Stay vigilant and remind again about the risk of trade fraud

In recent years, the tightening of monetary policies in major European and American countries has led to sluggish consumer demand in overseas markets and a decline in foreign trade orders. Many export enterprises have increased their pace of exploring new business, “taking orders eagerly” and “taking orders every time”. As a result, some unscrupulous elements have sniffed out “business opportunities”, and after dressing up, they have implemented the “empty handed white wolf” strategy, implementing trade fraud against enterprises. This type of case has clearly risen.

“Prevention is the key to trade fraud risk”. In order to prevent export enterprises from winning the bid, since this year, Sinosure Fujian Branch (hereinafter referred to as “China Export and Credit Insurance Corporation Fujian Branch”) has issued several articles on fraud risk prevention to remind export enterprises on the March 15 Consumer Protection Day and during the Canton Fair. This time, we will share with the majority of export enterprises the following typical cases of our brother branch companies, for export enterprises to learn from and assist them in risk prevention before doing good deeds.

Case Introduction

Case 1

Guangdong export enterprise A received an inquiry from Mr. S, a self proclaimed buyer of B from the United States, through an international e-commerce platform. Both parties quickly confirmed the purchase amount of hundreds of thousands of dollars, but they requested that the payment be settled on credit for 60 days. To dispel the doubts of Enterprise A, Mr. S provided a so-called “company official website” link for Enterprise A to consult on its own. On the other hand, to show its sincerity in cooperation, Mr. S also paid a small deposit to Enterprise A. After browsing the official website page provided by Mr. S and receiving a small deposit, Company A dispelled doubts and agreed to sign a trade contract with Mr. S with a settlement method of OA60 days. After the goods are produced, Mr. S instructed Enterprise A to send the goods to the Ugandan port. However, after Mr. S picked up the goods, he immediately lost contact and Enterprise A did not receive the payment, so he reported the loss to China Export and Credit Insurance Corporation Guangdong Branch.

Subsequently, China Export&Credit Insurance Corporation’s overseas channels contacted Company B in the United States. Company B denied engaging in any transactions with Chinese company A, stating that it had not received the goods involved in the case and had no branch in Uganda. At the same time, Company B denied that Mr. S was an employee, and the email used by Mr. S was not his company’s email. Company B provided his official website for comparison, but at this time, the so-called “company official website” provided by Mr. S earlier could no longer be opened. Company B stated that it had reported the case to the local police after discovering that a third party had used its name to engage in transactions with foreign companies. (From China Sinosure small and micro enterprise service official account)

Case 2

An employee of M claiming to be importer B placed an order with Ningbo exporter A and voluntarily proposed that exporter A investigate importer B’s credit and apply for a credit limit from China Export&Credit Insurance Corporation. Exporter A has applied for and obtained approval from China Export&Credit Insurance Corporation for a credit limit of $200000 under Importer B. M immediately negotiated the type and price of goods with exporter A, and the negotiation process was very smooth. Exporter A quickly received an order of over 100000 US dollars from M for LED lights. Exporter A shipped the goods to the designated port as required, but M lost contact after picking up the goods.

After investigation through overseas channels, Importer B denies conducting trade with Exporter A and confirms that they have never received the relevant goods. They also declare through relevant channels that the signature of the trade contract signed between M and Exporter A is forged, M is not an employee of Importer B, and the contact information provided by M does not belong to Importer B. (From the official account of Sinosure Ningbo Branch)

Characteristics of Trade Fraud Cases

（1） From the perspective of purchasing products

Trade fraud cases mainly involve general products and products with good resale performance, such as household appliances, daily necessities, textiles and clothing, which are easy for criminals to quickly clear customs, pick up goods, and handle.

（2） From the perspective of communication situation

1. Proactively finding export enterprises through exhibitions or websites and requesting export credit insurance, indicating their strong strength, and the insurance company can approve credit limits. There are behaviors such as voluntarily presenting one’s registration documents, photos related to company operations, and approval documents related to insurance companies, attempting to prove that one’s business is legitimate and normal.

