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Alibaba Supplier Scams: 3 Common Types & How You Avoid Them
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None of these scams are unique to Alibaba.com. On the contrary, Alibaba.com verifies all Gold Suppliers and offers far more supplier data than any other B2B supplier directory.
Alibaba.com is in many aspects the safest way to source products in Asia, as long as you have a risk management process in place.
That said, Alibaba cannot monitor every single email and WeChat conversion between suppliers and buyer’s on its platform. There are rogue employees out there, and hackers breaking into suppliers email accounts.
In this article, I explain how you can avoid 3 different types of scams, and the measures Alibaba has taken in recent years to make their marketplace safer.
Scam 1: Payment Frauds
This type of scam has been on the rise in the last few years. The first time I came across a payment fraud was in late 2011. The principle is simple. The scammer gains access to the supplier’s email account and determines which orders are about to be paid. This is easy as they can monitor email communication and wait for the next purchase order to come in.
Sometimes the perpetrator is also from within the company, often a rogue low-level sales rep looking to cash in big time.
From the supplier sent email box, they download a recently issued Proforma Invoice and make their own versions – with a few tweaks. It looks exactly like the “real” Proforma Invoice – the only slight difference being the bank account details.
The scammer simply replaces the bank account beneficiary and the bank account number. What happens next is that the buyer wires the money to the ‘wrong’ bank account – operated by the scammer.
Often, this is a bank account located in a different province in Mainland China or in Hong Kong. It’s also increasingly common that these scams originate outside of China.
The supplier doesn’t receive a single dollar and will therefore not ship the products. By the time you realize what happened, the scammer is long gone and almost impossible to track down. If this happens, you can only hope that your insurance got you covered.
We can help you manufacture products in China, Vietnam & India?
- 1. Product design and material selection
- 2. Finding suppliers in Asia
- 3. Product samples and payments
- 4. Quality control, lab testing & shipping
How to avoid this scam
However, it’s easy to avoid this type of scam as they must change both the bank account number and the beneficiary name. As such, you can simply compare the beneficiary name to the company name listed on Alibaba.com. If it differs, then it’s a red flag.
Never pay to a bank account held by a company or individual not matching the company name specified on Alibaba.com.
You can also use Alibaba Trade Assurance when paying suppliers, in order to ensure that the money will end up in the right bank account.
Scam 2: Sending the wrong or low-quality products
While quality issues are normally caused by misunderstandings and a genuine lack of attention to detail, some suppliers try to screw their buyer’s over by sending cheaper or defective items instead of what they actually paid for.
This is also more common when dealing with wholesalers and trading companies, compared to manufacturers.
Using cheap and substandard materials
That said, some manufacturers also have their own tricks, which can be more difficult to detect. Instead of making the product according to specification, the factory purchase cheap and substandard materials, hoping that the buyer will not notice. The purpose is to increase their profit margin, while still charging the customer a premium for a higher quality standard.
For example, instead of making a watch of 316L Stainless Steel and with a Miyota movement, they could send a cheap zinc alloy watch with a no-name movement. Based on photos alone, it’s hard to spot a difference.
This is not only a problem from a quality and price perspective but also a product compliance risk.
How to avoid this scam
The only way to ensure that the correct product and quality standard is sent is by first creating a clear product specification that defines the design, materials and (in technical terms) the quality of the product. In addition, make sure that you always book a third party quality inspection before you wire the balance payment.
Further, Alibaba.com strongly encourages buyers to always get their orders quality inspected, a process that’s built into their Trade Assurance program. In addition, you can also book third party quality inspections from their website, even if you’re not using Trade Assurance.
Keep in mind that there’s no easy way to return defective or damaged products back to a supplier – or request a refund for that matter.
Scam 3: Rogue employee subcontracting
Picture yourself working 10 hours per day, 6 days a week, for less than 600 dollars a month, plus a small commission if you’re lucky.
Wouldn’t you be tempted to divert customer payments to a local, cheaper factory?
I saved this one for last as it’s a combination of the two previous scams.
This is how it works
You email your supplier to tell them that you are ready to place an order. The sales rep on the other end issues the invoice.
However, the payment goes either directly to them, or a completely different factory. The purpose of this scam is to subcontract your orders to a factory that either offers a lower cost, enabling the sales rep to pocket the difference or pays a higher kickback.
Either way, you don’t get what you’re paying for.
How to avoid this scam
First, make sure you only pay a bank account held by the supplier. As mentioned, the bank account beneficiary must match the company name listed on Alibaba.com.
Second, get every single order quality checked before you wire the remaining balance payment.
Alibaba is working hard (and often succeed) to track down fraudulent suppliers
Alibaba.com is a B2B platform allowing Chinese suppliers and international buyers to meet. With millions of listed suppliers (including companies that claim to be a supplier, but are not), it’s impossible for Alibaba.com to monitor them all.
Besides, in many cases, things go wrong, even if the supplier has the best intentions. In fact, the importer is to blame more often than one might think. Many importers assume that if they only tell the supplier to offer products of “the best price and the best quality”, everything will be just fine.
However, there’s no universal definition of “good quality”. I keep saying that in every second article I write, but people still keep making this mistake over and over again.
If you don’t provide your Chinese supplier with clear and well-defined quality requirements, your product is most likely not going to be what you expect. Suppliers are not mind readers, and Alibaba.com cannot be expected to monitor every single email and Skype conversation between a buyer and seller in order to ensure that the products are of ‘good quality’.
What can I do if I fall victim to a supplier scam?
Make sure that you can show that the supplier listed on Alibaba.com, is the perpetrator of the scam. If not, you got nothing on them – and if you don’t, Alibaba can’t act. Assuming that you did your homework and can connect the supplier to the fraud, then you got a case that can be reported to Alibaba.com.
Before you send them anything, you should prepare yourself with the following:
- Email history
- Proforma Invoice
- Sales Agreement (if any)
- Photos and video showing the defective products
- Transaction records
If you can show that the supplier deliberately cheated you, Alibaba can act. It’s in their interest to ensure that buyers are not scammed by suppliers.
