Scams By Alibaba Suppliers // 12+ Scams When Sourcing Amazon FBA Products
Navigating Alibaba's bustling digital marketplace is akin to exploring a vast ocean filled with treasure and treacherous waters. As a leading global trading platform, Alibaba connects millions of buyers and suppliers, offering many opportunities for businesses worldwide. However, amidst these opportunities lurk the shadows of deception—supplier scams. In this post, we'll shed light on the darker side of Alibaba, examining the various scams that unscrupulous suppliers may employ to deceive unsuspecting buyers.
From counterfeit products and quality misrepresentations to phantom suppliers and fraudulent transactions, the range of scams on Alibaba is as diverse as the marketplace. This reality poses significant challenges and risks for businesses seeking reliable partnerships and quality products. We aim to equip you with the knowledge and strategies to identify and avoid these deceptive practices, ensuring your Alibaba experience is both profitable and secure.
Whether you're a seasoned buyer familiar with the platform or a newcomer taking your first steps in global sourcing, understanding and navigating the potential pitfalls is crucial. Join us as we explore real-world examples, key indicators to watch for, and expert advice on conducting safe and successful transactions on Alibaba. Your journey into international trade should be filled with rewarding discoveries, not costly mistakes. Let's embark on this essential guide to safeguarding your business against supplier scams on Alibaba.
The Most Common Alibaba Scams
If you are looking for products on Alibaba or one of its many alternatives, there is a high likelihood that you will come across someone trying to take advantage of you. They love to target first-time buyers who are unaware of their options. We wrote this guide to help you identify the most common ones. We also have a more in-depth guide on how to spot scams and verify suppliers.
1) Changing the payment recipient at the last minute
This is one of the most common and frustrating scams that Cosmo and most FBA sellers encounter, and it’s hard to detect until the last minute. Since the person you’re talking to lies about who they are, they often pass a basic test when searching for the factory’s authenticity. It’s not until the very end that you’re ready to pay that you find out. The best way to avoid this is to obtain payment details early and not compromise if they change them later.
2) Only accepting payment through Western Union or T/T
Under no circumstances should you make a wire transfer to a supplier. Western Union leaves almost no paper trail, making it the most common method for scammers to accept payments. PayPal and most other payment services diligently look out for fraud. There is a good chance that they may have used these services in the past, but are now banned for life. These services also heavily vet suppliers. Please see our guide to paying a Chinese supplier: What is the best way to pay a Chinese Supplier?
3) Counterfeit products
If you are an FBA seller, you should never buy counterfeit brand-name products and never work with a factory that sells counterfeit products. If they are willing to ignore copyrights, what’s stopping them from ripping you off? Further, Amazon is very aggressive about clamping down on counterfeit goods, and you will be banned, potentially for life. Counterfeit goods are widespread when sourcing and selling, so you may be tempted, but refrain from doing so. Cosmo Sourcing refuses to work with counterfeit goods and ensures that you have complete design rights before collaborating with you.
4) Poor quality products and products less than your standards
Unfortunately, Asian culture (notably China and Vietnam) tends to be ‘Yes men’ in that they will almost always say yes when you ask them about customizations. As a result, overpromising and under-delivering are very common. If you want to ensure that your product is legitimate and meets your standards, it may be in your best interest to hire a sourcing company to assist you.
5) Chabuduo, the art of Corner Cutting
‘Chabuduo’ is a Chinese word that roughly translates as “close enough.” The concept is all too prevalent in Chinese manufacturing. When sourcing products, you must be highly vigilant to ensure that the product isn’t made cheaper than expected and cut corners. Commonly, suppliers only do what is necessary, not one bit more, to make your product. There are many ways this concept manifests itself in an end product. For instance, you may get a sample made of one material and the final product made of another, or have internal components that are not what they should be.
6) Products not matching the samples
Sometimes, the final product does not match the sample. This might occur for a few reasons: sometimes, a different process was used (such as hand stitching for the sample and mass machine stitching in the final product), or worse, simply buying the sample from the store. The best way to avoid this is to hire an independent third-party inspection service to inspect your goods before they are shipped. This is one of the services that we offer.
7) Payment info that does not match the factory
If they are a legitimate factory or supplier, they will always have a legitimate bank account. They will almost certainly use four central banks in China: the Industrial and Commercial Bank of China (aka ICBC), the China Construction Bank, the Agricultural Bank of China, and the Bank of China. The account name should match the business name. There are cases where they will have a Hong Kong office and a manufacturing facility on the mainland, and they may require you to pay through an HK company to ensure diligence and double-check everything.
8) Having a payment go to a personal Account
This builds on the previous post. However, if they ask you to pay an account directly connected to a personal account, then it’s a form of fraud. Ensure you are paying into an account directly linked to a business. At no point should you ever make a payment to a personal account when buying products from China or Vietnam.
9) Selling products that do not exist or that they do not have access to
Many fake suppliers will create an entire storefront of the products that you are looking for. The catch? The supplier does not have the product and is just trying to get your money. The best way to detect these individuals is to request additional verification through photos or by ordering samples, which we cover in the next section.
10) Refusing to send Samples
This scam is annoyingly familiar. Before placing a full order, always request samples to be shipped. Any company capable of making your product will be able and willing to send you a sample. If they insist they cannot send a sample and must place an entire order, you should cease contact with them and move on to another supplier.
11) Asking for additional payments for customs clearance
This isn’t a deal-breaker, but a way for a supplier to make a quick buck off you. Including the customs clearance cost in your price would be best. When negotiating your product’s price, clarify the shipping terms and determine which party (the seller or you, the buyer) is responsible for shipping costs. Shipping is a complex topic, so we've written an in-depth guide.
12) Unverified profile on Alibaba
Alibaba has a supplier verification system that ensures suppliers have proper business licenses, bank accounts, and a dedicated contact person. In truth, it’s pretty easy to get verified on Alibaba. If they are not verified, it is a huge red flag; they cannot even complete a basic check from Alibaba. When searching for factories, ensure that you select Gold Suppliers and Those with Trade Assurance. This won’t protect you from fraud, but it will help a little.
How to protect yourself from Scams when product sourcing
Unfortunately, most “suppliers” you talk to on Alibaba and other sourcing websites are scammers. Fortunately for you, this guide covers figuring out and weeding out these people. Most are easy to detect, but for many, they will be harder to detect. If you want to read more on scams and how to protect yourself, see our in-depth guide covering techniques to protect yourself from fraudsters and scammers.
Cosmo Sourcing // Go Straight To The Source!
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If you start a new business, finding products and suppliers for your products is one of many things you need to handle. Our services are designed to handle every aspect of your business in China and Vietnam, allowing you to focus on growing your own business.
We have helped clients from Fortune 500 companies, brick-and-mortar stores, FBA sellers, and brand-new businesses. So don’t hesitate to contact us and let us know how we can help you.