Monday, November 22, 2010

Due deligence checklist on scammers

Scam checking

Ten guidelines for checking scammers
 In international trade, importers are more exposed to  scam risk, than exporters because they pay for commodities in advance of delivery. It is either the merchandise does not get delivered; or they receive wrong item, or fake products of poor quality.
As a serious and determined business person, it is very important that you try each step listed here. Please note, the last two points applies more specifically to traders registered on international business to business (B2B) trade platforms. Try it and you will be surprised how many scammers you will catch, off guard on several test occasions.




·                The most effective way to check for scammers is to visit their business premises in person and conduct essential business checks. Request to see, their offices, manufacturing sites, laboratories if any; talk to their marketing staff etc. However this is only viable when supplier is located close to your area, or when making bulk purchases. To be viable, the benefit of such an excercise should exceed its cost. For those that find it unviable to visit supplier, it is advisable to start trade with small orders, build trust and confidence with supplier before engaging large orders. Effectively, you can check your supplier using the methods listed below as good as paying them a visit.

·                If the offer is too good to be true, then ask yourself why? Most on-line  scammers offer unrealistically low prices (even for branded products),  huge cash discounts, free gifts for extra units bought above the minimum order quantity (MOQ), free shipment, and are quick to cut their prices, if you demand an adjustment. Therefore you need to watch these generous offers.

·                Excercise effective search engine scam check. Using your internet search engine (Google, Yahoo, Bing), type in the suppliers’ name or website domain and add the word “/scam”, then press search. This search will link you to any reported scam activities that the supplier had been involved in, if any. Also google search the supplier's contact address and contact name to link any reported fraudulent activity, on these contacts. Such a search also shows how many scam suppliers are using the same contact details.   


·                Verify which payment method the supplier accepts. Payment facilities such as western union, money gram, t/t, should not be used for any business payments, and only scammers insists on their use. Also verify if their bank account is a personal or company bank account, as you should never make any money transfer to personal account. Most reputable methods in international business payments are PayPal, and Escrow.

·                It is procedural and advisable to request from your supplier, a log of recent successful shipments delivered to customers, with verifiable customer details, and shipment tracking numbers. Verify a sample of these details instantly online, with their respective shipping service provider (like DLH, EMS). Also verify shipping costs, and compare with your charged shipping amount. You will be surprised how many times you can catch the scammer on simple price and delivery discrepancies.


·                Supplier's website faulty check. Rushed and poorly constructed websites usually points to scammers as they continously change websites, when older ones accumulate bad publicity. Date of website establishment is very important, as newly established websites for companies that claim years of experience and existence in the industry, raises alarm.
To verify date of website establishment, and some other useful statistics, follow this link, URL verification. On this check, please keep in mind that sub domain web verifications will only give results of their main domain websites, for example, say a company, xyz is registered on Alibaba trade platform, and is using a sub domain website on this platform, say www.xyz.au.alibaba.com. Verifying the URL, www.xyz.au.alibaba.com, will not give results of this sub domain website, but instead give results for the domain website, i.e. www.alibaba.com.  It is important to request the supplier’s company website and verify it.

·                Check for scam tendencies like poor business approach, taking note of every detail of conflicting information supplied. It is your right to ask relevant question about critical issues in the deal, were you need clarity. Scammers tend to give conflicting information, just like criminals cripple under cross examination in a competent court of law.
Also be on the watch out for scammers who push too hard to close the deal early and demand quick advance payments. This is an artful check in that your mindset needs to be mature enough so as not to confuse an aggressive business approach to internet scam tendencies. Scammers love to throw huge special offers with very close deadlines, to push you into prompt buying and quick payments. Also notice how they maintain special offers 365 days a year.


·                Verify your suppliers contact details, in most cases on-line scammers  give false information, and use free email servers. On addresses, I have noticed that some of the contact physical addresses do not even exist. I also found one address being used by many web scammers with different company names. In this situation, Google search the address and see how many fake companies are using that same address. Please invest some time and check your diaries properly. You can whether the address belong to the supplier throgh whitepages

On contact telephones, scammers normally do not give a land line number, but instead, only the CEO's cell number. When given the land line, try calling it to check if it is working, and take the chance to verify some information given in your e-mail communications. Also do the same checks for the fax number.

For trade platform members, you nee to verify consistency of information given by supplier with their registration details on the B2B trade platform. Find out if the address and phone number on their trade platform profile match their business registration records. And find out if the company has other trade platform profiles using the same address, phone number, email, or bank account (these are signs that the company will change names whenever they are discovered as a fraud)
Although email address are usually factual, most of internet scammers email addresses comes from free mail server or e.g. xyz@mailzim.cc, surely this is a scam. Even dotcom address, like yahoo, Gmail, hotmail etc can be used for scam activities. The better and more reliable email address are company email address, like info@xyz.co.uk say for companies in the UK, etc.

·                For those registered on international business to business(B2B) trade platforms, you must remember that on-line scammers are very professional. They qualify for Gold card membership as well, and keep changing websites and company names, but essential maintain their operational scam routine. So keep away from newly registered gold suppliers with less than one year, those sites normally belong to scammers although a few genuine ones exist. It is better to deal with reputable trade business with experience and have been registered on the platform for quiet a reasonable time.
·                Participate in trade forums, those discussing scam topics on your trade platform. You can give details of the supplier’s name and your communication so far and ask for professional advice. These forums are very helpful as you can get advise from seasoned professionals and some full time scam experts working on these forums. They can also provide you websites that gives a listing of scam companies or suppliers that have been reported in your line of business like fraud watchers etc.

Surely you must be asking yourself; to what extent do these tips cover me against scam. If a supplier passes all these tests, does it safely mean that they are not a scam? The final decision is yours, use your own business conscience, and do further research on checking e-business scam in your specific industry.
All industry generic guides like this is meant to point out essential issues that can improve significantly the quality of decisions you will make. This guide will surely screen almost all, but not all scammers. As I have said before, you should always remember that most scammers are a step ahead of you. They probably read this guide and other scam check publications before you did. 
However, they is always a way to catch these smart scammers, its either you will catch them off guard in one or two issues provided in this guide (and you must take it serious), or in doing your specific industry scam tests.

The blog is meant to address internet scams in general; therefore, if you have any questions, for your specific industry case, you can post your comment on this blog. An attendant will surely reply your question within 24hrs. Make sure you mention the trade platform you are registered (e.g Alibaba, Tradekey), if any and give sufficient information regarding your case, in order for the attendant to thoroughly review your case. This service is available for free.
Related Reading

I seriously recommend that you do further research on this topic. You are free to post your comments and suggestions directly to this blog on, constructive criticism is always welcome. 
Thank you for taking your time to read this guide and, may God bless your endeavours.

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