However, Alibaba.com is a company and not a government agency. There are limitations to what they can do. If the supplier refuses to cooperate, they can suspend their account. That’s basically how far their power reaches.
In some cases, the threat of being banned from Alibaba is enough to make a supplier compensate a customer. But not always.
Suppliers that are close to bankruptcy are much more likely to scam a customer, and these suppliers couldn’t care less about either their reputation or Alibaba account.
Disclaimer
This article is provided only for informational purposes only and neither the author nor any companies and/or service providers mentioned in this text make any representations as to the accuracy, completeness, currentness, suitability, or validity of any information in this article. This article only represents the views of the author and is not endorsed by any company and/or service provider mentioned in this text.
We can help you manufacture products in China, Vietnam & India?
- 1. Product design and material selection
- 2. Finding suppliers in Asia
- 3. Product samples and payments
- 4. Quality control, lab testing & shipping
Co-founder of Asiaimportal (HK) Limited and based in Hong Kong. He has been quoted in and contributed to Bloomberg, SCMP, Alibaba Insights, Globalsources.com, China Chief Executive, Quartz Magazine and more.
100 Responses to “Alibaba Supplier Scams: 3 Common Types & How You Avoid Them”
Comments are closed.
Your folks who work in Alibaba who are sugarcoating the the number of scammers that are present and present on hard working folks.
I have spent 3 days trying to a tool set from Milwaukee. Over 20 different conversations and everyone ends the exact same.
I’m safe send me bitcoin.
I take cashapp
You don’t vet anyone…no-one is honest on your platform. All they want is whatapp number so they can give you their crypto waller person receive number.
Your customer is none existence.
People sign up and offer no guidance, the scammers run unchecked and challenged.
No onboarding help at all.
The platform is unfriendly and hard to navigate and buggy
I can’t think of thing was positive.
All the while the richest man in the world could cares that folks are robbed and cleaned out on hisaite, he gets his cut from the fees collected from memberships.
There is no way to fix it…it rotten to the core. And and appetite from Alibaba to fix it.
..it easier to look the other way.
Why does management do much protect them…they don’t allow to review them, but they can block immediately.
How is that fair?
If your a legit seller on this site …your address, your contact if and email must be shown.
That basic.
They let the scammer run wild…and they get their own like there the expert.
This garbage has been going for years under their watch.
But there the experts.
LOL!
The landowner or bozo in charge of this blog are both clueless.
There are plenty of ways clean up the place. I’ve not had person ring up any of the tools I’ve selected. They jump straight into how they only bitcoin.
.
People are getting robbed blind and they don’t a damn thing.
Beware of Karis Imp&Exp Co., LTD!
I’ve ordered an RTX 3080 Ultra 10G, which is 660 USD each, and spent around 30 grand but I haven’t received any of the product. And after paying, Mr. Hugo, the contact person, cut me off. He
stopped replying and I did not hear anything from him.
Their website is nice and somewhat believable and he (Mr Hugo) also coordinated with me using
WhatsApp. They also have a picture of their business license, but in Chinese, and some company photos so they really look legitimate.
Hi John,
These transactions are always scams. There is no way a Chinese company or any third-party seller for that matter can offer you a better than retail price deal on these products.
So what your saying is alibaba holds no responsibility in case of falling for the above mentioned but not if everything checks out, you do your transfer through sale insurance and quality inspector and give precise order specs, but still get scammed..?
Yep. Alibaba do shit if you try and complain. I say “Try” because even reporting a scammer is near impossible to do. Once your lucky enough to chat to a human they keep leaving the chat and I’m sure another person tajes over the chat as they seem to ask the same questions over. I spent 1hr yesterday trying to report a scammer. Twice I was told ” We are very sorry this happened to you, I will be passing this on to our team”…… I kept waiting for the sentence to go on, but it didn’t. 20 min later I was told the same thing. Then told it would be looked into and I will get a email. Haha, the email I got saud something like this…….. Hello , we are very sorry about you experience with a Seller blaa blaa, we can not refund you to Alibaba service fee as banks don’t even refund this fee, not foes Amazon. If you bought something and used your card the bank or Amazon would take a fee for using them and they would not refund you Alibaba gave you a service so will not refund you the 2.99% service fee.
OMG my complaint wasn’t about the service fee!!! During our chat I told them the scammer should be made to also pay me back that service fee, but that’s all that was saud in my 1 hour chat about a scammer! I give up
I am new to Ali baba as a buyer. In my 3rd order on Ali baba app, I paid to the seller via Money gram in Turkey. Soon seller collected the cash via Money gram in Turkey, he sent me tracking detail on whats app. I told him not to use whatsapp for any communications but use Ali baba app. After couple of days, hes telling me on whatsapp again that my items I bought are stuck at Germany port, and I need to make another payment of $400 to him via Money gram so my products can be cleared from customs. I think I have been victim of fraud. Seller telling me if i dont pay $400, my goods will be forfeit. I have contacted, Ali baba but looks like I could be in trouble as seller didnt send me any invoice on Ali baba, However, I dont all negotiation and agreed a price with him on Alibaba app. He even sent me his detail for Money gram payment via ali bab app. Will I be covered?
thanks,
Hi Rana,
This is almost certainly a scam.
Did you even pay the supplier through Alibaba? If not then they cannot do anything.
Sucks hey.
Jeremy,
In my above comments, I purposely left out the hacker information because I felt it would be premature to mention them in name. However, after following the links above and reading the other articles you wrote referencing lawyers that might help in a case of fraud like this I thought “what the heck” it might be worth a chance. Can you help us locate a Hong Kong lawyer to help us possibly recover the money?
See below is the bank and the company that received the wire.
[EDITED]
Thank you once more for using your forum
Regards
Barry
Hi Barry,
I understand your frustration but we cannot publish company and bank account details on the website.
Jeremy
Fourteen days ago our procuring agent in mainland China had his email hacked.
This resulted in forged wiring instructions sent to the US office and a large wire being deposited into the wrong company in Hong Kong. This fraudulent act caused our factories to be delayed in getting their payment. The first time this has ever happened in all of my 16 years as an importer of Chinese goods.
