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