How to Stay Safe When
Finding Wholesalers
1. Find out as much information as you can.
Do as much research as you can to ascertain the credibility of the seller. Check the company is actually registered in the country that they say by asking the seller to provide you with a valid registration, or do a search of that countries companies registrar. Find out the physical address and give them a call to verify the company actually exists. Check the phone number you have been given matches the country of origin and look up the white pages of that country.
Never go with a seller who provides you with just an email address or website alone. If a website looks legitimate by all intents and purposes, check their domain information by typing it into a 'whois' feature, this will tell you where, by whom and when the website was registered. Be wary of sites that are registered in a different country or sites that have been set up very recently. Be wary also of sellers who provide you with a yahoo or hotmail address as legitimate companies will almost always have seller@company.com addresses.
2. Background checks
Make use of online credit services such as Dunn & Bradstreet to make sure that the seller isn't registered with them. Obtain all the seller's contact details, including their bank's telephone number and a fax of their personal ID, tell them you need it to do a background check. You can then sign up to someone like web-detective.com to check their credit history. Get in contact with their local credit agency for information about their local dealings with other companies.
Check the name of the company with The RipOffReport, which is a worldwide consumer reporting Website & Publication. By consumers, for consumers, to file & document complaints about companies or individuals who ripoff consumers.
3. Get it on paper.
Prepare an indepth sales contract and list your conditions of sale, how you have agreed to pay, a complete inventory, shipping details etc. For a directory of INCOTERMS (International Commercial Terms) - a universally recognised set of definitions of international trade terms, visit Import911 so there is no discrepancy as to which shipping method you have agreed on. Fax it to them and get them to sign it. If you can't do this yourself, ask family members and friends if they know a lawyer or law student to draw one up for you.
4. Use 'SafeTrader' with your wholesaler.
Using an Escrow service with your wholesaler is just like using SafeTrader at TradeMe. Escrow.com, an accredited escrow company, acts as a secure third party to protect the Buyer and Seller. Beware of sellers trying to convince you to use other Escrow services, it is very easy to set up a fake website or engineer fraudulent emails. Insist on setting up your own transaction, only with Escrow.com.
5. Try to use safe methods of payment.
Credit Card: This is a relatively safe method as credit card companies will usually refund you if you are a victim of fraud. Wholesalers may be cautious of taking credit card orders because if the card or number is stolen, then the funds are deducted from their bank account to refund the victim after they have already sent the goods to the fraudster. It is up to the wholesaler to acertain whether or not the order is fraudulent, this is why most companies will only ship to the address on the card.
A 'Standby' Letter of Credit: This is where the bank acts as a SafeTrader for you. It is an exchange of documentation where the bank acts as a guarantor for you, agreeing that they will pay the supplier when the goods arrive and are inspected, you will need to convince your bank that you are good for the full amount. Make sure you check every detail on the letter of credit issued to you.
Cash On Delivery: Although it is fairly remote they are going to go with COD to New Zealand, you can give it a bash.
6. Choose other methods of payment carefully.
PayPal: PayPal is fairly safe, as long as the seller is verfied, check their buyer/seller number alongside their verification to confirm their number of transactions. Never deal with unverified sellers. PayPal will freeze an account if you report a scam so only make credit card payments, never e-cheque or cash from your bank account.
7. Try to avoid Telegraphic or Wire Transfers.
A TT or wire transfer is when the full or part payment is made directly into the seller's bank account. Most legitimate businesses prefer TT to get a deposit, or require the full amount in advance as it is the least possible risk to them. If they absolutely will not go with any other payment methods be very wary, there is no reason for legitimate wholesalers to have a problem with safe methods of payment.
Don't be pressured into going with TT for a first time transaction, it should only be regarded as a fast and cheap method of payment between buyers and sellers who have built a up a mutual trust.
8. Avoid Western Union like the plague.
Never, ever use it. Western Union is only safe if you are sending money to a relative and it is a favourite of many internet scammers. Flatly refuse to use Western Union in any other case. It may seem like the deal of a lifetime but you are almost guaranteed to lose the full amount. Visit Western Union's Consumer Fraud Awareness page for more information.
9. Have a holiday.
If you are going to spend $10,000 - $20,000 on merchandise and you've been thinking you would quite like to see a bit more of this wonderful world we live in, then go to these countries and establish your own trade contacts. See that the shipment is loaded onto the boat and act as your own buying agent. If you already run your own business, claim this holiday back as an expense, if you a registered for GST, claim back the GST on the items you sell. If you don't have time for a holiday, do a search for buying agents in that country and pay someone to go and make sure the shipment gets on the boat for you.
10. Trust your own judgement.
Use your own common sense. If a deal seems altogether too good to be true, there's a fairly good chance that it is. That said, most scammers set off multiple alarm bells fairly quickly. I just visited a website that claimed to be based in London, they showed a beautiful building that would have astronomical overheads, yet their website was quite obviously hosted free. You would think that they would have enough money to set up hosting that didn't plaster ads all over their site if they were legitimate.
11. Check everything you are told.
Check every detail that the seller tells you before taking their word for it. I had a company in "Italy" inform me that they would forward the items to DHL (a worldwide shipping company), DHL would then hold and inspect the shipment for me. I was to forward the money to DHL, they would hold the money until the goods arrived, DHL would then release the money.
This is basically the service provided by escrow.com, never in my knowledge has a shipping company ever offered this service. I was thrilled, it was the answer to my prayers, a shipping company that acts as an escrow service for free?! Hallelujah!
I rang DHL to confirm the good news, and was informed that they never have or will act as an escrow service, they have never looked inside a shipment unless commanded by customs and would never consider doing so. Her exact words: "We just send the cartons to the address on the top, we're not that keen!"
The address the scammers gave me was deliveryservice@dhl-shipping.com, www.dhl-shipping.com is an msn homepage, the correct address is www.dhl.com. I emailed the address anyway just to see what would happen, I expected at least a copy of a DHL email but received a disappointing, plain text effort. Just, check and recheck everything they tell you before parting with your hard earned cash.
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