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How to trade safely and avoid scams, losing money, fraud, and risks


Search the internet for import export scams, international trade fraud, and for unhappy importers that paid money and did not receive their products and you will find many stories.

Just like in any business, you need to be cautious and avoid being optimistic and trusting especially of someone you did not do business with for a long time or did not know on a personal level. This is especially true and important when you are doing business internationally where the importers, exporters, and manufacturers are in different countries than yours and you will not have any common legal grounds that are easy and inexpensive to deal with.

The majority of import export complaints that I heard about or read boil down to someone who paid cash in advance and never received the goods or received partial shipment or received something other than what they thought they were buying. And in almost all of these cases, the buyer did not take a single step prior to sending the payment to verify and screen the company they are doing business with.





Here are few methods to trade safely and avoid scams, fraud, and losing your money:

1. Ask the company you want to do business with (importers, exporters, manufacturers, or suppliers) for business references especially for companies they did business with in your local market or at least outside their own local market (another country). When you receive the references, do contact them and ask them to share with you their experience and for how long they did business with them.

2. Avoid payments in advance such as money transfers even if it is not the first time you will be conducting business with this company. Use a payment method that offers better protection for both of you like Letters of credit or a verified professional escrow service. Note that there are a number of fraud escrow services so make sure you check them too. And remember that Letters of Credit are never sold or offered as investments. Refer to the section I wrote about How to buy goods to export to an importer without using your money? where I talk about Letters of Credit.

3. Ask for a product sample before you place your order. Use the sample to validate quality and match for what you need instead of assuming that you will receive what you are expecting without verification. Expect to pay for the samples though at a lower cost than regular export/import price.

4. If you can, visit their business location or have someone (you know or a third party service in their country) visit their business to verify their claims.

5. Remember the golden rule of being cautious and fighting the blinding greed; If its too good to be true it probably is. If the prices they are offering you are surprisingly very low compared to the rest of the market, then you should be very careful.

6. Just because a business is listed or claims to be a gold or a platinum or a trusted supplier on a trade board, that does not mean a 100% guarantee or trust.

7. Verify their business via their local Chamber of Commerce

8. Use the internet to investigate the company. Search the internet using their website address/url, their business name, their phone and fax numbers, their email addresses, and any other data to see if you can find any feedback or complaints about them.

9. Use available free resources to get to know more about scams to avoid: