Scams By Alibaba Suppliers // 12+ Acams When Sourcing Amazon FBA Products
Navigating Alibaba's bustling digital marketplace can be likened to exploring a vast ocean filled with treasure and treacherous waters. As a leading global trading platform, Alibaba connects millions of buyers and suppliers, offering many opportunities for businesses worldwide. However, amidst these opportunities lurk the shadows of deception—supplier scams. In this post, we'll shine a light on the darker side of Alibaba, exploring the various scams that unscrupulous suppliers may employ to dupe unsuspecting buyers.
From counterfeit products and quality misrepresentations to phantom suppliers and fraudulent transactions, the range of scams on Alibaba is as diverse as the marketplace. This reality poses significant challenges and risks for businesses seeking reliable partnerships and quality products. We aim to arm you with knowledge and strategies to identify and avoid these deceptive practices, ensuring your Alibaba experience is profitable and secure.
Whether you're a seasoned buyer familiar with the platform or a newcomer taking your first steps in global sourcing, understanding and navigating the potential pitfalls is crucial. Join us as we delve into real-world examples, red flags to watch for, and expert tips on conducting safe and successful transactions on Alibaba. Your journey into international trade should be filled with rewarding discoveries, not costly mistakes. Let's embark on this essential guide to safeguarding your business against supplier scams on Alibaba.
The Most Common Alibaba Scams
If you are looking for products on Alibaba or one of its 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 you know the most common ones. We also have a more in-depth guide on how to spot scams and verify suppliers.
1) Changing the payment recipient at the last minute
This is one of the most common and 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 lies about who they are, they often pass a basic test when searching for the factory’s 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 not budge if they change it later.
2) Only accepting payment through Western Union or T/T
Under no circumstances should you make a wire transfer to a supplier. Western Union leaves almost no paper trail, the most common way scammers accept payments. PayPal and most other payment services diligently look 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?
3) Counterfeit products
If you are an FBA seller, you should never buy counterfeit brand name products and never work with a factory that sells counterfeit products; if they are willing to ignore copyrights, 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 goods are widespread when sourcing and selling, so you may be tempted, but do not do it. Cosmo Sourcing refuses to work with counterfeit goods and will ensure you have complete design rights before working with you.
4) Poor quality products and products less than your standards
Unfortunately, Asian culture (notably 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 are very common. If you want to ensure 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.
5) Chabuduo, the art of Corner Cutting
‘Chabuduo’ is a Chinese word that roughly translates as “close enough,” The concept is all too prevalent in Chinese manufacturing. When you source products, you must be highly vigilant, ensure that the product isn’t made cheaper than expected, and cut corners. Commonly, suppliers only do what is necessary, not one bit more, to make your product. There are many ways this concept manifests 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 what they should be.
6) Products not matching the samples
Sometimes, the final product does not match the sample. This might occur for a few reasons: sometimes, a different process was used (such as hand stitching for the sample and mass machine stitching in the final product), or worse, simply buying the sample from the store. The 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.
7) Payment info that does not match the factory
If they are a legitimate factory or supplier, they will always have a legitimate bank account. They will almost certainly use four central banks in China: the Industrial and Commercial Bank of China (aka ICBC), the China Construction Bank, the Agricultural Bank of China, and the Bank of China. The account name should match the business name. There are cases where they will have a Hong Kong office and manufacturing facility on the mainland if they give you an HK company to pay to be diligent and double-check everything.
8) 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. Make sure you are paying into an account 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.
9) Selling products that do not exist or they do not have access to
Many fake suppliers will create an entire storefront of the products that you are looking for. The catch? The supplier does not have the product and is 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.
10) Refusing to send Samples
This scam is annoyingly familiar. Before you place a full order, you should ALWAYS get samples shipped. Any company capable of making your product will be able and willing to send you a sample. If they insist they cannot send a sample and must place an entire order, you should cease contact with them and move on to another supplier.
11) Asking for additional payments for customs clearance
This isn’t a deal-breaker but a way for a supplier to make a quick buck off you. Including the customs clearance cost in your price would be best. When negotiating your product’s price, you must clarify the shipping terms and know which party (between the seller and you, the buyer) is responsible. Shipping is a complicated topic, so we wrote an in-depth guide!
12) Unverified profile on Alibaba
Alibaba has a supplier verification system that checks to ensure they have proper business licenses, bank accounts, and a dedicated contact person. In truth, it’s pretty easy to get verified on Alibaba. If they are not verified that it is a huge red flag, they cannot even complete a basic check from Alibaba. So when searching for factories, make sure that you select Gold Suppliers and Suppliers with Trade Assurance. This won’t protect you from fraud but will help a little.
How to protect yourself from Scams when Sourcing
Unfortunately, most “suppliers” you talk to on Alibaba and other sourcing websites fall into scammers. Fortunately for you, this guide covers figuring out and weeding these people. 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, see our in-depth guide covering techniques to protect yourself from fraudsters and scammers.
Cosmo Sourcing // Go Straight To The Source!
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If you start a new business, 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 from Fortune 500 companies, brick-and-mortar stores, FBA sellers, and brand-new businesses. So don’t hesitate to contact us and let us know how we can help you.