10 Signs of Online Fraud on Alibaba.com

As someone who spends WAY too much time on Alibaba.com, I can be the first person to tell you that it can be hard to find the information you are looking for to protect yourself from scams and fraud.  The information you may need is sort of all over the place.

So when I find something that I think is worth sharing, I'll post it here.

Today's entry is from one of the forums and the title speak for itself.  A good buyer on Alibaba is someone who is a good businessperson, but also someone with a well-honed B.S. detector.  And advice like this can help.  The English is not perfect, but you can get the meaning.

Top Ten Signs of Online Fraud on Alibaba.com

1. Too much marketing terms Home business opportunity: No experience required. No work involved. Earn $2000 in one week! It’s easy to spot these kinds of scams because they’re full of too good to be true promises. And, exclamation points, too. What job will earn you that much money in a week without having to have experience and NOT having to work at all? None. Nada. Zilch!

 2. Too friendly email I mean the intro part of the email. If an email from someone you don’t know starts with “Hello my friend”, “Dear friend”, and they weren’t filtered by your spam box, consider these emails not so trustworthy. This method of scamming is known as phishing or fishing for details or information that will put your financial security in danger.

 3. Money Matters It promises that you can make money online. But you have to pay that upfront, one-time fee first for some training materials. Shady!

 4. Assembled Jobs If a home based business opportunity requires you to assemble furniture or stuff envelops, these are generic but often overlooked signs of a true blue scam.

 5. Country Representative Job Offer Coupled with sign no. 2, if an email offers you a job as a payment receiver requiring you to deposit a check on their behalf or anything similar to that job description, you’re doomed if you reply.

 6. Job Offer that Requires Your Picture to Get Hired Unless you are applying as a model, which is not a form of online money making venture, someone who’s looking for, say, a virtual assistant and asks that she sends a picture is offering something suspicious. Lots of free job listing sites have these types of job posts. Be very, very careful.

 7. Employer has no online presence. If you are trying to win an online job but when you researched about the online presence of your would-be employer and there’s no trace of his name or his company, ask your employer about his company or his business first.

 8. Presence of Pressure Tactics. If the online business opportunity tells you that you will get a chance to win a anti-scam book if you sign up now or you can avail of an early bird discount, walk! Unless they’re coaching or consultancy services which are not direct ways to earn money online, you should not be subjected to these kinds of pressuring if the opportunity will really make you money.

 9. Request from Employer or Sponsor that You Keep the Offer a Secret Coupled with scam sign no. 2 and 5, if the email sender asks you to keep your transactions confidential just for any reason at all, red flag, red flag, red flag! They don’t want you to inform others that you are about to get scammed, of course.

 10. Emails from Someone in Nigeria Although many Nigerians who use Internet scamming as past time, have already figured out that lots of Westerners already know that they should not trust any email from someone in Nigeria, there are still those who are gullible enough to fall for these frauds. Educate your friends and family who love to use the Internet. They can still be too busy checking their emails or MySpace pages to know these signs.

Another Case Study on How to Avoid Alibaba.com Scams

Alibaba.com is a massive site, and to be honest, somewhat poorly organized when it comes to searching for information on how to prepare yourself:  to buy items while avoiding scams and fraud.

So from time to time, I'll sift through the site and pull out what I hope are some helpful nuggets of information that help you become a smarter buyer - or supplier - on the site and not have to use mediation, or at the end of the line, the Alibaba Fair Play Fund.

So here's another case study from Alibaba.com:

Description: 

Case study on how to avoid scams on Alibaba.com

This company cheated me out of $2000 USD. Our terms were $200 USD for shipping, $1000 USD once the tracking info was verified and the balance of $1460 USD paid once the package was received. This guy said that he was going to use a local courier. He gave the website and tracking number for checking. When it showed "package now on hold in London", I sent $1000 USD as per the agreement. After that the company demanded the balance right away. He said his superiors wanted payment in full due to something about an audit and not being allowed to give credit to people from the USA.   He said I needed to send at least $800 more and he'd take care of the rest.  So I scraped up $800 more and sent it.  Then he came with a new excuse.  Something about a death in the family and if I wanted my package I needed to go ahead and pay the last $660!  So basically, he's made up some fake business and website and is using it to con people into believing that there package is on the way.  Then he puts the package "on hold" and says "if you want your package, I'm going to need more money". 

