China Scams- Anatomy of an Alibaba Scam

You don’t even have to be in China to be scammed. That’s right. You can be scammed right at your own home in the US or wherever you are. It’s true that there are plenty of Alibaba and eBay scams out there. There’s always the risk that you pay somebody for something and you don’t receive it. But despite this risk, international trade does still happen. There are lots of legitimate businesses producing products that are sold to buyers online. So why you? What are the chances? Here’s a look into a scam that gains your trust only to crush you in the end.

1. Your business idea. You are a trader and you are searching for a product that you can buy, have shipped to your country, and then distribute on your own. In this case, your starting capital is small and so you target small electronics that can be shipped easily and have a decent margin. So you visit Alibaba and find a few MP3 player or USB manufacturers and send them emails via Alibaba’s messaging system.
2. Making contact with sources. The next day you find several emails with quotations on pricing, payment terms, and shipping terms. To your surprise, the pricing seems to vary greatly. All of the sources require wire transfer or Western Union for payment. This seems to catch your eye as a risk but since your initial order isn’t going to be too large you don’t find it unacceptable. You also realize from previous experience that small orders such as these are usually paid via T/T or Western Union. Many of the emails received are from sales people with broken English but are generally decipherable.
3. Placing the order. You trade emails with a few sales reps and check out their company profiles. Many have Alibaba certified Gold Supplier status. This gives you some relief. You even check out your supplier’s website. The website looks professional and there are pictures of the factory. Their website links to their Alibaba page and you verify that the website url is legitimate.
4. Order placed, now where is it? You place the order and pay via T/T. The sales rep sends an email with the shipping tracking number. You check the tracking number on the courier’s website but discover that it is invalid. No worries, it’s too soon you think. So you check again the next day and the result is the same. Now you begin to worry and email the sales rep only to never get a response nor your order in the mail.

So what happened? You were diligent in checking the company out. It’s an Alibaba Gold Supplier after all. The website looked legit too. Here’s how the scam works:

• Alibaba Interface. When you emailed the suppliers on Alibaba your email gets sent to a sales rep from the company registered on Alibaba. Even though the company may be verified as a Gold Supplier, it is possible that the actual contact that received the email conducted the very unethical practice of selling your lead to a scammer. Or, the company that is on Alibaba actively works with scammers. Whatever the situation, your lead is now in the hands of scammers.
• Trust Gained. The scammers then email you a price quote posing to be one of the legitimate suppliers on Alibaba. If you look very closely, the price quote email provided by the scammer will have a signature at the bottom with a website url, phone, address, and sales rep name of a legitimate trusted supplier. You can verify all you want, but that company on the email is most likely a trusted valid supplier. The problem is, the person you are talking to doesn’t work for that company even though the email signature and email address appears to be that of the company. It’s likely that you received many emails that appear to be from legitimate sources that were actually sent from the same scammer or group of scammers.

So here are some clues to look for:

• Check Your Alibaba Emails. You can check the messages you actually sent on Alibaba. Just log in and go to your message center. If you sent 5 messages but received 8 messages back, some of those emails are probably from scammers.
• Check the Sender’s Email Address. Sure, the scammers have replicated a legitimate company’s contact details. Except there is one piece of info that they didn’t. It’s the email address from which they sent you the price quote email. Compare the email address from the price quote email to the email address the company has listed on their website. They may look the same, or appear to be from the same company, but may be different in some way.
• Check the Price. You may or may not have the experience to recognize proper pricing but be wary of price quotes that are much lower than other one’s you’ve received. Keep getting quotes to get a feel for the norm. And ask why the pricing is so low.

Now that I’ve explained the scam and the clues, here are some countermeasures to minimize risk:

• Only buy what you are willing to lose. Playing in the trade of certain products is sort of like gambling. Don’t put all your eggs in one basket. It doesn’t make sense to place a large order with a supplier you have never worked with.
• Get on the phone. It is sometimes troublesome to speak to a representative with limited English and during odd hours due to the time difference. But it is an effective way of knowing whether the person you are talking to actually works for the supplier. Just go to the supplier’s website and then call the phone number listed on the website. When you speak to the rep just ask how your order is going? Or ask whether you can change something about the order. If the response is “We never received your order” then chances are you actually have been communicating with a scammer posing to be the actual supplier. If you are not comfortable getting on the phone or find the language barrier to be an issue, we offer phone verification service. Just provide us with the order details and the phone number and we can three way conference call with the supplier and ask the revealing questions for you in Chinese.
• Google the company name. Just a simple google of the name of the supplier may result in some clues about it’s authenticity. Google results may include message boards and websites that track names of companies that are commonly used in this scam as well as companies that are simply fake. But remember that this is not fool proof since new companies and new scams appear all the time.
• Verify the supplier. If your order is large enough or you just want to eliminate the risk, then contact a company to verify the supplier. Trusting a verification company local to China may also be a risk however. If this is the route you’d like to take though, our services include verification services. Our trusted contacts in Shenzhen can visit factories and suppliers and interview representatives as well as sometimes get pictures or place sample orders. We’re Americans that have lived in China and have solid contacts- many of which are expats. Our company is a registered LLC in the state of Virginia. Go to http://www.gchworld.com for more info. Whatever you do, be safe!

