Scams in the Coronavirus era

At the beginning of the pandemic, we informed you about many cases of scam sales of masks, gloves, and other PPE products, run by Chinese companies. Unfortunately, we have noticed that Chinese scams are becoming more frequent when it comes to different types of products as well. An increasing number of importers find themselves dealing with untrustworthy suppliers, which is why it is so important to stay alert and thoroughly verify your potential contractor before making a deal. How not to fall victim to scams in the Coronavirus era?

Chinese scams in the Coronavirus era

We have previously informed you about the sudden surge of scam sales of masks and other PPE products. Because these products are in high demand, many untrustworthy suppliers started to appear on B2B platforms, such as Alibaba, who either never delivered the ordered products or sent them using falsified certificates, thus making them unsellable. Unfortunately, these are not the only Chinese scams that started to develop along with the pandemic.

Because of the pandemic’s escalation, we observed some behavior patterns of many Chinese scammers.

In the cases described below in the text, anyone could be a victim, not only the importers of PPE products. It is mainly because most Chinese scammers feel like they can get away with anything. Importers from all over the world produce their merchandise in China, and making transactions through websites such as Alibaba has become common practice. As they cannot travel to China, businesspeople do not visit their partners anymore, never see factories or perform quality checks, and often depend on nothing more than what they read on the Internet. Thus, many transactions are made without the contractor’s verification, and importers fall victim to the scams.

1. Prepayment extortion

Currently, the most common Chinese scam is the so-called prepayment extortion. In this practice, the importer sends the Chinese contractor an advance payment for, e.g. 30% or 50% of the total cost. Then, the Chinese company cuts off all communication without explanation. No traces of either the money or the product can be found. If the importer signed a no legally binding contract with the Chinese partner, it is impossible to get the money back.

Oftentimes, this scam is run by a non-existent or already closed company. Because of the Coronavirus downtime, many Chinese factories declared bankruptcy in the first half of the year. However, some are still active on the Internet, offering cheap products to businesspeople from all over the globe. Baited by the low price, the importer often chooses these “companies” and sends them money without checking who is really on the other side.

How to stay safe from such a practice? First of all, always verify the supplier before transferring money. It would be best if you were careful when the company requests full payment right away.

2. Different bank account number

Another popular scam is replacing the bank account number. Even an importer who has worked with the same company for an extended period could become a victim. In this practice, the scammers send out an email informing that the bank account number has been changed and asking for the payment to be made to the new account. Often importers who have worked with the company before do not check the message’s authenticity and send money to the swapped account. In reality, it does not belong to the importer’s Chinese partner but to the scammers. This method is used more frequently since the beginning of the pandemic.

How to stay safe from this practice? Other than verifying the company, confirm the bank account’s authenticity before sending the money. The best way is to confirm that the account has been changed together with the CEO’s signature and the company’s stamp. Moreover, the type of account should be checked. For example, many scammers have accounts in Hong Kong or Singapore rather than in continental China.

3. Low-quality Chinese products

We have already mentioned that it is nearly impossible to go to China to visit the factory and personally assess the product. Many business owners decide not to hire another company to do quality checks, thinking of it as a way of saving money. Suppose the products are not inspected during production or before shipping. In that case, cunning suppliers might feel like they can get away with sending out commodities that do not meet our standards. Instead of saving money, the importer might face additional costs or even lose the investment entirely if the product cannot be sold. Like in the case of prepayment extortion, without a contract under Chinese law, the importer cannot do anything after the product has arrived.

To avoid this, we recommend quality checks on different stages of production. During on-site product inspections in China, you can check whether the product meets your standards and spot possible defects before it is dispatched to the EU.

Additionally, make sure to verify all documentation, such as the ones concerning the CE mark. Unreliable Chinese suppliers repeatedly send falsified certificates, which is why ensuring they are authentic is crucial. If they are not, and the product does not meet European standards, it cannot be placed on the market.

Scams in the Coronavirus era – summary

Coronavirus is continuing its spread across the world, leading to the closing of borders, which only encourages scammers. We emphasize that verifying the Chinese company and all obtained documents, along with inspecting products, are the basis of a successful transaction with Chinese partners. We always discourage transferring money to China without knowing who is on the other side. Staying alert is even more important now when face-to-face interactions with Chinese partners are not an option.

Without a doubt, scams in the Coronavirus era happen not only in China but in other countries as well. All transactions should be made with caution. We also offer verification of companies from Malaysia, Thailand, India, Vietnam, Pakistan, Singapore, and many other Southeast Asian countries – feel free to contact us.