Ok, so we know that our income depends on genuine suppliers.
If the supplier has set up a presence just to con buyers, then they are not likely to pay us either.
Therefore, in many situations it’s important to verify the supplier before you connect them with your buyer.
If the supplier is offering a LC payment method, then this is a good indication that they may be genuine. But it’s not foolproof. Even with LC payment terms, suppliers can con buyers by sending poor quality goods, or faking the paperwork to get the money released by the buyer’s bank.
If you come across a supplier who is asking for a percentage upfront (as an advance payment), then this is common business practice done with TT.
Typically, the supplier asks for 30% upfront to arrange and prepare the goods, and then they accept the remaining 70% after the ship has been loaded and the Bill of Lading (BL) has been issued. Some of them even accept the remaining 70% after the shipment arrives at the destination port.
But this request for advance is also the most abused. There is a chance that the supplier is not genuine and all he is after is the 30%. 30% or even 10% of say a $100,000 order is still $10,000. Enough for con men to thrive.
Once they receive this deposit, they run and you’ll never hear from them again.
I’ve heard that story a million times.
So if you do have a supplier asking for an upfront payment, you need to check and verify this supplier to the best of your ability.
The first thing to do is ask for their business documents.
This would include:
- Business Registration Certificate
- Tax or VAT Records
If you receive either of these two, then look for any signs of alteration.
Having said that, these documents mean very little. Any con man can set up a company to scam someone and then dissolve it. Tax records, yes, that’s a bit more convincing.
The best type of proof I look for is a past shipment record. Usually, this is a previous bill of lading (Past BL). It shows that they have indeed shipped the product before, and thus, they are genuinely in this business.
But what tends to happen when you ask for a past BL is, the supplier refuses.
His normal excuse is, “we don’t want to disclose our buyer information” which is printed on the BL.
When he says this, ask him to sanitize the document by covering or blurring all the sensitive data on the BL and then sending you the document in that state. It’s called a sanitized document.
Then, they may come back and say “No sir, our company policy doesn’t allow us to give these types of documents out. It could be mishandled and misused over the Internet“.
This may be a genuine concern but my gut tells me that they are hiding something.
So in this case, if they haven’t shown me other adequate proof of a legitimate business, I would most probably forego this supplier.
If they do provide a past BL, then look for signs of doctoring the document. Sometimes you may see darker print or different font where their own name is compared to the rest of the document. Also go to the shipping company website and punch in the BL number. See what shows up.
If you can’t do that, email the shipping company and send them the document. Ask them if all the data on that document is genuine or altered.
The next thing you can ask the supplier is… “Can I visit you before I make the initial 30% deposit?”
The main reason for asking them this is to determine if they are hiding something or not.
They may be scamming people out of their bedroom for all we know.
Then ask them for their address.
When you get the address, check that address on Google Maps, satellite mode and do a street view.
This will put you in front of their building.
Check to see if it’s a house or an office/building.
I’ve caught many South African scammers this way. The address they gave me showed me a residential house.
Yes, they may have a home office, but it’s not likely.
Then I would ask for a website.
Many of them may not have one, but if they do, check the address on there. Check the phone number matches their country.
Do a WHOIS lookup to look for any inconsistencies.
Also check to see if they are using their website email to contact you or a gmail/hotmail type of email. Ask them about it.
Ask for their Alibaba page. If they don’t have one, then how did they contact you? They must have some presence on the internet. You can use that presence to do a google search… “company name + scam” and see what shows up.
If they are on Alibaba, how long have they been on there? If they are say a 5 YR Gold Supplier, then that’s a good sign. Or if they have been vetted by Alibaba under their Trade Assurance checkbox, AV Check, Assessed Supplier, that’s a very good sign. This shows that this is a genuine supplier.
Check the scam sites that some of our members have kindly put up. See if they exist there.
SGS is a third party company that many suppliers use to check the goods on behalf of the buyer.
Ask them for a SGS report. If they provide it, contact SGS and ask them if it is genuine. This shows that they have provided goods for a buyer before.
You can also ask them for various other certificates that generally accompany the product, such as organic certificate, health certificate and so on. A genuine supplier should have these handy.
Ask them for pictures. If they send you stock images, that could be a red flag. Look for real pictures which they have taken themselves.
If they supply many different types of products, then they could either be a trading firm or a simple scammer. If they only supply one product, that’s a good sign.
Whatever document or certificate they give you, check to see if you can spot any alterations. Darker print or changes in font are usually tell-tale signs.
Amin