Alibaba GOLD Member SCAMS!

The blog is turning in to a bit of a scam buster site now, as today we have a post all about Alibaba Gold Supplier scams, to follow on from last week’s one on Trademark applications.

Anyone who has read my very popular post “exposing the Alibaba scam” or the follow up article I did detailing the 10 most commonly attempted scams on Alibaba will know that I always recommend that you only deal with Gold Suppliers when sourcing products on Alibaba.

In fact, it’s the very first criteria I use when I’m searching for a new supplier and want to instantly filter out a large majority of the un-safe options. The reasoning behind it is incredibly simple – it costs a lot of money to become a Gold Supplier on Alibaba and most scammers are unwilling to spend that sum, when they know their account won’t last long anyway.

So does that mean only dealing with gold suppliers on Alibaba protects you completely against scams and makes you 100% safe? No, unfortunately not! You can still get scammed by gold suppliers on Alibaba and that’s exactly what I want to talk about today.

But before we get started with the meat of today’s post – I do want to quickly point something out: the absolute vast majority of gold suppliers on Alibaba are 100% legitimate companies. Of course I can’t put an exact figure on it, but I would estimate that around 1% of your dealings with these companies will be a scam. And no matter where you’re ordering from, a 99% success rate is very impressive!

So please don’t let this article scare you away from Alibaba, as that is the opposite of my intent! Instead I want you to feel more confident so that you can use Alibaba safely to source great products at great prices.

Alright, now that’s covered, let’s get back to the topic at hand.

From my experience and knowledge, there are 5 main instances when you may be scammed by a gold supplier, and we’re going to go through them one by one so that you know what to look out for:

Disloyal Employee

This is the probably the most common case of gold supplier scams. The way it works is a disloyal sales rep/employee of the company you’re dealing with scams you (and them!) by diverting any money you pay towards your order.

I’ve found that this happens a lot more when you post a buying request vs when you yourself contact companies directly. And that’s actually one of the reasons why I suggest against posting buying requests in general – you receive such a huge amount of unqualified responses and a lot of it is pure scam attempts, plain and simple.

But I know what you’re now wondering – how exactly do these employees steal money? I mean, surely Chinese companies don’t give account access to their sales reps!?

And you’re right of course – they don’t! What these rogue employees do is send everything to you exactly as normal, i.e. correct invoice, correct address, all the company details as they should be, with one small (but extremely important) change – they alter the payment details! So instead of the usual company account, they will instead ask you to send money somewhere else, usually via Western Union or Money Gram.

If you do happen to notice and question why you’re paying an individual, rather than a company, they’ll usually feed you a long story about how their account is having some problems or is being verified and in the meantime they are taking payment directly to the boss/owner via Western Union.

Of course that is all made up nonsense and you should never believe such stories! If something doesn’t sound right, then it most likely isn’t, so don’t convince yourself otherwise.

I have said this time and time again – you should only ever send money directly to your supplier’s company account, via PayPal or via Alibaba’s Trade Assurance and you should NEVER use Western Union, Money Gram or any other similar payment method which offers you no protection whatsoever.

Really if you’re following my filters and guides, you would never fall prey to this scam as it breaks one of the no.1 rules – payment methods!

Also, if an employee does try to scam you in this way, you should always contact the company via some other means (just using their Alibaba contact will do the trick) and inform them about it.

Alright, let’s move on to scam attempt no.2:

Hacked Account

This is quite similar to the rogue employee scenario, but is a much less common occurrence. Basically in this case, the gold supplier’s account has been hacked and another person/company will use their credentials to fool you in to sending money.

But as with the first scam we looked at, the big give away will be the different payment methods – once again this will usually be Western Union or Money Gram but could also be another company’s bank details.

This is slightly trickier to spot, as on paper the payment method is safe, and that’s why I always say to make sure you verify the details sent to you in the invoice to be 100% certain they match the company you’re supposed to be dealing with. As before, don’t believe any stories about it being a “sister company” or one of the owner’s other businesses!

If something doesn’t feel right or you have any doubts, then contact the company via some other means and speak to another employee who will be able to confirm whether or not there’s a scam taking place.

Fake Identity

This scam is incredibly common with free profiles on Alibaba but it can occasionally slip through to gold suppliers as well. What happens is a scammer will set up a profile using the details of a legitimate company, who they obviously have nothing to do with! They simply use their name, registration details, logo etc. so that they come across as genuine and trustworthy.