Analysis:

• Avoiding use unknown shipping websites. It is a risky to allow unknown shipping websites to deliver your products. Before you accept this delivery method, do your own due diligence, including searching the shipping website on search engines to see what others have to say. Or you can go to http://www.whois.com/ to search for registered information of this website. Be wary if the domain of this website was created less than three months ago. 

• When your supplier is making excuses about the delivery (or lack thereof) of products and asking for additional payment, it is generally a trick. 

• Search the company name on the forum or search engine to find something useful to you. Or you can contact Alibaba's service team.

Avoid Scams: Check Out Alibaba.com Blacklisted Suppliers

This is a truncated version of a longer post on my other blog:

Part of any good preparation for buying and then reselling items from an e-commerce platform is research, research, research.  You really need to do your homework before you dive in.  In my past post, I addressed some tips of how to get started (the positive), but it’s also important to know about the bad guys (the negative).  In addition to providing access to the Alibaba Fair Play Fund if you are defrauded, Alibaba.com provides an explanation of their blacklisting policy on their Web site.  

Oh – and note to Alibaba.com – it’s helpful to provide a link to the most current list of blacklisted suppliers on the site.  I found it here.

And remember:  DO YOUR HOMEWORK so you can avoid scams, fraud and never, ever have to get compensation for a loss on Alibaba.com.

Video: Alibaba Explains Fair Play Fund, Scams and Fraud

This is cross-posted from my other blog, but if you want to understand how to buy and sell safely on Alibaba.com, take the time to watch this video.

Alizila Editor Jim Erickson interviews Alibaba.com's Global Marketing Director Linda Kozlowski explains the company's Alibaba Fair Play Fund, a program that partially compensates users who lose money due to online fraud and scams. This is EXACTLY the sort of information that people need to have to verify suppliers, avoid fraud and scams, and if not, get compensated. The video is eight minutes, but if you buy or sell on Alibaba.com, this is worth every second.


 

Another Way for Alibaba to Avoid Scams: Inspection Service

This is cross-posted from my other blog.

I followed Alifest pretty closely over the weekend.  I've mentioned it here before, but it's the company's annual Internet conference at its Hangzhou, China, campus.  And by the way, if you like cool architecture, check out Bloomberg's video tour of the Hangzhou campus. I can't imagine how it is possible with millions of members, but during Alifest, the Alibaba Group announced "...an ambitious program calling for on-site inspections of all Chinese manufacturers and distributors selling through Alibaba.com's international website to ensure they are legitimate. "We're taking the existing authentication and verification process, and we're adding another layer to it," said Linda Kozlowski, Alibaba.com's director of global marketing and customer experience.." What is the Order Inspection Service? Well, always one to get forgiveness before permission, I have posted an article from Alizila that describes the program.  I don't know how they are going to pull it off, but it will go a long way towards helping users avoid fraud and scams - and not have to use the Alibaba Fair Play Fund.

Alibaba launches order inspection service

Quality assurance is a big issue for any overseas company that buys from Chinese manufacturers. Based on personal experience as a quality inspector, Renaud Anjoran, a blogger at QualityInspection.org, estimates that about 20% of all goods manufactured in China are "seriously inadequate." The problem is even worse for buyers that place small orders. "With a small order, factories are more likely to cut corners," Anjoran said. "If they piss a customer off, it's not a lot of money to them. So you have to be very flexible if you order a small quantity in China. You don't have a lot of weight to negotiate with the buyer." 

The antidote for buyers large and small has been to hire on-the-ground inspectors to ensure goods are up to snuff before they are loaded into containers for overseas delivery. The problem for small buyers is cost and quality of service. "Local inspection firms' prices are all over the place," Anjoran said. "And their service and reliability are sometimes terrible."  

Enter Alibaba.com's newly launched Inspection Service, which is now in beta on the site. It's an online solution designed by the B2B e-commerce company to match small buyers with affordable and reliable inspection services. Alibaba hand-picked 20 China-based inspection companies, most of them based in the Pearl River Delta, China's manufacturing hub, to participate. "We vetted them by checking how many orders they handle per year, how many years they've been in the business and their experience dealing with foreigners," said Irina Gee, who runs the service for Alibaba.com. 

