purchases from reputable companies who are willing to supply you with the following information:

·         Business license, broker license, or contractor license number

·         Name of their bank, so you can check account references

·         State agencies they are registered with

·         Membership in associations (AMA,ABA, etc.) 



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