2. The first transaction requires OA or DA settlement, while lacking knowledge of product expertise and being insensitive to product quality and price.

3. During the order execution process and before the goods are picked up, the email communication is smooth. Various promises will be made to pay for the goods as soon as possible before and after the goods arrive at the port, but the contact is lost after the goods are picked up.

4. In the case of intermediaries or intermediaries, the intermediaries or intermediaries indicate that commission is required for introducing business. All trade documents are signed with the final buyer through the intermediaries or intermediaries, and the contract title is displayed as the final buyer, but the export enterprise has never contacted the final buyer.

（3） From the perspective of trade documents

The contract or PO format for placing an order is relatively simple, but it may be overly standardized in document signing, including proactive stamping, signing, etc.

2. In terms of bills of lading, it is often required that the goods be sent to a third party or a third country, and the reason given is often to send the goods to the final buyer or to have business in a third country. Some bills of lading may have discrepancies between the notified party and the agreed consignee.

（4） From the buyer’s business card

1. When impersonating a well-known buyer to place an order, the email address on the business card is often a public email (such as gmail, hotmail, yahoo), and the email name is displayed as the well-known buyer, or there are only a few letters or characters that differ from the real buyer’s email, which can easily lead to export companies neglecting verification.

2. If it is not for impersonating well-known buyers, the official website on the business card may be excessively simple; Use map software to search for the address on the business card or sample delivery address, which is actually displayed as a residential area.

（5） From the credit report

1. There is a discrepancy between the main business and the purchased goods.

2. There is a situation where a large number of domestic export enterprises simultaneously inquire about orders in a relatively short period of time, and the commodity industry covers a wide range.

3. There are situations where the company has been established for a long time but has been dormant and has been activated in recent years. They actively provide financial reports and their performance is relatively “impressive”.

Enlightenment from Three Cases

In order to prevent fraud risks and protect the rights and interests of export enterprises, the following risk suggestions are for reference:

1. Fully verify the buyer’s information. Export enterprises can request company registration documents, business licenses, tax registration documents, etc. from the buyer, and initiate a credit investigation with China Export&Credit Insurance Corporation or inquire about the buyer’s relevant credit situation through channels such as the “Xinbu Tianxia” app, to verify the buyer’s key information, including name, address, tax number, phone number, email address, responsible person, management personnel, main products, etc;

2. Verify the buyer’s identity through multiple channels. Before the transaction, it is recommended to call the buyer, for example, calling the buyer’s switchboard to request the transfer of the procurement personnel in contact with this time, and communicating with the buyer’s public fax number or email for normal trade related information; Alternatively, use a domain name query tool to verify the buyer’s “official” email and website registration information (such as the domain name query website www.whois.com and the IP address query website www.whatismyipaddress. com).

3. Carefully verify the bill of lading information. Export enterprises can consult with freight forwarders about the pickup policy of the destination port. At the same time, they should pay attention to the relevant bill of lading information provided by the buyer, double check key information with doubts (such as discrepancies between the receiving party or notifying party and the buyer), remain vigilant, and timely control the order. The bill of lading is the core voucher for the delivery of exported goods. It is recommended that the shipper and consignee information on the bill of lading should be consistent with that of the trade buyer and seller, and the order should be carefully modified to reduce transaction risks. Among them, in addition to spelling consistency, attention should also be paid to whether there is a significant difference between the recipient’s address and its registration information, and whether the notifying party is the subject with the right to receive the goods.

4. Be cautious in dealing with first-time buyers. For first-time buyers, it is recommended that export enterprises require the buyer to pay the advance payment through the company account of the contract subject (currently the most effective means to prevent third-party impersonation fraud). If the other party refuses to pay the advance payment for the initial transaction, or if the payment party is inconsistent with the buyer, or if the actual place of shipment is inconsistent with the buyer’s country, special caution should be exercised. And currently, the number of countries involved in fraud cases is increasing, no longer limited to Greece, Uganda, and other regions. Cases in the United States, France, the United Kingdom, Italy, and other places also occur from time to time.