How to Avoid Scams When Sourcing from China: Red Flags and Protection

Introduction

While the vast majority of Chinese suppliers are legitimate businesses, scams do exist. Knowing how to identify and avoid them can save you thousands of dollars and countless headaches.

Warning sign for scams

This guide covers the most common scams and how to protect yourself.

---

Common Sourcing Scams

1. The Bait and Switch

Product quality comparison

How It Works:

Supplier sends high-quality samples

Bulk order arrives with inferior quality

Supplier claims "production variation"

Protection:

Use third-party inspection services

Include quality specifications in contracts

Request production samples during manufacturing

---

2. The Disappearing Supplier

How It Works:

Supplier requests full payment upfront

After payment, communication stops

Supplier disappears with your money

Protection:

Never pay 100% upfront

Use Trade Assurance or escrow

Verify supplier legitimacy before paying

---

3. The Fake Factory

Fake factory office

How It Works:

Supplier claims to be a factory

Actually a trading company or fake

Prices are marked up, quality uncontrolled

Protection:

Request factory audit or video tour

Verify business license

Check if address matches factory location

---

4. The Payment Scam

How It Works:

Supplier requests payment to personal account

Or asks for Western Union/MoneyGram

Money is untraceable once sent

Protection:

Only pay to verified company accounts

Use Trade Assurance or PayPal

Avoid wire transfers to individuals

---

Red Flags to Watch For

Warning signs

Immediate Red Flags:

Red FlagRisk LevelAction

Prices 50%+ below market🔴 HighAvoid Requests personal account payment🔴 HighAvoid Pressure to pay quickly🔴 HighAvoid No business license provided🟡 MediumInvestigate Refuses video calls🟡 MediumInvestigate Inconsistent information🟡 MediumInvestigate New account, no history🟡 MediumInvestigate

Warning Signs in Communication:

⚠️ Vague answers to specific questions

⚠️ Reluctance to provide documentation

⚠️ Pushing for immediate decisions

⚠️ Offering deals that seem too good

⚠️ Poor English but claims to be export expert

⚠️ Different contact person each time

---

Verification Checklist

Verification process

Before Placing an Order:

Business License Verification

- Request official business license - Verify on Chinese government databases - Check company registration date

Factory Verification

- Request video tour of factory - Ask for photos with your product name visible - Consider third-party factory audit

Reference Check

- Ask for customer references - Search for reviews online - Check trade history on platform

Communication Test

- Request video call with sales team - Ask detailed technical questions - Verify they understand your product

---

Safe Payment Practices

Secure payment

Recommended Payment Methods:

MethodProtection LevelBest For

Trade Assurance🟢 HighAlibaba orders PayPal�� HighSmaller orders Letter of Credit🟢 HighLarge orders Escrow🟢 HighAny size T/T (30/70)🟡 MediumEstablished suppliers Western Union🔴 LowNever use

Payment Terms to Negotiate:

30% deposit, 70% before shipping - Standard and safe

30% deposit, 70% after inspection - Better protection

100% Trade Assurance - Maximum protection

> Never: Pay 100% upfront to a new supplier, regardless of discounts offered.

---

What to Do If Scammed

Legal action

Immediate Steps:

Document Everything

- Save all communications - Screenshot payment records - Keep all contracts and invoices

Contact Your Payment Provider

- File dispute with Trade Assurance - Open PayPal case if applicable - Contact bank for wire transfers

Report the Scam

- Report to platform (Alibaba, etc.) - File complaint with local authorities - Report to trade organizations

Seek Legal Help

- Consult international trade lawyer - Consider arbitration options - Evaluate cost vs. recovery potential

---

AI-Powered Scam Detection

Modern AI tools can help identify potential scams:

AI verification

Cross-platform verification - Check supplier across multiple databases

Trust scoring - Algorithmic assessment of supplier reliability

Red flag detection - Automatic identification of warning signs

Price analysis - Compare prices to market averages

---

Key Takeaways

✅ If a deal seems too good to be true, it probably is

✅ Always verify suppliers before sending money

✅ Use secure payment methods with buyer protection

✅ Never pay 100% upfront to new suppliers

✅ Trust your instincts - walk away if something feels wrong

✅ Use AI tools for additional verification

---

Verify Suppliers Safely

Try our AI-powered verification tool to check supplier legitimacy across multiple platforms.