The companies are charging between $150 to $250 a day to carry out product inspections prior to shipping from the factories. Inspection Service is among a number of new measures Alibaba has introduced in the past 18 months to improve the experiences of small buyers using Alibaba.com and to curtail online fraud. All participating inspection companies are required to demonstrate their good faith by putting up a deposit which may be forfeited to buyers in the event of a dispute. 

Inspection complaints are handled by Alibaba's dispute-resolution team, which has the authority to pay up to $3,120 in compensation in the event of a faulty inspection. Alibaba also holds the buyers' payments for inspection services in an escrow account until they agree to release funds to the inspectors. Even with safety checks such as escrow, there's no guarantee that problems won't arise. Buyers and sellers do not always agree that the original product specifications have been met. 

"The spec of the product is very, very important," Anjoran said. "Sometimes buyers aren't very good at describing what they want." While no software can overcome that hurdle, Inspection Service includes a one-stop online communication system to improve transparency and make it easier to manage transactions. Buyers use this system to select inspectors and upload their requirements. Inspectors use the same system to upload their reports. Buyers then use the site to release funds to the inspectors. 

Memomark Inspection Services in Guangzhou was one of the first inspection companies selected for the new program. The company has eight full-time employees and caters to small and medium-sized buyers in Europe and North America. Jim Huang, the company's owner says he's already seen an uptick in business since the platform launched. He's landed two new clients and is negotiating with several others. Inspection Service currently covers only shipments from China, although Alibaba officials say they hope to expand to other countries in the future.

What's New With Alibaba: Steps to Continue Fighting Fraud and Scams

As I mentioned earlier in the week, last weekend was Alifest, the company's annual Internet conference at its Hangzhou, China, campus. By the way, I have a good video with an architect taking people through the amazing buildings on the Alibaba campus. It's amazing.

One of the more interesting articles I have read on Alizila mentioned Alibaba's ongoing efforts to fight fraud and scams - no easy taks considering that the site has more than 50 million users!

This is the article that appeared on Alizila:

Alibaba.com Unveils New Services, Programs For Safer Trading 

Alibaba.com introduces new steps to help combat fraud and scams

Alibaba.com today announced new initiatives and products designed to make the international business-to-business website safer and more valuable to small and medium-sized businesses that use the site to source products. Among the new programs announced at Alifest, the company's annual Internet conference at its Hangzhou, China, campus, is an ambitious program calling for on-site inspections of all Chinese manufacturers and distributors selling through Alibaba.com's international website to ensure they are legitimate. 

"We're taking the existing authentication and verification process, and we're adding another layer to it," said Linda Kozlowski, Alibaba.com's director of global marketing and customer experience. Next month, Alibaba.com employees will begin visiting some 112,000 of the e-commerce platform's paid China Gold Suppliers in person to physically confirm that the factories exist and conform with members' registration documents, a process that is expected to take up to a year, Kozlowski said. A third-party inspection service will also conduct random, unannounced checks on an ongoing basis to make sure the manufacturers remain compliant. 

Kozlowski said a recent increase in membership fees will cover the cost of the labor and time-intensive inspections. The company also announced an expanded escrow program; an online sourcing concierge service called Custom Sourcing; and elaborated on its new Inspection Service, an online solution that allows overseas buyers to hire inspectors in China to verify that goods ordered are shipped as promised. The announcements are part of a continuing campaign to combat fraud committed by Chinese sellers operating on Alibaba.com who were taking money from overseas buyers for a wide range of products without delivering any merchandise. The illegal activity came to a head in February when Alibaba.com CEO David Wei and COO Elvis Lee resigned in connection with an organized group of scammers that was discovered operating on the site, sometimes with the help of Alibaba employees. The executives were not involved but voluntarily stepped down to take responsibility for not being more aggressive in responding to fraud. 

