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How B2B site members are scamming gullible newbies

Discussion in 'General Business' started by Importexport, Jun 23, 2016.

  1. #1
    Because there are so many complaints about DHGate on this forum, I decided I should give some information on how widespread B2B scamming is.

    The popular B2B sourcing sites attract not only legitimate businesses but also many professional scammers from various countries, not only China. Scamming is big business, with thousands of scams being reported every year.

    The biggest problem from my point of view is that most B2B sites are not providing realistic verification of suppliers and this leaves great opportunities for those who know the simple procedures that are needed in order to look genuine. Here is a comment on this subject by Mr Yulin Yuan, the owner of a well-established inspection service in China: “Normally the scammers cannot obtain a real Business License or Export License from local officials, but they can obtain some license samples online in China, then they will use Photoshop or other technics to change the names, business scopes or registered captial etc. They can even 'make' an official Stamp or Chop easily. This is why you can see there are so many scammers online worldwide. The license look exactly the same as the real one, you can hardly check them out without professional knowlege in Chinese. A Business License can tell you whether they are real manufacturer or not in China ( their business scope, registered capital, legal representative, history and address etc. ) Good luck, everybody!

    There are some sites where verification is thorough and real, but I consider it irresponsible to send people to those safe sites unless I know they have an understanding of safe sourcing practice. From my experience in dealing with many hundreds of newbie importers I know that very few really understand the risks. Many are lucky, but a greater number make costly mistakes.

    Most would-be importers still flock to Alibaba for product sourcing, so that site gets the lion’s share of my criticism, but when you read through this post you will see that other sites are just as bad.

    Several years ago there was a news item “Alibaba and the 2336 thieves” dealing with Gold Supplier scams admitted by Alibaba. Well, the system used by almost every big B2B site is very similar. The purpose of this post is to alert Fastlane members to the fact that there are risks in using the popular sites for sourcing.

    Rather than rely on the fact that so many people say Alibaba or some other site is great, why not do some checking for yourself?

    I will start with Alibaba: There are many places to look and get the stories from people who won’t recommend Alibaba and I will mention one of them later, but there is no place better than Alibaba itself !

    Alibaba have their own very extensive forum. Below is a link to the section of Alibaba’s discussion forums where Alibaba staff and buyers post comments. Please note that some of the posts with various user names are obviously posted by Alibaba employees.

    When looking for comments from buyers I suggest you scroll down the threads list until you find threads with numerous replies. http://resources.alibaba.com/discussion_board/88/Safe_Trading_Basics.htm

    The thread THREE SIMPLE SIGNS OF B2B SCAMS in the Forum section: “SAFE TRADING BASICS” begins with a much too basic introduction by admin and includes this: "Just because a company has a professional-looking website or has set up shop in an online marketplace like Alibaba.com doesn't automatically make them legitimate."

    Then a potential buyer new to Alibaba posted in reply to that point: “And Alibaba claims these suppliers have been verified. How do you reconcile this contradiction?”

    Like almost all critical comments posted on the Alibaba forums, this one went unanswered. The reason must be that it is unanswerable. The verification process is clearly intended to make buyers believe that the verified supplier is legitimate.

    Tradekey also has a community forum at http://community.tradekey.com/forum-88/Report_Suspicious_Companies/0/1320.html There you will find many posts by Tradekey buyers complaining about being scammed by suppliers found on that site. It is necessary to start at Page 133, because the first 132 pages are full of spam. As is the case with Alibaba, Tradekey staff post a lot of replies.

    Here is one post from a UK Tradekey user, minus the last two rather offensive paragraphs that I won't publish: ”Its a typical situation that tradekey makes money from, GOLD MEMBERS a lot of the gold members pay to get there Gold membership and tradekey does nothing to verifiy the legitimacy of these companies
    1. so eventually a GOLD member scams and makes alot of money from unsuspecting buyers,
    2. buyer complains to trade key
    3. the GOLD member gets shut down
    4. All complaints get logged, BUT THE SELLER IS NEVER FOUND BECAUSE HE/SHE IS USING A FRAUDLENT ADDRESS AND COMPANY DETAILS (tradekey.com fault becasue they fail to check and verifiy if the seller is legitimate) the same seller then PAYS FOR ANOTHER GOLD MEMBER PASS, NEW COMPANY NAMES MADE UP (tradekey.com MAKES MONEY)"


    EC21.COM has a community forum here: http://community.ec21.com/forum/viewforum.jsp?forum_id=90000006 This is a link to the Report and Verify Fraud forum. Note, EC21’s Gold Supplier equivalent is Trade Pro. Here is one of the posts. Sorry it is all in caps, but the buyer is clearly very upset.