Anybody know of any other scams or variations of this one? If so, please share!

China Scams- Tourist and Shopping

This is the second installment of the China scams series of blog posts. Today I will focus on Tourist and Shopping related scams. This is a broad topic so I will only describe some of the common scams I’ve heard of or run into.

Tourism is huge business in China. Visitors to China often join tour groups because of the convenience. Although there is safety in a controlled environment such as a tour group, visitors can still fall prey to scams. Those going it on their own also need watch out for scams. Even if you are an experienced traveler. Here are some tourist/shopping scams:

• Taxis. I have already covered counterfeit money and fake taxis in the previous post. There’s more to taxis however. It is common for taxis to target tourists by offering a ride without the meter and then requesting a fee well above the norm. An example is when backpackers visit the remote city of Xining in Qinhai province. Taking a taxi into town takes about 30 minutes and taxis don’t usually use the meter for this ride. However, visitors must take the initiative to ask how much the driver will charge for the trip before getting into the cab. If the amount isn’t agreed upon prior to getting into the cab, then the driver may take the liberty to charge double or triple the typical amount. It’s best to know beforehand how much is the typical fare.
  
  In addition to disputes over fees, it is common for taxis in tourist areas to get kickbacks from restaurants, tourist sites, museums, etc. So if you find yourself in a cab and ask the driver for best sites or best restaurants, more than likely you will go to the place where the driver gets a kickback which may not be tourist guide recommended.
• Tourist Traps.Many tours stop at tourist trap places such as parks, temples, and sites that are heavily manicured and scripted. These places are aggressive in targeting tourists. An example is the Li minority village tourist site in Hainan. The site appears to be a quaint village with men and women dressed in traditional outfits escorting tourists through the village. But at every turn, tourists are forced into role play and then aggressively charged a fee for participation. For example, the moment a tourist group arrives, all the tourists are given traditional hats and jackets to wear. Then a mock wedding ceremony is conducted without the visitor’s permission. Once concluded, you are asked to pay 49 RMB for the ceremony and performance. Other aggressive tactics include having fake buddhist monks tell tourists’ fortunes and then charge another fee. It almost seems like the tourist experience is basically being walked through a scammer obstacle course: one activity forced upon the tourist after another with another ‘fee’ charged on top! The only way to avoid being forced through this is to politely decline participation and end the visit short or just wait by the tour bus.
• You break, you buy. Another scam that targets tourists is the “You Break, You Buy” scam. Many tourist sites have vendors set up nearby that sell souvenirs, gifts, and other trinkets. Tourists that enjoy browsing and touching the products are targeted. The vendors work with a partner that acts as a pedestrian also browsing who “accidentally” bumps into the tourist causing the tourist to drop and break the fragile souvenir. At this point the proprietor of the gift stand demands the tourist pay for the item; usually a price that is many times the value of the gift that was broken. This is a common scam in Yangshuo by the souvenir stands at the cruise boat deboarding area. The best advice is to look but don’t touch.
• What fee? Another tourist scam that is common in Yunnan province and other places is the assessment of fees for places that are normally free. In areas that are heavily trafficked by tourists, the locals and sometimes the local police get in on some money making action by staging as fee collectors for various sites, restrooms, and other facilities. You may find out later from locals that a particular restroom or site is free of charge. The only way to avoid paying unnecessary fees is to ask for an id card that identifies the fee collector as an employee of the place you are visiting. If that’s not worth the trouble to you then you can consider the charge an “outsider’s fee” and just pay it since it may be just a minimal cost.
• Bait and switch. In many shopping areas, tourists and visitors buy clothing. One particular shopping scam is where the shopper visits a store and finds a piece of clothing to buy, say a shirt. The store salesperson may ask whether you’d like a shirt from the back of the store rather than the one that’s displayed on the floor. Or the sales person may ask if you need a different size. I’ve heard of shoppers paying for one thing and then getting another thing. This happens when the shopper picks something out and then agrees to get a brand new wrapped shirt from the back. In this case, the shirt you receive may be of inferior quality, damaged, irregular, or not what you expected.
• Fake Goods. There are some great shopping bargains in China. But be careful when shopping for name brand clothing and other goods. Famous shopping centers such as Silk Street Market in Beijing have official certifications that the goods sold are authentic. That is, the Polo shirt you buy is an actual Polo and not a knockoff. But in recent years, its been found that even government certified shopping areas can and do have knockoff or faked goods. Another product that tourists like to buy are bootleg dvds of American movies and tv shows. These shops are prevalent. Sometimes the dvds will work or sometimes they just simply won’t work. There is no way to really tell unless you bring your laptop and test them out. Also, even if you try to avoid buying bootlegged dvds and want to buy authentic dvds, you may have a hard time deciphering authentic from bootlegged since even the large reputable department stores may carry dvds that are copied. It’s up to you personally whether you are comfortable buying media in China. If you are, then try to test the disc out before buying. Otherwise, you may be disappointed later.
• Where’s my wallet!?!. The large crowded cities of China are full of pickpockets. This isn’t really a scam as much as it is just petty thievery that the tourist or visitor must be wary of. The more crowded a street, subway car, or station is the easier it is for pickpockets to ply their trade. Due to such tight quarters you get used to bumping and brushing against people. I’ve seen a pickpocket nonchalantly pull on a backpack zipper while being stuffed in a crowd of people exiting a subway station. He was noticed and disappeared but this could easily have been just another street theft. I even remember a tv news program in China where they selected a young woman and told her to hide her wallet while strolling around downtown because the tv show had planted a pickpocket in the busy city center. The challenge was to see if the young lady would be able to detect the crime. Without knowledge of where the cash was hidden, the experienced pickpocket sure enough was able to stealthily obtain the woman’s cash without her knowing. That’s how good these theives are! Please beware of your belongings and have a copy of your passport in a safe place.