The hacker gained access to our agent’s email one of two ways. When he had problems with his computer and had it repaired by the hacking company or it was hacked by the very hosting company in Hong Kong that hosted the server he is on. Either way, its the same company in both instances. The wire was sent to a hosting company that is also a computer parts supplier and computer repair company.
I wrote this in your remarks section because I believe this story has relevance to your article concerning fraud and because it’s related to wire payments for goods made in China and it has a twist in that it’s about the money being the key target, not the products.
In mid-July, this hacker gained access to our agent’s computer, read the emails, got an inside look into our payment methods to the factory’s. The scammer or hacker as it was watched the emails back and forth from our US office to the agent’s office in mainland China.
The hacker was successful in altering the emails and attachments to and from our two offices allowing him to alter the bank information and wiring instructions on email attachments. The scammer was so successful in his counterfeit emails and documents it took us a week of scratching our heads until we finally figured out what the hacker had done.
The company we know that is behind the hacking is the named beneficiary on the altered wiring instructions. That company received the wire transfer. That company is both a web hosting company as well as a computer parts supplier and computer repair company located right in Hong Kong.
How convenient that a high 5 figure wire would wind up in the bank account of a computer repair company that host email accounts. A company we have never heard of before and a company that we have been unsuccessful in contacting and one that has not responded to any of our emails.
The Hong Kong police were alerted and a cybercrime report was made. This has resulted in Zero information and no steps taken. The banks are no help, it wasn’t their fault but even when this happens they offer no help in getting the money back.
My point in all this is obvious, Caution and double verification aren’t enough. Never make a payment until you are satisfied with the goods and have verified, verified and verified the verify. Then verify the wiring information and please don’t rely on an email as I did.
Once payment is made there is no way it will ever be returned.
Now, with all said, There are a lot of good honest hard working companies to work with in China, I don’t mean to imply they are all bad, that is not the case.. With over 16 years of importing from China and working with countless factories, those honest companies are rare indeed and when you find one, stick with them. Also, let it be told I’ve never won an argument with any of the factories concerning quality issues. compromise yes, but never a victory without a compromise.
BTW. Someone might suspect our procuring agent might be behind this wire fraud but be assured that is not the case. He’s been with us 16 years and handled millions of dollars over those 16 years and never a penny misplaced. The emails themselves showed proof of hacking in the header codes as well as the hackers perfect English and grammar statements that are out of character for our agent.
In closing,
I advise everyone making products in China to be ready to compromise on price when the quality fails to meet their standards. Be over-cautious when you think you got the better of a price deal. It can come back on you in the quality. Always count the pieces. Never rely on just the document count. Never allow your inspections to be done the last minute before a shipping deadline.
I could go on and on but I think I’ve made my point. Be careful and verify everything before paying for the goods. Even the deposit is lost if you try to change your mind or the deal goes sideways.
Thank you for a place to vent on your forum.
Regards to All
Barry
Hi, thanks for your great article. i have ordered two devices from Alibaba.com. after first payment the supplier asked for another one. each time they came up up with new request payment: transport(although they told me shipping is free),clearance,post,tax,demurrage…
at the end i did not get my ordered products so i contacted another reseller from the supplier page and told them what happened.they claimed that their account was hacked and they cannot do anything about it. i asked them why they did not inform me when they found out about the hack but they told me they did not knew that there is an active order(they never checked the hacked account message center). i asked them why they did not blocked the hacker account to prevent more damage to others;surprisingly, they told me that they did not want to loose a 8 years account on the alibaba.com. now they don’t accept to cover my loss despite the fact that they let the hacker to complete his scam.
their account on alibaba has golden sign plus onsite check.it has been active for 8 years yet they turned to be scammers.
i have explained everything with full details here: http://beware-authentea.com
I lost more than 2.2(10000$ now it worth 16000$) bitcoin which was the result of 5 years money saving.
do u have any idea that how can I get back my money? do u know any lawyer in china ?
This sounds like a classic payment fraud. I suggest you read this article: https://www.chinaimportal.com/blog/supplier-scams-police-report-china/
I’d like have more informations about this Company: Shenzhen honestda Eletronichs from global sources. I bought 8 consoles with moneygram because he promised he would not withdraw the money without transfer number. He sent 10 more consoles and now my parcels are locked in Malta sent by this courier h2h courier and I have to pay $ 540 to the company for them to arrive. What can I do?
This sounds like a scam. Probably nothing you can do now.
BUYER BEWARE!!!!
[COMPANY NAME]
Do not order from this company. They are fraudsters and will take your money and lie about it. They are dishonest, and will act professional until the very end, when they say they haven’t received your money, put up the price, say the dye factory is closed… all LIES!.
BE VERY CAREFUL WHEN DEALING WITH [COMPANY NAME].
Notice that we cannot publish company names here, as we cannot verify the claims.
yall are weak…he just robbed and your protecting the damn their. Do you hear yourself.
You literally just called him a liar and spit in his face.
He lost his savings.
We don’t report names cause there not to defend themselves. Fuck them!
When are you guys…the management gon a take for the victim.
He came to this with his life saving hopeful trying to make situation for himself.
Instead gets ripped and the guy/the company takes and you won’t expose him?
Why not? Then us review the thieves and spread the word what he’s doing.
Which is exactly what guy trying to do…he was the community. And you idiots redact it. You guys clearly not care not care.
And do not say you do….I promise you. He went right and got back on the phone trying for number for the day.
Why not…
pathetic.
Alibaba / Aliexpress / Global source
Investigation 6 monts 4 investigators.
Supplier inspections.
# 58% of quotations do not respect the price of negotiations for the same quantity
# 71% Are companys trading
# 23% s products do not match the products ordered.
# 96% Born in compliance with the 1 year warranty they promise.
# 33% in case of frauds changes company name.
# 11% are actually verified when subscribing GOLD member
# 82% of the disputes are not resolved, lack of seriousness of the structure Alibaba
# 14% increase in scam over the last 6 months.
# 61% of products are of poor quality.
Alibaba / Aliexpress / Global source
Privacy policy not respected
When you make mass quotes your personal data first name / firstname address phone / email are disclosed to all members who paid a subscription on Alibaba / Aliexpress / Global source, you will notice when you request an RFQ the box to agree To share My business card is already checked in the form. While legally this box must be checked only by the buyer.
The system RFQ request strong quotation is a deception and exposes you to products of poor quality, scam and spam on a large scale.
Why?
Because when you do call the RFQ mass quotes. The application is sent to all suppliers, trading company, without any selection by contribution to the product request. That is to say that companys who have never sold this product will also receive your request and so you access your data: company name. First name, phone, email. This increases fraud and spam.
TRAD INSURANCE: trad insurance does not guarantee the buyer, the quality of the product, the accuracy of the products ordered by the buyer.
Deception in the details of Alibaba / Aliexpress / GlobalSource articles
Finally it is important to know that these websites the B2b and B2C traent. That is, you can negotiate prices, also note that 56% of sellers do not adhere to the price range for the same quantity.
For example, you see
US $ 2.99-9.99 / Piece
Minimum order 100pcs
When you enter into communication with the seller the prices are above the maximum promised.
This is a technique to attract you, but especially that indicates that this seller is not honest.
if the price quotation is over the price when applying for listing for the same minimum order do not do business with that seller who is not honest.
It is necessary to look at the descriptive of the articles sold more than
72% of the articles use false descriptive, for example TV LED and in reality it is of the LCD type. False images that are usually taken on branded brand products like Samsung LG etc.
Alibaba / Aliexpress / Global source accepts this deception; support indicated that it is to attract buyers.
So it’s a total complicity with Alibaba / Aliexpress / Global source
Now when you complain to Alibaba it seems that a robot named “zoe” respond to you.
Indeed just a week ago I submitted a complaint and in response I have receive “standard” sentence like you must show the 1st record communication with the supplier when I have provided ; communications, proforma invoice, proof of payment, link of this scammer registered in Alibaba as supplier represented by Mr xiaoyao WEI with a photo of a famous actor Jackie Chan instead his !?
Alibaba dealt with a company that not only sent a second hand piece of equipment but it was not complete. I am now $13000 in debt without any way of getting the money back. Company name is [COMPANY NAME REMOVED]
Bought a new Tractor from Oriemac in China. It was second hand and delivered in pieces. $14000 lost thanks to Alibaba who did not listen or honour their Trade Assurance or Quality Guarantee. They sided with the seller.
Lesson learned. Do NOT accept delivery without examining the goods!
Hi Paul,
Do you have any sort of written agreement that states how the tractor was to be delivered?
Nothing was in place. Alibaba has now closed the case siding with the seller. There’s no more I can do.
Case number was 76581790984601
Case number was 76581790984601. Even now I can see that the tractor is not a ZL10 but a cheap copy.
Hi Paul,
I understand. The issue here is that Alibaba cannot act unless they have contract between the buyer and the seller. This is also explained on the Trade Assurance page on Alibaba.com.
It is important to understand that Trade Assurance is not a quality guarantee (as there is no universal definition of “good quality”), but an escrow service that provides protection to the buyer – assuming it can be proven that the seller violated the terms.
I can totally see your point of view, but it’s words against words – and Alibaba cannot act on that. Legally.
Had a run in with [EDITED] . Scammed me and Alibaba wont do anything.
I ordered shirts and other things, all wrong colors and sizes and printing is poor.
[EDITED] scammer wont refund or anytihng and Alibaba wont punish him.
Abusive emails calling me a dog and many other things.
Stay away from [EDITED] scammers
Your comment is awaiting moderation.
Alibaba is the hive of scam gold suppliers. and Alibaba dont care buyers.
so better dont go to Aliexpress or Alibaba.com
the support is very bad. and process dispute is a joking
many scam company same shenzhen jumbo power saver ,
i buy power saver and i try test with meter 1 room with 2 airs conditioner
3 hours meters without power saver 4.5 kw/h
3 hours meters with power saver 5.6kw/h
total i make 5 test 5 different s places
So easy understand with power saver jumbo you don’t save you eat more kw/h when you use
power saver jumbo.
we not recommanded buy product to Alibaba , Aliexpress and nevers buy product for jumbo also i ask jumbo him product is not save so is are scam product , him reply me Fuck you.
i contact is seller and transfer data.
and is produce is for save electric , power saver , after 5 days testing differents place.
i understand jumbo power saver is are scam product. 1 him not save, and when you test with the power saver you meter inscrease the kw/h
the best solution
dont use alibaba or aliexpress and never buy product for scammer jumbo power saver.
I used Aliexpress bought 5 items online since early Feb this year 2016 and received nothing so far and I am convinced that this site is a scam. They got my money upfront and deliver nothing, they have no real to speak with only robots they will drive you crazy and make to believe that they will solve the problem, but then nothing happen, no refund and no goods. I recommend everyone to avoid these chinese scammers. I never had anything similar when shopping at Amazon.ca
Hi Adam,
Aliexpress is certainly not a scam. However, Aliexpress is a marketplace, not a seller. You must report this seller right away to Aliexpress, and send all the evidence you have (email records, transaction records etc). They shut down fraudulent accounts, and it may be possible for them to recover some of the money.
Just to keep everybody well informed we have are victims of a shipping scam as we speak:
1) Supplier name: [CONTENT REMOVED]
All the information of their website is fake. They are a new company established in April this year (2016).They give themselves different names all the time.
They use 2 to 3 different booking agents that you cannot track them down easily. They are trying to extort money out of us for the Bill of Lading.
Our shipment arrive in Namibia on Saturday the 6th of August. We can do nothing because everybody pull up their shoulders.
We still do not have the original Bill of Lading only an email copy. We are stuck and stand to loose N$ 500 000.00 of shoes and hair in that container.
It is very important to check the supplier’s honesty before you pay.
Here are two ways to check a supplier’s honesty:
1) Google their export records
2) Ask for Customer references
3) Ask as more professional questions as possible
Guys, when you order on Aliexpress you receive the product and then you approve the payment. If anything wrong with the product buyer can open a dispute and solve any issues before money are lost. So, what are you talking about, have you at least used Aliexpress before writing this “article”?