    “EC21 DOES NOTHING TO STOP FRAUD - AMITY SAMCO TRADERS FRAUD

    THE SELLER THAT RIPPED ME OFF STILL HAS AN ACTIVE PROFILE THAT SAYS TRADE PRO VERIFIED SINCE 2014. THESE SCAMMERS HAVE THE ENDORSEMENT OF EC21. EC21 HAS DONE NOTHING ABOUT THIS FRAUD EXCEPT TO CONTINUE TO LET AMITY SAMCO TRADERS KEEP A PROFILE UP WITH THEIR ENDORSEMENT, THIS IS TOTAL BULLSHIT. YOU CANNOT RELY ON EC21 TO DO ANYTHING ABOUT FRAUD.”

    Most B2B sites don't have a community forum, but with little effort you can find comments posted online by buyers unhappy with the sloppy verification process used by most B2B sites.

    http://alibabascam.com/ As of today’s date there are 763 denunciations of Alibaba suppliers on this site. If you go to the site tomorrow you will find more complaints added. Most of the suppliers mentioned are Gold Suppliers.

    Look up sitejabber for reviews on DHGate. This site has recorded 1916 reports on DHGate Over 960 people gave a 1 star rating and many lamented that one star is the minimum allowed.

    I hope this rather depressing post does not deter entrepreneurs from entering the high profit world of importing. There are many who have succeeded, some without mishap.

    Take care. It is your hard earned money you are risking. Remember: You are swimming with sharks.

    Walter Hay
     
    Importexport, Jun 23, 2016 IP
  2. sarahk

    sarahk iTamer Staff

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    #2
    I gather much of your opinion was formed prior to 2014 when you also posted about this.
    Has anything been done to improve or worsen things since then?
     
    sarahk, Jun 24, 2016 IP
  3. jv1999

    jv1999 Active Member

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    #3
    I guess if you pay with PayPal, there's protection
     
    jv1999, Jun 24, 2016 IP
  4. Importexport

    Importexport Member

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    #4
    The situation has not improved, although Jack Ma promised to clean up Alibaba's act after the disclosure that 2236 Gold Suppliers had scammed buyers.

    An investigation by China's consumer affairs watchdog, reported last year stated that “For a long time, Alibaba hasn’t paid enough attention to the illegal operations on its platforms, and hasn’t effectively addressed the issues.”

    The situation has been made worse by Alibaba's decision this year to allow only Gold Suppliers to respond to buyers' inquiries. This might seem a good move ....... After all, isn't it better to buy from Gold Suppliers? The answer is NO, and here's why:
    • In many categories, buyers will find the thousands of listings are all made by Gold Suppliers. This effectively removes any differentiation that might have existed between unverified suppliers and Gold Suppliers, because to get any sales inquiries it is now essential to sign up and pay to be a Gold Supplier. This is a huge income earner for Alibaba, but little comfort for buyers.
    • Gold Suppliers have still been no more thoroughly checked than ordinary verified suppliers. That checking process involves a visit by Alibaba staff to the supplier's office, and a look at the business registration certificate. The weaknesses in this verification process are that the office might have been rented for the day of the inspection, and the business registration certificate could be forged, and needs to be referred to the local authorities to confirm if it is genuine. That is not done, according to my legal contact in China. He tells me that forging of certificates of all kinds is rampant in China.
    • The Gold Supplier fee has now been permanently reduced to $699. That's not enough to deter scammers, who can make 10 times that much on a single scam. For over a year it had been on "Special" for $299, causing a huge increase in numbers of Gold Suppliers.
    • There is still nothing to stop scammers buying the business identity of a failed Gold Supplier of several years standing and as a result having the appearance of being a reputable Gold Supplier.
    • The scams continue, and the complaint count on sites like ripoffreport, sitejabber, alibabagoldscam, and Alibaba's own user forum continue to rise. Sadly there are many newbies who are losing their money and I hope my posts will lead them to be more cautious.
    Walter Hay
     
    Importexport, Jun 24, 2016 IP
  5. Importexport

    Importexport Member

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    #5
    The protection might not be what you would expect. I wrote on this subject in Post #210 in the thread:
    Any experience with Dhgate.com?

