CHECK US BUT THE PRODUCT WILL BE GONE

02/08/2010

Scammers try to prevent the importer from checking them by stating that the offered product will be sold before the check is completed.

This technique is often used by con artists who pretend to be an overseas export company. To start their “business” the scammers are either answering the requests that importers have published on trading boards or act more proactively and send their offers directly to the prospective buyers.

Usually the offers are very attractive as the price for the product is much lower than the current market level. The “sellers” explain that it is a very unique opportunity for the buyer to purchase at this price. The explanations for such a low price can be many, for example, the firm has a license from the customs authorities in the country to sell the confiscated goods, the product was received by them very cheaply as a debt repayment or their partner’s company is filing for bankruptcy and selling the stocks, to name a few. The buyer must act very quickly as there are a lot of importers interested in this offer and the first company that signs the contract and transfers the prepayment will receive the product.

Needless to say, the payment term in the deal is partial or full prepayment only. The seller explains that they do not need to work with a letter of credit as the product can be easily sold for cash.

So the buyer needs to make a fast decision to send the money to the unknown supplier or not. We do not exclude the possibility that some companies will transfer the prepayment without any doubts. More cautious importers will try to collect more information about the seller and check the firm. They will ask the supplier to provide details about the company in order to perform the check, such as registration and VAT numbers, full company address, references etc.

Of course the scammers are not interested in being checked. They will try to push the buyer for a quick decision by any means. They will tell the importer that they can send the necessary information but the product will be definitely sold in a couple of days. Usually it takes 5-10 days to obtain a proper company report and the buyer understands that by the time he receives the information the product will be sold to another company and the money paid for the report will be spent for nothing.

Being under pressure and not willing to lose a profitable deal the buyer could make a fatal mistake and perform just a very general check of the supplier’s webpage and his advertisements on the internet. Trying to be the first to obtain the product the buyer can transfer the money to the scammers and will see neither the product nor the money. The fraudsters will simply collect prepayments from several companies and disappear with the money.

In this situation the buyers should pay attention to the very strong “red flag”: the seller is trying to finalise the deal as soon as possible and is pressing the buyer to transfer the payment. The buyers should be very careful when they see this type of behaviour.

We strongly recommend importers start with an inexpensive and fast “registration check” offered by our company. It normally takes one to two days to have a company checked. Then, of course, the simplest way to protect your prepayment is to ask the seller to provide an Advanced Payment Guarantee from his bank. If the exporter is not willing to do it, whatever the reasons are, our advice would be to stop any negotiations with this company and search for a new supplier.