Scammers in China - protecting yourself from ripoffs

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Chinese Scammers - who are they and how to protect yourself

It is more and more common to see complaints online from buyers who have been ripped off trying to buy products from China. So who are these scammers and how can you protect yourself from being scammed and losing your money? Well in most cases it is pretty straightforward so I thought that I would outline some of the main considerations in this review.

I have been fortunate to have had a great deal of exposure to factories in China and the way that the staff and bosses of those factories think. Having lived and worked in China for 15 years and being able to speak and read Chinese has given me an insight that most foreign buyers do not get. My roles in China were varied ranging from work with a local Chinese trading company through to Chief Representative of a foreign branch office in a Chinese city for a European sourcing and procurement company with customers that included Walmart, Harvey Norman and other leading retailers throughout  Europe, the USA, and Australia. I am also an invited moderator on the trading website alibaba.com which would be the most recognised website for sourcing products from factories and suppliers.

Who are the scammers?

In almost all cases Chinese scammers are individuals. China still maintains the death penalty for fraud so in most cases of foreigners being scammed of money it is very unlikely that a company is involved. Most of these scammers are young university graduates of English. They have entered the work force in the foreign trade sector and perhaps realised that the salary of a new graduate is very little compared to what transactions are going on around them. A bit of greed, an opportunity, and some naieve foreigners with a little too much money is the recipe that turns these individuals into scammers. I suspect that many of these scammers actually set out trying to earn some legitimate money on the side but when they realise just how much money they can make scamming foreigners the temptation is just too great.

Most of these individuals would be living in the factory dormitory often at the factory which in most cases will be on the edge of a town or out in a rural or perhaps a commercial district. Having just come from a university with thousands of young people their own age they are now living in the middle of nowhere with people much older than themselves. They would generally work six or seven days a week, around 8-10 hours a day. The reality is though that being isolated as they are they would commonly spend 12-14 hours a day online in their offices as they have nothing else to do. The only vacation time they get is public holidays and a week or two holidays around the Chinese New Year period. So plenty of time at work and plenty of time on their hands!

A recent university graduate working in a medium sized factory in most areas of China could expect to earn around RMB3,000 (AUD500) per month so the temptation to scam can be quite considerable.

Having said this most of these scammers are not very intelligent and are actually quite easy to detect and outwit if you take a moment to consider what they are offering. If these individuals did actually have any intelligence then they would be making money legitimately so keep this in mind as you consider the situation.

How do they scam you?

Scammers are preying upon your vulnerabilities so the more you protect yourself the less likely you are to be scammed.

They will use the greed and naievity of some foreign buyers to their advantage. If you are careful and you do not try to buy items that you have no right to be buying then you are very unlikely to be scammed.

Chinese scammers will offer products that they know will attract young buyers. They offer products that any serious foreign buyer would never consider attempting to buy from China. They offer these products for bargain basement prices with very few apparent strings attached. They know that these are the buyers who are going to part with their money easily and also the buyers who are least likely to be able to follow up after they have been scammed.

So if you as a buyer know what you can and cant buy in China then you are off to a good start. If you know what a reasonable price for a product is from China then you are again informed which will help to protect yourself. Finally if you know how to transact securely then you are again protecting yourself from these scammers.

What are some main scam products?

Some of the main product lines that buyers get scammed on include:

1. Foreign Brand Name products - any product that has a name attached to it that you recognise is almost certainly going to be a protected brand name e.g. iPhone, Nokia, Nike, Burberry etc. These brand name companies may contract a factory in China to make their products for them but this production is done under strict contractual arrangements. The Chinese factory does not own the product but the customer does. So you cannot buy these items from the factory, you can only buy them from the brand name company and their licenced resellers. If you are interested in buying foreign brand name products for resale then contact the foreign brand name company attached to those products and ask them and they will inform you of the process for buying which will not include buying direct from China. It cannot be done so dont try and do it or you will lose your money.

So what are the scammers in China who offer these foreign brand name products selling then? Well there are a number of categories:

a. Selling nothing - most scammers are offering product that they just dont have to sell. Once they get your money you will never hear from them again. They will generally avoid pushing for big deals and will instead try to entice you with great deals worth under a couple of thousand dollars. They know that you are more likely to part with that cash and also less likely to try to follow up after you have been duped.

b. Selling refurbished products - in the case of mobile phones and other tech products some scammers will offer you 'authentic' products at very low prices but once you receive your products you will realise that it is not as expected. They may be selling what looks to be the real deal but is in fact filled with refurbished or fake parts that just wont last as the real ones would. So you end up with items that look great but essentially dont work.

c. Selling out of region products - less common but also possible is that you may end up with 'real' product but product that was built for other regions of the world where requirements are not so high. In order to compete with the counterfeit markets in many developing countries some foreign brand name companies will actually licence the production of 'B' grade products that are real brand name items but are manufactured to lower standards in order to be able to compete on price locally in some of these developing countries. A lot of these products will be incompatible with Australia and less reliable as a product.

d. Counterfeits - far less common in the tech products but very common with other products you may be sold fake countefeit products under false claims that they are real. So you are essentially paying far too much for an item that you could have purchased for a lot less.