    Walter Hay
     
    Importexport, Jun 25, 2016 IP
  6. Winner2mill

    Winner2mill Peon

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    #6
    Yes the nigerian scammers are now moving to online sites like alibaba
     
    Winner2mill, Sep 7, 2016 IP
  7. Importexport

    Importexport Member

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    #7
    It is not only Nigerian scammers that enjoy using some of the big B2B sites. There are scammers from all over the world that advertise on Alibaba and other B2B sites that have inadequate verification processes.

    The B2B sites give the impression that because they have "verified" the suppliers, they are safe to deal with. It is true that they publish disclaimers warning buyers to do their due diligence, but most people don't seem to know how to do that.

    This is why I have written my book to teach people how to source product much more safely. I have taught many hundreds how to safely enter the high profit world of direct importing, even for small quantities, and I have only ever had one out of many hundreds who has ever been scammed. That was a result of him failing to follow the advice in my book.

    He admits it was his own fault because he did 3 things wrong:
    • He sourced through Alibaba which I advise against.
    • He placed a large order first up, but I teach that you should always place a small order first.
    • He paid though Western Union which I warn is the scammers preferred payment method.
    If you have any questions about safe product sourcing or importing, ask them here:
    Ask Me Anything About Product Sourcing and Importing

    Walter Hay
    Provenchinasourcing
     
    Last edited: Sep 7, 2016
    Importexport, Sep 7, 2016 IP
    sarahk likes this.
  8. qwikad.com

    qwikad.com Illustrious Member Affiliate Manager

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    #8
    So basically if someone wants to get scammed: use Western Union and place large orders... For everyone else: use Paypal and place a small order to test the waters so to say.

     
    qwikad.com, Sep 7, 2016 IP
  9. Importexport

    Importexport Member

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    #9
    I wish it was that simple. There are lots of tricks of the trade, including finding genuine manufacturers and not dealing with the multitude of opportunist traders (often one person businesses) listed untruthfully on B2B sites as manufacturers.

    Payment by using PayPal is not foolproof either. There have been many scams resulting in PayPal declining to require a refund. If you would like details of how that works, please ask me on my AMA thread linked above.

    You also need to know how widespread scamming is by suppliers on the big B2B sites. Even large numbers of Gold Suppliers have been found out scamming buyers.

    Walter Hay
    Provenchinasourcing
     
    Importexport, Sep 7, 2016 IP
  10. atinga

    atinga Active Member

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    #10
    The popularity of Alibaba was based on the fact that they were no security conscious. Not for the buyer or for the seller. They had build a network that was greatly exploited by scammers.
    First of all, the Chinese are not so transparent in their dealings, coupled with their large population, Alibaba saw an out-burst of user-ship, most of which where not genuine.
    Secondly, because of the tight rules set by eBay, Alibaba became the only alternative for scammers.

    The scam is so enormous on Alibaba as many claim to be suppliers of all kinds of commodities. By just even looking at some names and their sources, and quantities they are able to supply, you became marveled if such deposits still exist, not even in the most obscured parts of the world.
    Another aspect is the ease with which they operate on Alibaba compared to other B2B websites.
    Today, many people are skeptical dealing with suppliers on Alibaba.
     
    atinga, Sep 9, 2016 IP
  11. Importexport

    Importexport Member

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    #11
    If you go back to my original post you will see that I report on scamming on other sites also, not only Alibaba. I didn't even name them all, but there are others in addition to the ones I wrote about there.

    There's a lot of smoke and mirrors on Alibaba, DHGate, and others. What you see is not necessarily what you get. It takes a lot of experience to be able to tell genuine suppliers from scammers. It is also necessary to know what payment methods to use for safety.

    Most people think that they are safe if they pay through PayPal, but that is not necessarily so. I know of numerous cases in which buyers have been scammed and PayPal won't protect them. I have written a detailed explanation of the scams used to prevent you successfully making a claim through PayPal, and also how to avoid them. See here: Ask Me Anything About Product Sourcing and Importing

    Walter Hay
    Provenchinasourcing
     
    Importexport, Sep 9, 2016 IP