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Don't get fooled - Payment fraud

Afraid of losing all your money when you’re importing from China?

You should be, and you’re not alone. Paying frauds are one of the most common forms of scam, and they are targeting small to medium sized businesses sourcing products on Alibaba.com. In the last few years, I’ve seen small importers losing hundreds of thousands of dollars in this type of scam.

We also had one of our customers telling us that, before she knew our company (Traders Easy Way) her money was stolen by a company that she believed was real in Shenzhen! She found that company on Alibaba, after she had sent the money to the company! There was no reply from them; later on she confirmed that was a scam.

Why this fraud still works?

So how do they do it? Very Simple. All the scammers what they do is, to hack the suppliers (the company) email account, check the sent box and then replace the beneficiary, the bank account number and the SWIFT code. The next thing they do is to resend the invoice, often together with a simple excuse for sending the same invoice twice. So if you are not careful, you will not notice that the information on the invoice has been changed.


In this situation, when you send the money to the supplier, the money will go to the third part without you knowing! You must be very cautious when buying from China especially when you are doing that for the first time.

How to prevent this type of payment fraud?

Preventing payment frauds when importing from China is very easy if you follow the following three rules:

Firstly, NEVER pay to a bank account where the beneficiary name does not match the company name of  the supplier you’re buying your products from.

Secondly, NEVER pay to a bank account that’s registered in a completely different city, province or country than the supplier you’re buying your products from, Shenzhen or Shanghai, for instance.

Try to ask the official documents of the company you are buying from, this will help you to find out earlier  if the company is real or fake!


Watch out for the supplier employees

There’s also another problem. Many Chinese suppliers request payments to bank accounts that are not operated by their company. It’s very common that suppliers in China’s southern Guangdong province have offshore companies in Hong Kong, often owned by the Legal Representative or a relative of this person. In some cases I’ve seen individual employees acting as middlemen by asking the client to pay to them first where after they pay their employer for the products. As expected, they pocket a handsome commission on top of their salary.

But I know of at least one case where an importer was not only paying more than they should have, they actually got scammed. The employee simply took their money and ran away without paying the actual supplier. So what did the supplier say when the client asked about their products?

“Sorry, we didn’t receive your money”. 

 You have been warned. Be cautious when buying from Chinese land!