Ever been swindled in China? Share your story in the comments below. Newbie travelers can definitely use some wise advice!

China Scams- Counterfeit Money

I’m all for safe cultural and economic exchanges between China and the rest of the world. But the reality is that seasoned travelers as well as first time travelers all should be vigilant when it comes to scams. Traveling to China or any foreign country is an exciting experience. However, given the unfamiliar landscape, language, and customs, you can easily be swindled. Because the number of scams seem to have grown along with increased trade and travel to China, I will be writing a series of blog posts on this topic in the coming weeks. Today, I will focus on the subject of counterfeit money.

Here’s how it works. You as a tourist or traveler sees vendor of some sort of service or product (usually vendor is a fruit vendor or taxi driver- mobile, temporary, with no permanence). You buy the product or service but use a 100 RMB bill to settle a small tab of only 10-20 RMB. The vendor gives you change but instead of giving an authentic 50 RMB bill plus some smaller bills, the vendor gives you a counterfeit 50 RMB bill along with other bills. You don’t notice because the 50 bill is stuffed in with the other small bills. On the surface the bill looks like an authentic 50 RMB but the paper feels just like your average office paper and not the textured heavy duty money paper.

A more aggressive version of this scam goes like this. You being a tourist with lots of fresh 100 RMB bills approach said vendor who may be alone or with a partner. You settle your tab with a 100 RMB bill. The vendor inspects the bill and disgustedly claims that its a fake and asks for another one. The moment you take your eyes off of the bill you handed to look for another one in your wallet, the vendor returns you a fake 100 RMB bill. This exchange is repeated with all your authentic bills until your wallet is full of fake bills. This scam often works in teams where one partner’s job is to distract you enough so that the other partner can switch the bill being returned.

If you find a fake bill in your possession, do not attempt to use it. It may be upsetting to find a fake bill in your wallet or purse. The first impulse is to go out and try to use the fake bill in an attempt to make up for your loss. But please do not use the bill. It is illegal to use counterfeit bills and the more of them in circulation the worse off everybody is. Local vendors can easily spot fake bills and imagine the awkwardness in being “called out.” Instead, report to police or destroy.

It’s also possible to receive counterfeit bills from legitimate sources. For instance, it isn’t unheard of for bank ATMs to occasionally give out one. Or say an employer paying English teachers in cash to give a fake bill. These instances are usually unintentional and happen because fake bills have infiltrated business operations. In these cases, early detection is best so you can exchange for a legitimate bill.

Here are some countermeasures:

• Always carry enough small bills to be able to pay with exact change.
• Never take a ride with an unofficial taxi. Many of the scammers are fake taxis that wait near tourist sites and border crossings. Night time in these areas are usually rife with scammer taxis. Often the scammer taxis gain customers simply because of long waits for the legitimate taxis. Being lowly lit at night, scammers can execute their ploy much more effectively. Just wait for a licensed taxi but stay vigilant for fake bills exchanged when making change. Take notice of the licensed taxi’s license and id number if there is suspicion.
• Learn to identify fake bills. Use a small UV light to inspect the official hidden watermark. Or use your fingers to make a small tear on the bill. If it tears easily like regular paper then it’s fake. Another method is to use your fingernail to scratch Mao’s collar. Authentic bills have texture and the image of Mao has raised texture on the bill. Scratching the collar will make a noise and the texture can be felt. Also, the media occasionally will report on bills with certain serial number ranges being fake.

Blog Begins!

It’s been a long time coming but this is the beginning of the GCH World blog. GCH World LLC is a import export agency focusing on trade between the USA and Asia; in particular, China. In addition to trade and commerce, my intent is to cover China lifestyle, travel, business, and other current events through this blog. It is an exciting time in our history with the need for greater cross Pacific cultural and economic exchanges with China as important as ever. Stay tuned for more…