Warning Signs of a Chinese Scam
Sound too good to be true? Then it probably is!
"Red Flags" with Your Chinese Buyer
- Unfamiliarity with your product's application
- Limited details or unwillingness to provide information on the project in which the materials will be applied or the end user
- Discrepancies on business cards that cannot be clarified
- Incomplete information on the purpose of the ‘fees’ outlined in the contract
- Inability to specifically explain the regulations or government entities that are allegedly imposing certain fees
- Offers to sell certain internal government information or sensitive commercial information
- Rented cell phones
- Location of office space in residential areas
- Less than one year of operation history with very young leadership
- Insistence on paying for a banquet in cash to the Chinese entity prior to concluding contract
- Cash requested for cost of hosting a banquet is far in excess of typical costs. [While banquets are a traditional business activity, the U.S. entity can arrange for a banquet through their hotel. While costs vary, a nice event for $10 at a local restaurant (non-western hotel) might run $200]
- Unusually large product volume or urgency to purchase
- Insistence that the contract is only legitimate if signed in China
- Requests for an invitation letter to visit the U.S. facility prior to any substantive communication about purchase terms or exchange of company background information
- Insistence upon attending a banquet prior to concluding a contract later in the evening[referring to getting the foreigner intoxicated in an effort to finalize contract terms more favorable to the Chinese buyer]
For more red flag indicators, click here
Protect Your Business!
- Request a copy of the business license, check validity of address and phone number, license validity date, name of registered representative, etc.
- Request a copy of the company's certificate of import/export authority
- Verify the company's international trade experience and avoid firms that have less than two years of experience
- Seek multiple references and check them. Request referrals to both suppliers and customers
- Order an International Company Profile Report through the U.S. Commercial Service
- Accept only secured forms of payment such as letter of credit or direct telegraphic transfer (T/T or wire transfer)
Report Fraud to the FBI
If you believe that your company has been a victim of internet credit card fraud you can file a complaint through the FBI Internet Crime Complaint Center at http://www.IC3.gov. IC3's mission is to serve as a vehicle to receive, develop, and refer criminal complaints regarding the rapidly expanding arena of cyber crime.