Alibaba Scams: Tips to Avoid Fraud

Ali Baba and the forty thieves is the first thing that comes to mind when I hear the name of the now widely used website Alibaba. Ali Baba knows the secret password to the  to the cave full of the thieves gold but is more concerned with getting some of it for himself than bringing them to justice. To note Alibaba is the most common place for buyers to be scammed by purchasing online before they have gone to the effort to verify and confirm the supplier is real in person or by a trusted third party.

Alibaba is a fantastic tool and probably one of the most respected and used online trading platforms on the web. Many Chinese suppliers think that it is an important to have a presence on the site and pay exorbitant fees in order to have them verified as a Gold Supplier.  Unfortunately the thieves know about Alibaba and they swarm here in their thousands to cheat, lie, rob and steal. Fraud is commonplace on Alibaba and it should only be used as a reference point for products and manufacturing locations in China. The truth is that very few of the genuine manufacturers have a site on Alibaba. Many factories wisely are reluctant to pay thousands of dollars a year for a few pages and product listings and usually have their own representative website that can only be located via Chinese search engines like Baidu.  Most “Gold Suppliers” tend to be trading companies that take out membership to verify themselves and then sell the products of the genuine manufacturers under their name. They make a lot of money doing this, usually charging ridiculous mark ups just to place orders and masquerading as real manufacturers.

Take a look for any popular product on Alibaba and you will see multiple photos of the same product with the same packaging which strangely come from different sellers who say they are the factory or manufacturer. The trick to seeing through this is to know how to look for the clues. What you will typically find is that the traders masquerading as the manufacturer will usually be concentrated in a certain area which is close to where the real factory is. Some of these will be genuine traders who have relationships with the factory producing the product and can often give you very good service. Others will be fraudulent sellers who see the opportunity to fleece careless foreigners. I have spoken with many a foreigner that has lost a great deal of money when dealing with verified Gold Suppliers on Alibaba.

When looking at suppliers you think may be suitable ask to see their website outside Alibaba. If they are working from an office building or central city location then there is a good chance they are a trader trying to look like a supplier. This may not be the case if the company they represent is a very large company with nationwide offices and representation. This should be apparent by the companies formal website. Check the phone numbers of the contact that appear on Alibaba against the contact that appears on the website. Try contacting them via both the Alibaba and the outside company website.

Verify banking details presented to you also. Sometimes these will not match up with the names presented on invoices. Make sure that names that appear on the invoice are the same as the business account that they are asking you to pay to. If they are requesting payment by Western Union they are not a real company and there is a good chance they are not registered. Your money may likely disappear into a scammer’s pocket. Although some legitimate traders do work from their personal accounts to receive payments it is not wise to send cash to them until you know exactly who they are and have an established working relationship.

Do a search for the contact details and check Google maps for a location on where they are supposed to be based. Search the phone number separately and see what comes up. If anything does not add up forget the supplier. Look at trade forums and check for suppliers that appear in fraud listings and complaints sections. Most of the cheats out there are repeat offenders and will still be trading as Gold Suppliers on Alibaba who appear to not care if a company behaves unlawfully. If they pay their annual fee then that is all that matters.

I think the most important thing to do if you want to buy from China is to come here yourself and have a look. Sourcing products and finding the right supplier is not easy. The inexperienced buyers think they can log onto Tradekey or Alibaba and find supply by simple reading product listings and contacting with the sellers on their home computer.  If you are serious get out there and buy a ticket to China. Take a few weeks or months to look around and touch base  with the sellers. Visit factories and wholesale markets make contact with sourcing agents, shipping agents and build relationships with a network of people you can trust. See what really goes into making an import business work at the supply end and do not think it is as easy as logging on and sending a few emails.

You may be lucky a few times. But in the end you will come unstuck if you do not go to the extra effort to understand. Be aware and remember that Ali Baba has more than 40 thieves in this story.


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