Hello Andrei,
This article has nothing to do with Aliexpress.
‘Good quality. Whatever that means.’ It means it doesn’t fall apart right out of the box or a month after you buy it. It means it’s not engineered specifically to fail.
Hi Pat,
Indeed, but then you need to define that in terms of technical specifications.
Thankyou for all your information, as a small business starter I am very nervous of being scammed of my hard earned dollars! I will be using Alibabas payment option but what would be your other most important tips for me?? My supplier is currently making up a PI for me and we have been communicating through Alibaba and WhatsApp
Thanks :)
Hi Joleen,
I suggest you read this guide on Alibaba’s Trade Assurance: https://www.chinaimportal.com/blog/alibaba-trade-assurance-explained-importers-must-know/
I have read so many posts regarding the blogger lovers however this paragraph is in fact
a nice post, keep it up.
This will be my first time shopping on Alibaba, and the company who is based in china sent me an email saying that they dont want to complete the transaction on alibaba and asked for my paypal account. Is this normal? seems like a scam to me why cant we just finish the process thru alibaba?
I am also the first timer and I’ve experienced the same with my contacted supplier. That sets me back and I’m holding my transaction now. Looking forward to get the post reply by Fredrik .
Hi,
Normally, payments are not made through Alibaba.com. This is, as far as I know, not even the case when using their Trade Assurance program. Alibaba is mainly a supplier directory, like the yellow pages, rather than a payment processor. However, they do have their own payment gateway, Alipay, but as said, it’s up to the supplier.
That said, you are still wise to assess the supplier before making a payment. I suggest you read this article: https://www.chinaimportal.com/blog/payment-methods-importing-china/
Frederick – Thanks so much for a great website and great information. You’ve really helped me double check my concerns and doubts in relation to trading with China, and I’ve enjoyed reading your clear and informative articles, and your willingness to engage with commentors on your site.
I’ve now completed my first alibaba transaction that I was very vigilant about due to all the unknowns, and some of the stories you and others have shared. I thought I would share my experience in relation to the OP here.
In relation to the OP in this instance, It’s not ‘normal’ to ask for paypal from alibaba’s point of view, and you can report them within alibaba (it shows the link in the bottom left of the screen in your ‘my alibaba’). However, Paypal offers its own buyer protection, so depending on your order value and whatnot, its likely less risk doing paypal than paying direct to their bank account with no escrow/third party.
I’ve only just complete my own first transaction on alibaba and cant thank you and other informed parties like you who I’ve researched for all their information in helping me make an informed decision. I paid using the alibaba escrow for the protection it can offer, and have taken what measures I can to ensure that even within that I haven’t been scammed or ripped off – even still I can’t know until goods arrive without a third party on the ground like you Frederick, or folks who offer services like yours.
The other thing that may justify their reasoning is that paypal will send them the money straight away, while alibaba will wait until the goods are shipped before releasing money. If your agent needs to buy or produce your item(s) with the money your paying, they may need it in hand up front.
I am not suggesting you accept or deny their offer, nor am I claiming to be an expert at all on such things. As I say, I’ve just done my first deal on there and researched a LOT before committing, including company details, ability to provide, checked their alibaba credentials etc.
If I ever needed to trade again with other suppliers, I think you, Frederick, would be my first choice for a ‘real flesh’ third party rather than a behemoth third party like alibaba, since Frederick and his crew are obviously a third party on-the-ground themselves.
I’ll be honest though, I dont think I would even have known where to begin looking for suppliers without alibaba, and this is where folks like you come in Frederick – great work and thanks for a great site
Hello Chris,
Thank you very much for such a well written comment!
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Hello Frederik!
I have been marketing bio-fertilizers for many years, mostly in West Africa. It’s easy to do business there nowadays. Things have changed a lot there for the good. You pay commission after a sale. It’s agreed in advance. It’s clear and simple. The scammers nowadays are the silly people who send out email scam mails, thinking that their scam mails are original. You know, the “I have access to a secret bank account” mails.
But I refuse outright to have anything to do with business in China. When anyone contacts me from China, I decline to do business with them. Somehow business people don’t have a conscience, and there’s far too much corruption. The system of corruption is amazing! It makes West Africa in the “bad old days” look like a Kingdom of Angels.
I won’t even buy an item in a shop if it’s made in China as it will only break quickly. China will take a generation at least to sort itself out.
But I wish Alibaba members good luck! I prefer Africa though.
My warmest regards,
Peter
Hi
I submitted a complaint like below in alibaba
I want to complian from [Hidden company name]
I buy the crystals according to PI is attached from this company 17 July . their agent Ashely Wang buy the crystal.
i want her to shipped it with TNT and i paid the TNT shipment fee according her PI. but she send crystal with chirlinexpress. after 11 days the product is in china.
we trust their company but they have not good manner. we pay TNT fee because we need our crystal immediately.We had lost and our damages must be paid.
please help us to give crystals immediately and Redress our damages.
Please help me
1- how can i do anything else???
@Fredrik I ordered the goods in aliexpress for $ 260, after payment seller to send the goods to the wrong address and I do dispute , the seller apologized and gave compensation $ 20 and provide a new item to be sent again , then I agree , suddenly two days later came an email from aliexpress stating that the seller suspended , all the links and shops disappear . While the process is still running my order and I have not received a new item , it becomes clear all hands off . May I ask for solution on this issue and what i must to do ? thanks
ok sorry, actually today I got reply finally, she was just out of office, and even a sample photo of one part and information that all is ok. I guess I got worried too easily! For moderator, please don’t publish the company name and my last message, because I don’t want negative publicity for them if all actually is ok.
Good to hear that it worked out. We will not publish the company name.
Hi, I thought I did my homework well but now feels little bit that all it’s not ok.
Company is listed in Alibaba with gold member 5 years in guangdong, on site check, trade
assurance and all good things on their site. Had long email discussion for products, and the person seemed to understand a lot about production specifics and finally I got proforma invoice.
