E-Commerce Fraud and Scams Study - and Alibaba's Advice

Alibaba.com fraud preventio

Cross-posted from Alibaba Fair Play Fund Facts:

Found an interesting survey today in Financial Fraud Law blog about e-commerce fraud and scams.  The bad news is that it is going up.  They make four main points as to why it is on the increase:

1. "Stolen Data" – one of the recent major data breaches included credit card numbers, and the fraudsters are using the data compromised email accounts is being used by the criminals to target consumers with really good phishing emails, referred to as spear phishing. The fraudster knows the consumer conducts business with a specific company. 
2. The "Spear Phishing" – a major recent data breach that fraudster creates a targeted email from the company who conducts business with the consumer, and is able to collect enough information to compromise the consumer.
3. "Malware" – malware has spread and become more vicious. While the malware is more vicious, an impact on eCommerce has yet to be determined; although it may come in the future. Additionally, according to data on the APWG's website, malware for the past 12 months in the U.S. was 35.85 percent, and in the past 90 days was reported to be 25.48 percent. Based on these numbers, malware attacks are actually down according to the website.
4. "Fake eCommerce Donation Sites" – After researching this theory, it is believed the increase in fraud attacks is tied to fake donation sites that took advantage of the earthquakes and Tsunami in Japan. This belief is supported because the fraudsters have the exact information on the data elements for making purchases, and the accuracy rate is very good. Therefore, it is most likely the data is being collected from fraudulent sites that took donations from the devastating earthquakes and Tsunami in Japan. It is believed the fraudsters used social networks to promote the donation sites to expand their reach farther and faster than has been viewed in previous years.

What do these have in common with the topic of this site, Alibaba.com's attempts to help customers avoid fraud?  A lot.
Prevention is the key to making sure that you can avoid becoming the victim of an online scam.  Alibaba.com has posted a series of tips to help avoid being ripped off and Tip #7 on the Fraud Case Studies page is "Fraud Case Study 7 - Remain Vigilant!"

1. It is an advanced fraud trick; the fraudster will use the psychology of the supplier to conduct fraud activities. He will place small orders first and transfer payment quickly to convince the supplier he is a good partner. Then he will place a large order and set a trap for supplier. Based on the good cooperation of previous business, the supplier will fall into the trap easily.
2. Always follow normal foreign trade processes when doing business with your partner.

Hope this helps.  Stay vigilant!

Fraud Case Study from Alibaba: How to Avoid Scams and Rip-Offs

Avoid Fraud on Alibaba.com!

It seems like a firm grasp of the obvious, but there are something like 56 million people who use Alibaba.com.  Even if one tenth of one percent of those people (which would be better than the general population, BTW) are dishonest and want to scam you, preventing the fraud is the best way to go.

I spend a lot of time on Alibaba.com, trolling the site, and found one of their case studies on how to avoid the trap of getting ripped off.  Info is below.

Fraud Case Study 1 - Gold Supplier Identity Theft

Case Description:

One of our buyers sent an email to Alibaba service team. It said: "I have received a quotation in my email; the sender said his company was a Gold Supplier. I knew Gold Supplier members are verified, so it gave me confidence in this transaction and I paid 30% deposit to buy the Ipods he provided. But after the payment, I didn't receive my Ipods, nor get any response from them. Their contact person, Tony Yang just seemed to ignore my emails.  Please help me contact this company to either get a refund of my payment or send the items I paid for."
After checking with the Gold Supplier member mentioned by this buyer, the Tony Yang in this case wasn't an employee of this company at all. The so-called "Tony Yang"  was a fraudster posing as a verified company’s representative to de-fraud innocent people on our website.

Be cautious of this type of fraud.  

To avoid a similar situation, please adhere to the following advice:

1. Make your own investigation before dealing with your potential partner. Use the company name they provided to search Alibaba.com to find the company's website.
2. Compare the products listed on the company website. If they are in entirely different categories, for example; the company usually sells shoes but the offer you received is an Ipod, it might be a signal of fraud.
3. Contact the company on Alibaba directly and confirm with them whether the person contacting you is really from their company or not. 
4. Or you can send email to the Alibaba service team; they will help you verify the contact person. 

Alibaba Gold Supplier Scam? Get Smart!

Found this trolling Alibaba.com.  Again, if those of you who do import/export online or are interested in services like Alibaba or eBay, each service has a special level of seller.  But just like other forms of identity theft, there can be Alibaba Gold Supplier Identity Theft.

Here's what I found on their site.

Be Cautious of Gold Supplier Identity Theft

Case Description:

One of our buyers sent an email to Alibaba service team. It said: "I have received a quotation in my email; the sender said his company was a Gold Supplier. I knew Gold Supplier members are verified, so it gave me confidence in this transaction and I paid 30% deposit to buy the Ipods he provided. But after the payment, I didn't receive my Ipods, nor get any response from them. Their contact person, Tony Yang just seemed to ignore my emails.  Please help me contact this company to either get a refund of my payment or send the items I paid for."

After checking with the Gold Supplier member mentioned by this buyer, the Tony Yang in this case wasn't an employee of this company at all. The so-called "Tony Yang"  was a fraudster posing as a verified company’s representative to de-fraud innocent people on our website.

Be cautious of this type of fraud.  

To avoid a similar situation, please adhere to the following advice:

1. Make your own investigation before dealing with your potential partner. Use the company name they provided to search Alibaba.com to find the company's website.

2. Compare the products listed on the company website. If they are in entirely different categories, for example; the company usually sells shoes but the offer you received is an Ipod, it might be a signal of fraud.

3. Contact the company on Alibaba directly and confirm with them whether the person contacting you is really from their company or not. 

