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Warning Signs of a Chinese Scam

Sound too good to be true? Then it probably is!

"Red Flags" with Your Chinese Buyer

  • Unfamiliarity with your product's application
  • Limited details or unwillingness to provide information on the project in which the materials will be applied or the end user
  • Discrepancies on business cards that cannot be clarified
  • Incomplete information on the purpose of the ‘fees’ outlined in the contract
  • Inability to specifically explain the regulations or government entities that are allegedly imposing certain fees
  • Offers to sell certain internal government information or sensitive commercial information
  • Rented cell phones
  • Location of office space in residential areas
  • Less than one year of operation history with very young leadership
  • Insistence on paying for a banquet in cash to the Chinese entity prior to concluding contract
  • Cash requested for cost of hosting a banquet is far in excess of typical costs.  [While banquets are a traditional business activity, the U.S. entity can arrange for a banquet through their hotel.  While costs vary, a nice event for $10 at a local restaurant (non-western hotel) might run $200]
  • Unusually large product volume or urgency to purchase
  • Insistence that the contract is only legitimate if signed in China
  • Requests for an invitation letter to visit the U.S. facility prior to any substantive communication about purchase terms or exchange of company background information
  • Insistence upon attending a banquet prior to concluding a contract later in the evening[referring to getting the foreigner intoxicated in an effort to finalize contract terms more favorable to the Chinese buyer]

For more red flag indicators, click here

Protect Your Business!

  • Request a copy of the business license, check validity of address and phone number, license validity date, name of registered representative, etc. 
  • Request a copy of the company's certificate of import/export authority
  • Verify the company's international trade experience and avoid firms that have less than two years of experience
  • Seek multiple references and check them. Request referrals to both suppliers and customers
  • Order an International Company Profile Report through the U.S. Commercial Service
  • Accept only secured forms of payment such as letter of credit or direct telegraphic transfer (T/T or wire transfer)

Report Fraud to the FBI

If you believe that your company has been a victim of internet credit card fraud you can file a complaint through the FBI Internet Crime Complaint Center at http://www.IC3.gov.    IC3's mission is to serve as a vehicle to receive, develop, and refer criminal complaints regarding the rapidly expanding arena of cyber crime.

China Wire Transfer Fraud Alert!


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