Company is not to be found from any scam or fraud google searches, nor the contact person. Beneficiary bank account is similar named hongkong company. This contact person was active in answering emails, until I send proof of payment from bank. After this, already over a week, not a single reply for my many emails and tried to contact also from their alibaba contact chat but nothing after sending money!
I will pay $1000. For the person that finds me a manafractura for old spice pure sport deodorant. ASAP..
My email. Addisgessese@gmail.com..
Maybe u guys can help me. I found trade manager on alibaba..he gave me his companies bank account which is in UK..he also emailed his companies certication r which is registed in new York city state business database which I double checked. I still think something is fishy. The company is called Annex inc in new Albany new York. Address is 80 state street new Albany NY…Does anybody know anything about this company??
Maybe u guys can help me. I found trade manager on alibaba..he gave me his companies bank account which is in UK..he also emailed his companies certication r which is registed in new York city state business database which I double checked. I still think something is fishy. The company is called Annex inc in new Albany new York. Address is 80 state street new Albany NY…Does anybody know anything about this company??
Sounds very strange. Almost certainly a scam.
You cannot import brand name items directly from a contract manufacturer. It doesn’t exist.
I was also scammed some time back. The company changed bank adress or got hacked. No body knows. In case your supplier sent you a mail about a new bank account you must act very carefully. I made a blogpost about this scam wth a Ningbo garden furniture supplier.
It cost me arround USD 8000,=
Beware not to fall for this trap!
Qingdao Tianfule Plastic Co.,LTD.
CHEATER, QUALITY PROBLEMS, DO NOT PAY BACK MONEY, BUT STILL IN ALIBABA AS GOLD MEMBER!!!!!
1) Date of first Order problem: 24/6/2014 also our first order to them.
2) Value of order: 11,930 usd 1 fully container 20 feet
3) First step is send claim with the problem, one material 4mm sheets was rejected in my customer as the material have a quality problem.
4) Supplier recognize the problem, but as Miss grace had some personal issues and we don’t get any reply I send somebody there from our shanghai office to have a meeting in his factory and find a good way to solve the problem, in this meeting they told me no problem , we are responsible of this problem and we will replace, I ask if they want the goods back, they told me NO. ( NO as no Need )
5)weeks pass and no action from supplier side, then I fly myself as my customer is very disappointed with this issue, then I meet the Owner of the company, he told me apologize, they are guilty and they will give me the replacement, then he ask me please help him to get new order to fill the container and even was not best option considering that first shipment was all rejected but in order to show our support and looking forward good cooperation I order and pay 30% advance extra material.
6)then when I paid they request me pay 100% all the new order, I was disappointed but again with good intention to show I want to do good business I paid 100% new shipment. Then also they want I pay transport, and to avoid more problems, even ridiculous as they send wrong goods and I fully paid I accepted and pay double normal cost to them.
7) then once I send them more than 4K usd more, they told me now his Boss want I return reject products, then for us is not a problem but in peza zones this have a process almost 30 days, since 2 month ago I ask them if they want it, but they REPEAT NO, then now they told me once you send me back or buy me 50% price I send you new goods. This is unacceptable, I paid and I get bad product, then now I need goods urgent, even I told them come to my place is cheap and you see the bad products you deliver to us.
11) After wait 2 month, make many many emails , skypes and visit them 2 times to his factory, trust them and send more money they treat like that, then how come one supplier ISO and Gold member for 4 year cheat companies?
12) I ask my money back, my customer is not going to wait 25 days his reject material go back, then I REQUEST ALIBABA CLEAR THEM, IF I RETURN HIS MATERIAL they need to pay me back my money, or you need to remove them from Gold member otherwise Alibaba keep manufacture non according with industrial and commercial regulations.
13) We lose our image almost our best customer and we really try to help the supplier, but is impossible to follow all his obligations since they even know what they send is bad.
14) Even I am the one risk more than supplier sending more money again, they are asking me a warranty I will return the bad product or money per 50% of the value before 30 days, and I told him no problem, they can find a lawyer and we can sigh a contract, even give check from my company, if 30 days pass they can get the goods.
15)Finally I got just my new order money back, but any replacement was done.
Personally aside the money they cheat us and lose our customer credibility I got sick of depression due this case , then I will not stop in all network up they give me what is ours.
Hope people can be careful with this company, due our experience.
1) Supplier name: Qingdao Tianfule Plastic Co.,LTD.
2) Alibaba member:
3) My contact trought Alibaba: Grace Yang
Sales Director
GB/T19001-2008/ISO9001:2008 (No.:015812Q)
-Qingdao Tianfule Plastic Co.,LTD.
Beiguan Industrial Park, Jiaozhou, Qingdao City, China 266300
Tel.: +86-532-8228 6699
Fax.: +86-532-8228 7839
Mob: +86-150 9200 1972
Hello Fredrik,
I have learnt important things from your blog. I am looking to buy goods from Alibaba supplier with OEM. I have talked with one who seems reliable, but is requesting 30 % now and 70 % BEFORE shipping. The problem is that tells me to pay throught Pay Pal on a person name, not a company name. It is trustwothy to pay a person, not a company name? Proforma does not have any bank account for this supplier, just it s name…
I know that Pay Pal open a dispute only for one-time payment if you don t receive goods or are quality issues. That means that Pay Pal is not involving if I pay 2 payments?
Please forgive me my bad english…
Hello Nico,
No, that sounds quite sketchy. Keep in mind that PayPal can only issue a refund if there is still money to collect from their account.
thats not true iv had a paypal dispute against me and i had no funds in my paypal account
it went into a negative balance and days after they forcefully took the money from my bank account
its more safe to use paypal as a buyer then a seller
Hi Tom,
Interesting. Then I stand corrected!
Why court danger when the funds are transferred to an individual that you don’t have a contract with?