Though I do have to say that it’s very unlikely that you’ll come across this scam with a gold supplier, as Alibaba are usually excellent with verifying the details of companies who apply for gold membership. And if some do somehow slip through the cracks, then once again you should be alerted by the fact that the payment details don’t match up (that really is the running theme so far!).

Bought Account

This scam is slightly more unusual and hard to explain, though it is something I’ve witnessed several times over the last few years. From what I understand, scammers buy gold accounts on Alibaba from companies that have gone bankrupt or are no longer trading for whatever reason.

That way the scammer gets the mark of authenticity without having to pay the real price (which is what puts them all off in the first place). This scam can actually be especially dangerous as they sometimes even take over the bank account of that former gold supplier, which, for all intents and purposes, makes it seem as if you’re dealing with a genuine gold supplier.

Thankfully that’s very rare though, as it’s much harder to pull off, and most of the time they will drop that big warning flag of asking you to send payment to a different account/company.

One other thing I’ve noticed about these scams is that the scammers act very aggressively, by which I mean they try very hard to make a lot of money as fast as possible – by posting loads of listings in unrelated product categories, including all the usual scammer favourites such as branded electronics, designer clothing etc.! I guess it’s because they’ve “invested” some money in to this scam and want to make a return as soon as possible, coupled with the fact that they know they don’t have long before Alibaba catches them.

And this recklessness is a great tool for us to take advantage of, as you can often spot a scammer by checking what other products they sell. If you’re searching for a supplier of washable cushion seats and they also have iPhones and Nike shoes listed, you’ll know that something fishy is going on and can stay well away!

Branded Goods/Pro Scammers

I saved no.5 to last, as these are what I call the professional scammers. They are actual companies, set up 100% officially and legitimately, with proper company bank accounts – they even pay the fee to become a gold supplier. The only difference is that these companies have one intention – to scam people!

This is probably the hardest one to deal with, for people new to importing at least, as from the surface they look completely legitimate and genuine. There is one big give away though, that my seasoned blog readers will know all about – they sell branded goods! Yes, that’s right – they go down the usual scammer route and list all these products which are by default impossible to source from China; things like high-end electronics, designer clothing, colognes and perfumes, Blu-rays, PS4 games and all the rest!

I have said it hundreds of times by now, but you cannot find such products on Alibaba, under any circumstances. And in fact, the best way to avoid scams in general is to NOT search for such products as you just cannot source them from Mainland China.

I’m happy to say that most of my blog readers are well aware of this fact by now, but the real problem arises when you start looking at Hong Kong gold suppliers for such products.

Yes, in this case the items may be genuine, as Hong Kong is actually a big source for such products, but the risks are just too high and that’s why I still suggest staying away from these types of products completely (even if by some miracle you can source them without being scammed, then good luck making any profit!).

But if you absolutely must buy such products and if no amount of pleading from me is going to sway you, then at least stick to Hong Kong based suppliers who have been a gold member for a minimum of 3 years, preferably 5+, always search for the company on Google to check reviews, and always increase your order size very gradually, starting as small as possible and making sure you verify the authenticity of the products you receive.

And lastly, as Hong Kong sellers will usually take PayPal – use it! And for even more payment protection, always fund your transactions using a credit card, rather than your PayPal balance or bank account, as that way you have the option of starting a chargeback, if worst comes to worst.

Conclusion

So yes, in case any of you were wondering, you can still get scammed by a gold supplier on Alibaba (though to be fair, in nearly all cases this is done without their knowledge and they’re also being scammed).

These scams will be few and far between though, especially if you follow my advice and source unbranded, low risk items.

Always use your common sense, start with samples and small orders and never use un-safe payment methods (as you’ve seen today, most scams would be avoided completely if you stick to using PayPal and Alibaba Trade Assurance). If you do decide to pay a company you’ve dealt with before via bank transfer, then I’d always suggest negotiating a small deposit (30-40% max) and make sure you arrange a pre-shipment inspection as well.

I apologise for the negative tone of today’s post, but knowledge is power and it’s always best to be aware of the risks, however remote they are.

Hopefully I will get a few emails from people who were about to send money to some scammer before reading this post, as the whole idea here is to save people money!

As always, if you have any questions or would like my help with something, then don’t hesitate to post below in the comments section and you’ll get a personal reply from me within 24 hours, Monday – Friday.

Until next time.

All the best,
Andrew