2. Technology Products - including MP3 and USD storage devices etc. In the case of storage devices they will offer high storage capacity products at low prices only for you to find that the real capacity of these products does not even come close to what you believe you have purchased.

3. Hot Products - whatever the hot product of the moment is some scammers in China will offer these products. Whether it is pocket bikes or Pandora compatible bracelets, you can be sure that a scammer will offer the product and that foreign buyers will continue to lose their money trying to get rich quick.

So if you try to buy the wrong products in China then you are going to cross paths with scammers and quite likely lose your money.

So how can you spot a scammer?

There are some obvious give aways that a seller in China is a scammer and these include:

a. Offering foreign brand name products - any seller in China that offers to sell you foreign brand name products is going to be a scammer of some type or another. There is no legitimate avenue for you to be buying someone elses property (i.e. the property of the foreign brand name company) from anybody but the foreign brand name company and their licenced re-sellers. Verify the sellers details with the foreign brand name company and you will see that they do not exist as a legitimate re-seller.

b. Offering a range of products - sellers that offer a range of products that have no obvious relationship to each other except for being in high demand products. For example a seller offering Nokia mobile phones and Nike running shoes is going to be a scammer as that is not the way the sales process works in China.

c. Offering products that are not manufactured in the sellers area - China is an interesting country in that every product is produced in certain areas. High tech products are generally produced in the south of the country so any seller in the North or Central China that is offering these products is most likely a scammer.

d. Payment methods - legitimate sellers in China can only receive foreign currency into specific company named bank accounts. Any seller that asks you to pay into a personal bank account will often be a scammer. Any seller that asks you to pay by Western Union or Money Gram is almost definitely a scammer. Any seller that asks you to pay by Paypal is almost certainly not a business but an individual and quite likely a scammer.

Tips to avoid being scammed

a. Never try to buy foreign brand name products from China.

b. Never send money to individuals. Only send money to companies. Bank transfer is a common and legitimate way to purchase products from suppliers in China and provided that you only pay to companies you are increasing your chances of avoiding being scammed. I would also never send payment via Paypal for reasons that I will outline later.

c. Never spend any more money with a new supplier than you can afford to lose.

d. Verify the sellers contact details as most scammers hide behind fake contact details. Take the time to call a fixed line phone number to speak with your seller. Send them a letter to their listed street address with some information that they will only know if they receive the letter i.e. you could post them your order or a sample picture or something.

e. If at all possible contract a buyers agent or inspection company to check the goods production before releasing final payment to the seller. This may cost you a couple of hundred dollars but it ensures that you are getting what you are paying for.

f. Dont believe a scammers excuses. A legitimate seller will find ways to overcome problems - a scammer will hide behind excuses as to why you cant call them  on the phone, or why their company name cannot be found online etc.

Is Paypal a secure payment method for buying from China?

In my personal opinion no it is not a safe payment method for buying from China.

First off, no legitimate supplier in China is going to accept payment via Paypal. Most will not have ever heard of Paypal and even those that may have heard of it will not use it as it can be difficult for them to set up in China and also unneccessary for them as they do plenty of business with the standard payment method of bank transfer so will have no interest in Paypal.

Individuals and scammers will however be willing to accept Paypal as they will know that any buyer requesting this payment method is both new to buying in China and also looking to buy in small quantities - two keys that scammers look for when finding victims.

Assuming that you do make a payment with Paypal then the only protection that you have is that an item will be sent. You have no real protection that the item sent will be what you actually purchased. So assuming that you use Paypal to purchase 5 pairs of 'authentic' Nike shoes yet you receive 5 pairs of unbranded shoes then you will be required to return the unwanted products via a trackable method in order to get your money back from Paypal and here is where the problem arises.

If the seller has already absconded with your money then there is nothing that you can do. Paypal may refund your money from their 'kitty' but that is unlikely.

If you try to send the items back to the seller then first off it is going to cost you more than it is worth to ship international registered post. Secondly it is quite likely that your goods will be confiscated by customs in China and the seller will never receive the package as the goods will be considered a commercial import which is highly regulated in China. Eevn if the goods are to make it past customs it is most likely that the scammer has not provided accurate address details to Paypal so your goods will never arrive.

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