I have now known that all supplies on alibaba are scam
Hello all, very nice article. Id just like to give some input from the other end – my wife and I started a kid’s clothing company and are a real supplier on Alibaba, we have received constant attempts at scams. Im not sure what they are hoping to get from us as we don’t buy anything this way…there is no chance at getting cash from us – there has been a few people posing as a buyer and then try to get us to log our email details into some fake trade application – obviously trying to hack our email account. Possibly they are wanting to pose as me or my wife in an identity theft incident or act as a middle man and resell our products at a mark up. Its so bad that any enquiries we receive have to be assumed to be a scam – if any ‘buyer’ is from a central African country it almost certainly is not genuine. Im beginning to think we wont be continuing our membership next year.
Hello Mike,
We are actually receiving very similar emails from scammers posing as buyers. These are probably bots targeting any company that may be a trader or manufacturer.
Just to keep you guys updated here is a scammer was successful in cheating me –
Umine Technolgy Company (HK) Ltd
Contact Person – ADA
Skype: zhang.xiaoxuan
Email: ada@usb-flashdrives.com
Web: http://www.usb-flashdrives.com
Address: Huaqiang Road Metro Station beside ,Futian District, Shenzhen PRC
Phone: :0086-15627456393, 0086-33136393
Well they are smart enough to communicate professionally to make you believe that you finally found a reliable vendor with a lucrative price offer. But tricks are very common and I was new in the market when fall in their trap and finally received piece of plastics instead of microSD cards.
You can also use AlibabaScam.com scammers list to check, this before sending any money! :)
http://alibabascam.com
Hello Michael,
True, but that will only protect you if the company is a known scammer. Businesses set up to commit frauds are usually closed down after going on a “scam spree”, only to reappear a few weeks or months later under another entity.
Have you been a lot in China Fredrik? Maybe you can help me understand geographical concern I have when it comes to matching phone area codes and ZIP codes with province and city where manufacturer claims to be?
I have stumbled upon what feels like legit supplier on Alibaba. His profile and onsite report claim his location to be: Pujiang County, Pujiang, Zhejiang, China (Mainland)
I have checked and found that Pujiang county is in Jinhua prefecture of Zhejiang province for which I have validated ZIP code and phone number but there’s Pujiang which is a town and it’s in Shanghai. The distance between both is almost 300Km. Do you know why supplier and onsite report would specify both locations?
Hi Boris,
Yes, been living in Shanghai since 2009 so I am pretty familiar with the geography. So, if I get you right, there are two places named Pujiang?
Yes. Supplier’s onsite report has registered address and operational address stating “Pujiang County” which is county of Zhejiang and thats okay because according to ZIP and area phone codes everything clicks into place. I use this resource for matching:
However on Alibaba’s contact information page of supplier, it says CIty: Pujiang but Pujiang is a town in Shanghai, thus discrepancy.
I am going to assume that Alibaba does not allow field on supplier’s contact page for specifying county, thus that’s what supplier written. Or it’s just supplier’s mistake.
About resource I posted link for above, I think I don’t quite understand how ZIP codes are supposed to be. There is a supplier in Dongguan that on his contact information page has 523883 as his ZIP code, however the resource states that Dongguan has 511700 as ZIP code.
Am I getting ZIP codes incorrectly Fredrik?
Hi Boris,
If so, I assume they refer to Pujiang in Zhejiang, as they would never label a district (I don’t think it is even a district, never heard of this place actually) in Shanghai as a city. I also assume that they list Zhejiang as the province? If so, there shall be no conflict of information.
Regarding Zip codes: In all honesty we have never attached much weight to this. That said, Dongguan must certainly have more than one zip code, as around 8 million people live there. It’s quite a big place.
Anyone have info on this supplier:
Company Name: MJ TEXTILE INC
Operational Address: 110 E.g. 9th street B798_796, Los Angeles, California, United States
Website on alibaba.com:
Also, any advice on whether or not to trust them. They want me to pay for an order I made via Wester Union. They are a 2 yr gold member, Alibaba certified, and I found the owner on linkedin. The only suspect thing is that the company is a textile company and I’m purchasing electronics. That do you think?
Hello,
We don’t have any data on this company, but it is rarely a good thing to buy any other product than the category of which the supplier is focused on. However, this seems to be a trading company based in the United States, and as we don’t know anything about the company, it’s not possible to come up with a judgement.
Dear JK,
Maybay you know something about MJ textile inc company?
if you know something pls write to my email grzegorz.grzech1@gmail.com
There was a comment I just read on Renaud’s blog from someone who does sourcing and QC inspection in China. He told that in Guangdong there are more factories invested by HK and Taiwan and that factories place emphasis on quality and are more authentic as they are led by HK and Taiwanese. But in Zhejiang/Shanghai/Jiangsu area factories are more focused on quantity. How true do you find this to be Fredrik?
Also I heard that in south and east parts of China quality is better. But on the other hand it’s been 2 or more years since China manufacturing (textiles, toys, shoes and furniture) started to evolve due to financial stress on low-tech, labor intensive factories being pushed out by developed factories with better technology.
Hello Boris,
Yes, Hong Kong and Taiwan are decades ahead of Mainland China. However, I wouldn’t say that they are less focused on quantity. They like to get big orders too!
However, Hong Kong and Taiwanese owned companies tend to be more reliable, in terms of product quality, compliance and management.
China will remain a developing country for a very very long time to come, and the central government in Beijing still need low value added manufacturing to keep people employed.
However, It’s true that the manufacturing landscape in China is changing. Low end suppliers are finding it increasingly hard to remain profitable and compete with suppliers in Vietnam and Cambodia. Thus, the market is consolidating, slowly.
Also, keep in mind that most Taiwanese owned factories are located in Mainland China, including Zhejiang and Jiangsu, but also Guangdong and Fujian.
“A proxy company is rarely owned by the actual supplier. Instead, an employee or relative of the legal representative is the only shareholder. However, I need to clarify that a proxy company doesn’t necessarily say that the supplier is a scammer. But it does increase the risk. In order to offset this risk, you need prevent the supplier from evading responsibility.”
This seems to hit red flag of transferring to personal account. But you said that this risk can be offset by preventing supplier from evading responsibility. Can you explain this one Fredrik?
Hi Boris,
The best way to do so is by letting both the Hong Kong company (receiving the payment) and the actual manufacturer (in Mainland China) to sign and stamp the Sales Agreement, Proforma Invoice and Product Documentation. But, stamps and signatures can be faked.
