Common Supplier Scams // 12+ product sourcing scams from China and Vietnam
If you are looking for products product on Alibaba or one of it’s many alternatives, then there is a high likelihood that you will come across someone trying to rip you off. They love to target first time buyers who do not know any better. We wrote this guide so that you be aware of the most common ones. We also have a more in depth guide on this topic about how to spot scams and verify suppliers
1) Changing the payment recipient at the last minute
This is one of the most common and most 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 is lying about who they are, they often pass a basic test when you search the factories authenticity. It’s not until the very end that you are ready to pay do you find out. The best way to avoid this is to get payment details early and do NOT budge if they change it later on.
2) Asking for additional payments for customs clearance
This isn’t a deal breaker but is a way for a supplier to make a quick buck off of you. You should always have the customs clearance cost included in your price. When negotiating the price of your product You need to be sure that you have the shipping terms clarified and be aware of which party (between the seller and you the buyer) is responsible for which. Shipping is complicated topic so we wrote an in depth guide!
3) Only accepting payment through Western Union or T/T
NEVER under any circumstances should you make a wire transfer to a supplier. Western Union leaves almost no paper trail and is the most common way that scammer accepts payments. PayPal and most other payment services are very diligent in looking out for fraud. there is a good chance that they may have sued 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?
4) Counterfeit products
If you are an FBA seller, you should never buy counterfeit brand name products and you should never work with a factory that sells counterfeit products. If they are willing to ignore copyrights then 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 good is very common to encounter when sourcing and selling so you may be tempted but do not do it. Cosmo Sourcing refuses to work with counterfeit good and will make sure that you have full rights to the design before working with you.
5) Poor quality products and products less than your standards
Unfortunately, Asian culture (particularly 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 is very common. If you want to make sure that your product is legit and up to your standards it may be in your best interest to hire a sourcing company to help you out.
6) Chabuduo // the art of Corner cutting
‘Chabuduo’ is a Chinese word that roughly translates as “close enough” and the concept is all too prevalent in Chinese manufacturing. When you source products you need to be extremely vigilant and makes sure that the product isn’t made cheaper than you expected and that they cut corners. It’s all it common that suppliers will only do what is absolutely necessary, and not one bit more, to make your product. There are many ways this concept manifest 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 at all what they should be.
7) Products not matching the samples
Sometimes the final product does not match the sample. There are a few different reasons for why this might occur: sometimes a different process was used (such as hand stitching for the sample and mass machine stitching in the final product) or worse they simply bought the sample from the store. 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.
8 // Payment info that does not match the factory
If they are a legitimate factory or supplier then they will always have a legitimate bank account. In China, there are 4 major banks that they almost certainly will use: Industrial And Commercial Bank of China (aka ICBC), China Construction Bank, Agricultural Bank of China, and Bank of China. The account name should match the business name. There are cases though where they will have a Hong Kong Office and manufacturing in the mainland. If they give you a HK company to pay to be very diligent and make sure you double and triple check everything.
9 // Having a payment go to a personal Account
This builds on the previous post, but if they ask you to pay an account directly connected to a personal account then it’s a fraud. Absolutely make sure that you are paying into an account that is directly attached to a business. At no point should you ever make a payment to a personal account when buying products from China or Vietnam.
10 // Selling products that do not exist or they do not have access to
Many fake suppliers will create a full storefront of products that just happen to be exactly what you are looking for. The catch? The supplier does not actually have the product and are just trying to get your money. The best way to detect these people is to ask for additional verification through photos or ordering samples, which we cover in the next section.
11 // Refusing to send Samples
This scam is annoyingly common. Before you place a full order you should ALWAYS get samples shipped to you. Any company that is capable of making your product will be able and willing to send you a sample. If they insist that they cannot send a sample and that you need to place a full order then you should cease contact with them and move onto another suppliers.
12 // Unverified profile on Alibaba
Alibaba has a verification systems for suppliers that checks to make sure that they have proper business license, bank accounts and a dedicated contact persons. IN truth it’s actually quite easy to get verified on Alibaba. As a result if they are not verified that it is a huge red-flag that they cannot even complete a basic check form Alibaba. When searching for factories make sure that you select Gold Suppliers and Suppliers with Trade Assurance. This won’t protect you from fraud but it will help a little.
13 // A Trading company posing as a factory
When talking to potential suppliers it’s important to understand what a trading company is and what they do. Trading companies are NOT manufacturers but they often do have relationships with the factory, that being said you are dealing with a middle man and not directly with the factory. We wrote a guide on how to find out what type of company you are dealing with.
How to protect yourself from Scams when Sourcing
Unfortunately most of the “suppliers’ that you talk to on Alibaba and other sourcing websites fall into the category or scammers. Fortunately for you, most of this guide covers how to figure out and weed these people out. 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 then see our in depth guide which covers techniques that you can use to protect yourself from fraudsters and scammers.
Let Cosmo Sourcing do it for you!
If you don’t want to do create a Product spec sheet, Request for Quote or Validation by yourself, the let Cosmo Sourcing do it for you. We bundle all three of these steps into the PLAN step, which is the first step of our Simple Sourcing package.
PLAN // FIND // MAKE // SHIP
Our Simple Sourcing Package, is designed to do everything to turn your idea into a shipped product. Simple Sourcing Comes with four steps: PLAN, FIND, MAKE and SHIP.
Give us your product idea, and we’ll work with you to find suppliers, oversee the manufacturing and ship it to its final destination. Cosmo can do everything from creating a product spec sheet, validation, sourcing, ordering and evaluating samples, arranging inspections, finding freight forwarders, quality assurance, negotiations and even working with prep and fulfillment centers in the States.
If you are starting a new business, then finding products and suppliers for your products is one of many things you need to handle. our services are designed to handle every part of your business in China and Vietnam, so you can focus on the rest of growing your own business.
We have helped clients ranging from Fortune 500 to small FBA sellers. Don’t hesitate to reach out to us and let us know how we can help you. firstname.lastname@example.org OR Visit us online at Cosmosourcing.com