About 100 of the website's workers were fired after the incident, and thousands of fraudulent sellers have been removed from the site. Alibaba.com has since taken many other steps to restore its reputation. Company officials said the measures appear to be getting results. According to Kozlowski, the monthly number of fraud complaints received by the website have fallen 77 percent since February. Customers have apparently not been deterred. Alibaba.com saw an 86 percent increase in monthly unique page views between July 2010 and June 2011. Another indication that the company’s campaign to clean house has been effective is that payouts from a special fund set up to compensate fraud victims have fallen 81% since the restitution program was introduced in March of 2010. When the company first created its Fair Play Fund to reimburse victims of fraud, the average monthly payout totaled $164,889. The most recent monthly payout totaled $32,049. "We're very happy with our progress," Kozlowski said.

Alibaba.com Chairman Jack Ma Addresses Fraud Issue

Interesting weekend out of China.

Alibaba held its annual "Alifest," to recognize and reward businesses who capture the imagination of customers around the world through e-Business."

The highlight of the weekend was a speech by Chairman Jack Ma, who recognized that the company had faced it share of scandals and claims of scams and fraud.  Loretta Chao, writing in the Wall Street Journal on September 11, noted:

Alibaba Group Chairman Jack Ma

Alibaba Group Holding Inc. hopes its efforts to repair its reputation among customers following a fraud scandal will also burnish its reputation with U.S. consumers, as it increasingly moves into territory claimed by rival eBay Inc.

China's dominant e-commerce company by transaction volume unveiled a number of moves Friday at its annual Alifest gathering for members that include a new on-site inspection program and escrow service.

Alibaba has been working to shore up its reputation following a scandal involving employees at Alibaba.com Ltd., its Hong Kong-listed online-trade unit. According to Alibaba.com, about 100 of its employees colluded with more than 2,300 sellers to create fraudulent listings in a scam that led to the resignation of Alibaba.com Chief Executive David Wei in February. Mr. Wei wasn't directly involved in the scandal, the company has said.

It's be interesting to see how this plays out in the weeks and months ahead.

Avoid the "Contract Trap" Scam on Alibaba.com

As I have stated in the past, much of the best information about how to avoid fraud and NOT have to use the Alibaba Fair Play Fund is to do your homework.  Prepare yourself in advance.

While it's a big Web site and info is hard to find, I have pulled out another case study from Alibaba.com that describes ways to avoid scams and fraud.  This one is called the "Contract Trap."

Have a read:

The Contract trap

Case description:

This company offered us a government project for the supply of wooden furniture to a Togo government agency. I even went to Togo to meet the principal and the people from this government department.

We had been tricked into paying the sum of USD 30.000 plus other expenses to the value of almost USD 40,000. The money our company paid was supposed to pay for the bidding/lawyer fee and legal fee for the contract.

They said they would pay us the money for the furniture immediately after the legal process, but to date, they have not dispatched the money for the said contract.

Analysis of this case:

1. Any unsolicited business proposal, especially large high-profit government projects from African countries should be carefully scrutinized. Most of them are too good to be true. Check with your embassy in that country if there is really such a government agency. Or consult with your bank, an attorney, or the police about the contract.

2. The con artists will always tell some stories to you, such as you need to register in some business agency to export your products to their country or something else. In this case, they asked for a bidding fee, a lawyer fee and legal fee for this contract. It is necessary to understand whether or not this is a normal process for a business contract in that country.  

3. In such a fraud case, you are not dealing with one scammer; you are fighting with a group of scammers. Someone will pretend to be an attorney and guide you to their trap step by step. Someone will pretend to be a government official and give you confidence in this contract. They are a professional scammer group instead of an individual scammer.

4. Search the company name or government agency via a search engine to find some useful information for your business

Steps Avoid Being Defrauded on Alibaba.com: Case Study

Let's face it. Alibaba.com is ONE BIG, HONKIN' web site. There are thousands of pages of information and sometimes, even on the best Web sites, it's hard to find the information you need. So on this blog, from time to time, I'll pull out items of interest on Alibaba.com that are related to avoiding scams and fraud and if you re unfortunate enough to get ripped-off, take advantage of the Alibaba Fair Play Fund. Here's the latest in a group of case studies:

Case Description:

Avoid Alibaba.com Scams

I was contacted by two people from a company in Henan . They offered me a big purchase order and invited us for a face-to-face meeting to sign the sales contract. We met in in January, 2008.  From the first day, they asked me to pay high bills for KTV (Karaoke bars) and expensive gifts after contract signed.  However, they never paid their deposit; they delayed time; and asked for even more expensive presents. When we pressured them for a deposit payment, they ran away. There were a group of people who took part in this fraud scheme. They pretended to be the company president, financing manager, accounting manager, marketing manager and banker. However, they all ran away when were asked to take their pictures. Some people only use the Internet to attract victims to their city so they can prey on them. 