I also advice you to verify that the Hong Kong company and the Mainland China company has the same legal representative.
Thanks Fredrik
But there is another “right off the bat” problem – how do I know if supplier I am about to contact already has his email compromised without knowing it? How do I establish connection with legitimate company individual to verify if that is the case?
Technically I don’t understand how emails are hacked (excluding inside jobs) because hackers operate within range of supplier which means they use wireless connections. I doubt suppliers do not take extra care to encrypt their organization wireless access point. Actually I doubt organization would use wireless technology for communications.
Hello Boris,
You don’t know. However, what really matters is that you verify the supplier and its bank account details, thus ensuring that you pay the right company – and not a scammer.
I can assure you that web security is an alien concept among most Chinese manufacturers. It did in fact happen to a Chinese friend of mine, running a factory in Shanghai. They got a hold of his email account and sent fake payment details to a client in Greece. They paid the scammer, and my friend didn’t receive a single dollar. The bad part, for my friend, was that the cargo was already in the Suez canal – a bit late to order a recall!
Hacking an email account is not science fiction these days. Most factory owners, especially the older ones, use simple passwords like “mrchen123” and it takes only minutes to brute force such a password, using password generating software.
Hi Fredrik.
Can supplier’s Alibaba account be compromised i.e. chat and listing? If all supplier’s channels (email, Alibaba and Skype) are compromised, the only way to get a hold of someone from factory is by phone calling?
Hello Boris,
Yes, and I know of case where an employee, managing the chat, requested payment to a company owned by him/her. Thus, the Alibaba supplier received no money. No items where shipped. In the end, what really matters is that you do pay the right company. It is not possible to verify who is operating the suppliers chat, email or Skype account. Never assume that their employees are not potential scammers.
Hi thanks for such an informative article! I was about to agree to importing some sports products when I asked for a proforma invoice and the bank account details are based in Hong Kong. I heard alarm bells instantly, started googling and found this article !
The company I am intetested in is a Manufacturing and trading company in Guangzhou. Theyve been a gold supplier for 1 year on alibaba. The sales rep and I have shared many emails regarding price and shipping and all her emails cc the manager in china, which I matched in the alibaba business page. Ive even tried the phone line n number to Guangzhou n it worked. Theyre also accepting payment by paypal. everything seemed legit til i received the proforma invoice. The proforma invoice has a slightly different company name to the alibaba company name and they use bank HSBC (Bank of Hong Kong and Shanghai? 1 queens road hong kong). the paypal address is solely in the sales reps name @foxmail.com not the managers name or company paypal email address ?
is paypal still safe with these guys or am I right to be worried?
Hello Vivian,
I need a lot more information about the supplier and their legal status before I can say if PayPal is safe or not. This could be a scam, I’ll send you an email with more information.
Hi Vivian did you ever figure anything out on this? we are looking to buy sports products from a “manufacturer” in Guangzhou and I feel like the prices are too good to be true. I need info to convince my business partner this may not be a good idea
Hi there,
This article is very interesting, as a matter of fact even if it is an Alibaba supplier, the buyer should careful and do his homework. There are some goods resources complementary to your suggestions Fredrik that I would recommend:
– the China Sourcing Information center has always great case studies and vidéos very useful for all buyers : chinasourcinginfo.org/
– few articles from the Quality Control Blog
How to avoid scammers )
Free resources to select China suppliers )
Hi, thanks for the article, it’s very helpful since I’m new to importing. But I have a question as to payment scams. I’m placing a small trial order, about $1000, but they requested T/T to an account in Hong Kong. The beneficiary name is different from the company name listed on Global Sources and their email, but from what little I’ve seen, companies operate under different names (this is true in the US, too, even my own company has several different names, depending on the product line). Is there a legitimate reason they factory would have you T/T to a HK bank, or should they be able to accept T/T to a mainland bank. I have checked the factory out pretty thoroughly, even paid an independent 3rd party individual to visit the factory, who confirmed that it’s a reputable business. I’m just worried that it could be the individual sales rep trying to scam me, not the company itself. Thanks
Hello Tony,
That depends. Is the HK company name similiar to the company name of the supplier? That would weed out most scammers.
If not, you need to verify the name of the Legal Representative of the HK company. That’s the only solution I see. Do you have any other contact person working for the supplier?
Thanks Fredrik, I’m doing some extra checking right now and there is definitely something fishy going on. From what I can tell so far, the salesman I was working with is no longer with the company.
Your post was very timely for me. I guess you can never let your guard down!
Hi Tony
When dealing with Alibaba request to pay via PayPal or Escrow. That way any funny business you can file a chargeback and get your dough back bro!
PayPal no longer protects deals that involve multiple transactions. Attempt to chargeback if something goes wrong and have your PayPal account suspended. You will get your money but is it worth the risk of losing PayPal account?
The only way I see to use PayPal is for samples but I am not sure it covers customized samples if you decide to refund sample not made to your specifications. From now on Escrow, Trade Assurance and T/T and the last one would serve as a good way when paying for sample only to ensure that money is wired to company’s bank account before wiring for bulk order after you approve sample. The risk is only losing money paid for sample.
Escrow only works pre-delivery. If what you receive is rubbish, too bad. Alibaba introduced me to a chinese company (oriemac) that dealt with waste paper recycling for my business in Sydney NSW. Once the company sent me a shoddy replica in pieces unable to work, Alibaba decided that the seller was in the right. I have lost over $19500 and cannot do a thing about it. Trade assurance means nothing. Alibaba are responsible for my loss all the way to Jack Ma.
Using a proxy company in Hong Kong makes scams easier (or, rather, makes it harder to follow the trail and sue the guilty party), but I am not sure it can be qualified as a scam in itself. Most of the time, it is a scam to the PRC’s government ;-)
Hello Renaud,
Yes, you are right on that. It’s not a scam by default. But in this article, I refer to it in the context of suppliers using proxy companies / accounts to evade responsibility. In that sense, it is a scam and shall be considered as one.