Over the past ten years, I have heard of many companies getting scammed as follows:
- They pay a supplier (usually in China) by bank wire (T/T)
- At one point, the buyer receives an email that seems to come from the supplier (but is actually sent by a scammer who somehow got access to either the buyer or, more often, the supplier’s email account) requesting a payment to a different bank account
- The buyer sends the money to that different bank account, but the supplier never knows anything about it and doesn’t receive the money
- In the end, both parties realize the situation, and nobody accepts responsibility for it
Recently, a client suggested that we offer this as a service. I thought a bit about how to package it, and here is what I came up with:
- Call the phone number shown on the supplier’s website, or their Alibaba/GlobalSources/Made-In-China profile, and ask for confirmation that the contact person provided by client works in that company.
- Call the phone number provided by the buyer, and ask for confirmation that it leads to the contact person provided by client.
- Get the bank account information in English from the supplier by email: bank name, bank branch name & address, SWIFT address, bank account number, account name and address
- Confirm it’s a company bank account, and the company name seems to be the same one as communicated by the client
- [If the company is different] Request a letter from the supplier, in Chinese, with their company chop, certifying that they want payment on that other company’s bank account (insert all the details of that company and that bank account in the letter) and any payment to that other company will be treated as a payment to their own company for all commercial and litigation purposes. Suggest that the buyer consults a lawyer to confirm it.
- Send the supplier a very small sum from a China-based bank account (not by SWIFT since it is a local payment, but using the bank account information in English provided by the supplier)
- Get the supplier’s confirmation of receipt, and their confirmation of the right amount, both by email (note the email address) and by phone (note the phone number, get their confirmation that they did send the email).
In the end, we created a solution that our clients can buy from Sofeast: Supplier Bank Account Verification. Feel free to take a look if you’re interested, as it is fast and affordable.
This should actually be part of an importer’s due diligence efforts, before sending money to a new supplier. It is a good supplement to checking the supplier’s basic company information and to sending a quality auditor to their factory.
In addition, as I noted in the above-mentioned infographic, the buyer needs to have a procedure for the case where the supplier requests a change of bank account. It may be a good idea to go through the process of verifying the new bank account, from scratch, like the first time…