4. Or you can send email to the Alibaba service team; they will help you verify the contact person. 

Who Gets Blacklisted on Alibaba.com

There are scammers everywhere you buy and sell things online.  There is fraud everywhere, if you use eBay, Craig's List of Alibaba.com

Here's some interesting info on how members get blacklisted on Alibaba.com who don't meet their trust and security standards are banned from the marketplace.  I have taken excerpts from Our Blacklisting Policy: Members who don't meet our trust and security standards will be banned from our marketplace

Alibaba.com is committed to fighting unfair practices such as fraud and intellectual property infringement on our marketplace in order to provide a safe and reputable trading environment for our users. We take issues such as trust and safety very seriously, and have strict policies in place to deal with unfair trade practices.

In response to intellectual property infringement and fraudulent conduct complaints submitted in accordance with our take-down policy, we take down thousands of product listings each year. In addition, we blacklist suppliers that continue to be subject to substantiated take-down notices and fail to live up to the expectations of our member community. We remove all listings of blacklisted companies, terminate their memberships and ban them from our marketplace permanently.

Of the millions of suppliers on our website, only a tiny proportion has been involved in unfair trade practices. Please be assured that the vast majority of our suppliers' online storefronts are used by honest, hard-working entrepreneurs and small businesses to promote their products and services.

Who gets blacklisted?

Alibaba.com members that are the subject of substantiated complaints involving unfair or fraudulent trade practices are considered for the blacklist. We have a dedicated Trust and Security team that works with buyers and suppliers to review and handle these complaints. We blacklist companies based on various factors including the nature, severity, number and frequency of complaints.

Send us your feedback

We welcome reports on unfair or fraudulent trade practices from anyone, and if we become aware that a member is using Alibaba.com in an illegal manner or in a way which violates our Terms of Use, we take prompt action to ensure those activities are stopped. Please send any comments or complaints you may have to our Customer Service team.

Online market for medicines growing

Saw this the other day on China Daily and thought it was pretty interesting. While ordering from online pharmacies has become somewhat commonplace in the U.S. (and remember the whole problem with people in the U.S. ordering drugs from Canada), it's a whole new ball of wax in China.

The whole article is here, but a good quote is:

With the rapid development of the Internet and the consequent changes in lifestyles and shopping habits, Chinese pharmacies are now further tapping into the online business-to-consumer (B2C) sector to raise profits.

ForMe Drugstore, the largest chain drugstore in Shanghai, saw a sharp daily increase of orders from online selling in just two weeks after it entered the Taobao Mall, or tmall.com, a B2C trading platform run by the country's largest online retail website, Taobao, in late June.

Don't Get Scammed on Alibaba.com - Get Smart: Fake Verified Gold Supplier

How can you avoid getting scammed or being a victim of fraud amongst the millions of Alibaba.com buyers?  I can't say it well enough myself, so here is the "Alibaba.com Safety and Security Center" page:


Fake Verified Gold Supplier

Case Study:

I received an email from a supplier called Mike from a company named Happy Electronics Co. He told me he could supply PS3 at a low price. I searched on Alibaba.com and found he was a Gold Supplier, so I was confident about this transaction. I placed an order for 10 pieces of PS3.

After payment, I lost contact with him and didn’t receive any goods. I reported Happy Electronics Co. to the Alibaba.com Service Team. After an investigation, they told me that the person I contacted is not really an employee of Happy Electronics Co.; in fact, he is a scammer posing as a representative of the company. Below is the email I received:

Case Analysis:This is a case of Gold Supplier identity theft. Scammers will pretend to be representatives of legitimate companies with the intent of cheating unsuspecting buyers. Please be aware that you should always:

How do you spot fraud on e-commerce sites like eBay and Alibaba.com? They tell you! So don't get scammed; do your homework first.

Here's content from the Alibaba Safety and Security Center. Pretty helpful stuff:

1. Ask the suppliers to provide you with their Company Website on Alibaba.com. You can also use the company name that they provide to do a simple search online. Once found, compare the contact info that they provide with the information published online. If it’s different, please be very cautious. You can also use TradeManager to contact companies listed on Alibaba.com. Ask them to verify that the person you are in contact with is actually their representative.

2. Be extra cautious if the price quoted is extremely low (50% lower or more than the market price). For instance, the quotation in the case above seems very good: one PS3 costs only US$188 per piece and you get an extra one free if you buy 5 pieces. This deal sounds too good to be true because it is.

3. Use Alipay as your preferred payment method when you want to buy from Chinese Gold Suppliers. Alipay is safe because your money will only be released to the supplier after you confirm satisfactory delivery. If disputes arise, Alibaba.com will help mediate. Learn more about Alipay. Western Union and other direct payment methods are risky, especially for your first transaction with a supplier.

4. Email the Alibaba.com Service Team for help verifying suppliers found on Alibaba.com

List of Banned Members (Scammers?) on Alibaba.com

Everyone,

Admitted Alibaba fan boy.  I spend a lot of time on the site.  You can use the Alibaba.com Fair Play Fund to help get money back, but why not look at the list of scammers to begin with so you don't even get into trouble?

Here's what Alibaba has to say:

The below companies have been removed from Alibaba due to suspected fraudulent activities reported by our members. Alibaba is always contributing to a trustworthy and safe business platform. Due to our constant efforts and the help of our members, suspected fraudulent activities are closely monitored and dealt with.  

 However, we advise you to Online Security Department of Alibaba.com immediately if you encounter any suspected fraudulent activity on Alibaba. Our service team will follow up accordingly in order to avoid repeat offences. 

Here's the latest: Banned Paid Members on Alibaba.com.

peace.