- As entrepreneurs look for ways
to expand their product line
without needing to run up their debt
for funding or storing inventory,
dropshipping has become very popular.
However, like most good things,
there's usually a scam artist who is more than happy
to relieve you of your hard-earned cash.
Unfortunately, dropshipping scams can fool
both new and experienced sellers.
- Today, we're gonna look at a few red flags
to look for and give you some tips
on how to avoid them to protect yourself and your business.
So spotting wholesale supplier scams.
In the process of buying wholesale goods,
there are a few key opportunities
where suppliers can take advantage of your business
to boost their own profits.
We have two red flags for you
that will help you dodge the scam artists.
So communication red flags being the first one.
The supplier does not have any contact information
on their website, making it very easy
for them to disappear with your money
and leave you with no way of contacting customer service.
Similarly, they may also provide
any phony contact information,
which will also leave you with no method of contact.
You are always dealing
with different people rather than formal points of contact.
And in general, suppliers with poor communication skills
or written grammar are often a clear sign of a scammer.
- Now let's get into business practice red flags.
The wholesale supplying company
does not require your business ID
or tax ID number to conduct business with you.
Legitimate wholesale suppliers use the number as a sign
that the buyer meets government business standards
and is trustworthy.
Well, a scammer doesn't care.
The company denies your request for samples of products
or starts acting strange when you ask for one
and this is often a sign of replica goods
or some other issue involving low-quality products.
Your wholesale supplier offers
unbelievably low wholesale prices,
so low that it seems as if the supplier
probably won't make any money from your purchase.
Instead, they'll make money by scamming you
when you purchase goods.
- Then you wanna verify your wholesale supplier.
Fortunately, there are a few ways you can verify
that your wholesale supplier is legitimate.
First, do your due diligence by investigating their website.
Identify the supplier's full business name
and contact information,
and note whether the information
is transparent on their website,
or if it's difficult to find.
You'll also wanna inquire
about different payment methods for the merchandise.
Most scammers prefer Western Union or even Bitcoin
as the payments are untraceable.
However though, if the supplier accept credit cards,
or better yet, checks,
then it's likely has a merchant account
from a legitimate payment processor
that has already verified the business.
- Now you can check EDGAR,
the SEC's database of corporate filings
at a state level for company registration info.
If the wholesale supplier claims
that they're based in California, there should be a record
with the California Secretary of State for that company.
Additionally, research the company
for wholesale scams on sites such as
the Better Business Bureau or Ripoff Report.
The BBB can help verify the legal status
of that company and will provide information
on any claims of fraud, which is handy.
Complaint websites like these will show you complaints
made by others on these public forums.
So taking these steps will allow you to ensure
that the supplier is real and trustworthy, or not.
- If you are scammed by a supplier,
don't immediately assume you've lost.
There are several actions you can take
to potentially reverse the fraud
and even prevent the scammer
from hurting others in the future.
If you use an official marketplace
to find your suppliers
such as Alibaba or eBay wholesale lots,
many of these sites have rules
to protect buyers against scams.
And before reporting the scam,
it's best to familiarize yourself
with your marketplace's official rules.
If you're using another marketplace
simply search on Google your marketplace's name
and then fraud policy
to learn about what they define as scamming.
There are a few forums that are specifically dedicated
to reporting scammers like econsumer.gov
is for reporting international scamming incidents.
And there's a category
for e-commerce to report fraudulent wholesale suppliers.
I mean, sharing your experiences on forums
most likely won't lead to reimbursement,
but it will protect buyers from being scammed
by the same fraudulent suppliers in the future.
- Apply these standards for handling scams
and you'll be prepared to protect your business
against fraudulent suppliers.
If something seems suspicious or odd,
always investigate it.
Checking requires time and effort, sure,
but it's better to ensure the supplier is credible
than risk dealing with a scam.
All right, that's a wrap,
but your journey doesn't have to end here.
We have over 300 videos for you to watch.
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This is "The Journey,"
and we'll see you in the next video.