Case Analysis:

1. Serious buyers usually don’t place large orders the first time. Generally speaking, they will work with order from suppliers several times in order to build a mutually trustworthy relationship first; and also to make sure the supplier continuously has the capability and capacity to produce quality products.

2.  Scammers will send professional looking inquiries asking for product details, such as specifications, price, etc. This is only the first step of their plan to defraud you and is only designed to make initial contact with their victims. During the next step of their plan to defraud victims, they offer a big purchase order and invite victims to fly to their country to sign a sales contract and discuss business in detail. However, in their country, they will find an excuse to make you pay expenses, such as expensive gifts, dinner, or other entertainment expenses according to their “local tradition.” In reality, scammers receive financial rewards from restaurants when they order expensive items, such as wines or cigarettes.

3. If you encounter this situation, refuse their requests and leave them as soon as possible. You should also move to another hotel to avoid any possible threat to your property and security.

4. It is always essential to check the background information of your potential business partners. This can be done by searching the Internet or on Alibaba.com's forum. Conducting your own due diligence to avoid Internet Fraud is always important. Here are some tips to help verify a potential trade partner:

• Ask detailed and direct questions. Genuine buyers will have the patience to   wait  for your reply, and will be knowledgeable about the product you are selling;

• Check their phone and fax numbers are correct; 

• Ask for their business address as well as their email address;   

• Check their website URL and their Host Registration; 

• Check with the Business Registrar in their country to confirm their business is real; 

• Check out their business profile and activity; 

• Contact the Chamber of Commerce, or the Embassy of the country and ask for the Commercial Department. Check out if this company is real, the Director's name and the name of the Purchaser or Procurement Officer and their phone number

Avoid Scams and Fraud: Be cautious of business impostors

Many nuggets of good advice on how to avoid scams and fraud on Alibaba.com are on their site, but on a location with probably thousands of pages, it easy to overlook the information that the folks at Alibaba.com have posted. So since I spend a lot of time on the site, from time to time, I like to pull out pieces of information from those who see the fraud and scams regularly and point people to the Alibaba Fair Play Fund. Here's a case study in what might happen in a rip-off and what to do about it. Happy reading:

From Alibaba.com:  Avoid Scams and Fraud

I received a call from a man saying they have agents around the world and have seen our company on Alibaba. He said that we have the kind of products their customers are looking for. They sent me all the information about their business by fax and asked for 7% commission for their services. They then sent me a letter by mail with a printed letterhead containing the same info asking me to send a free sample and a deposit of about £790 to them so that they could show it to their big customers. I paid a UK bank to do a background check of this company. The bank report indicated that the company was legitimate. I also searched the internet for information and found nothing suspicious. I felt safe, so I sent a total of £1000 (deposit and sample costs) to them by T/T. They always claimed their customers were going to place a big order with us sooner or later; however, we still haven’t received an order and they can no longer be contacted.

Case Analysis: 1) Beware of scammers who use the name of a real company to conduct fraud on the Internet. Scammers will pretend to be an agent or branch of a real registered company to convince you that they are serious. Don’t blindly rely on a Bank report.

2) Check their background information using your own due diligence. Go to local government or state websites to locate this company and then compare it with their contact information. If the company’s registered contact information is different from the information they have provided you, be extremely cautious. It is always necessary for you to contact the real company for further verification. For verification of UK companies, the following government website can help to locate registered companies’ information: http://www.companieshouse.gov.uk//index.shtml

3) Never send payment upfront. In this case, it is strange that the supplier was requested to send payment before getting orders from the agent. Scammers know that suppliers are desperate to establish good and long-term relationships with big buyers. This allows them to make unreasonable requests, such as upfront payment. Please be vigilant if you encounter similar requests.