Back in January 2013 we alerted our readers to a scam targeting Chinese factories and Western buyer which was reaching epidemic proportions at the time of writing. At the peak of the outbreak, we were receiving no less than a report a week from CSIC readers who had fallen or almost fallen for the scam.
In 2012 and early 2013 the scam involved a 3rd party hacking a factory email, pretending to be the factory, and accepting orders from buyers.
Payment was made into the hacker’s bank account and once the funds cleared, the hacker disappeared. The factory never knew there was an order. The full scam is exposed at Factory email hacked. 29K USD stolen from buyer. How to avoid it happening to you.
The key points to remember are:
Make sure the name on the contract is the same name as the bank account.
Don’t send large payments to private accounts.
Visit the supplier for audits and inspections during your order. If the buyer schedules an onsite visit to check an order, it will become clear pretty quickly if the supplier is not aware an order has been placed!
But like any nasty virus, this scam evolves and gets harder and harder to eradicate. Here is the new twist. A few weeks ago we were contacted by a European buyer who was scammed 300,000 RMB ($48,000.00 USD) by somebody who hacked the suppliers email. Looking for support, he asked me for introductions to China based English speaking investigators.
When I read the background, I assumed it was just another case of the common 2012 scam. However, the professional investigator had been around the block long enough to sense hanky-panky going on. The investigator offered the following tactics to flush out the truth:
Test One: Have a trusted 3rd party contact the supplier and get the bank details to send money for a test order. Is it the same account as the one that was supposedly belonging to the hacker?
Result: Supplier gave the same official bank account that was originally given to the European Buyer. No proof of wrongdoing there.
Test Two: Have another trusted 3rd party back home pretend to be an interested buyer and contact the supplier who said their email was hacked. During the order process is the buyer informed of a new bank account to send the money?
Result: You guessed it. The factory email was hacked “again” by some “unknown 3rd party.” The new twist on the old scam is collusion between the hacker and the factory!
It’s still hard to prove it in a court of law and the money is probably lost. Even if the buyer wins a court case, it will be hard to receive financial compensation for damages done. So the moral to the story is, as before:
Make sure the name on the contract is the same as bank account.
Don’t send large payments to private accounts.
Visit the supplier for audits and inspections during your order. If the buyer schedules an onsite visit to check an order, and there is no stock ready to ship…big red flag something is not right.
If you have fallen victim to a scam and need help, contact me and I will be happy to introduce the investigators mentioned above.
Help me name this new scam
All the nasty modern viruses have a cool name or acronym. I think it helps spread awareness when the name is catchy. Any ideas on what we should call the new scam above to help warn other buyers?
I came up with “The Zhejiang Screw job” inspired by the “Montreal Screwjob” of professional wrestling fame.
There are different interpretations of the events of 11/9/1997 but essentially the actors in the ring agreed in advance on the choreography and outcome for the title match. At the last second, Canadian Hero Bret Hart was to break out of Shawn Michaels’ Sharpshooter hold and go on to retain the title. Keep in mind that Bret was planning to leave the WWF for rival WCW, so Vince McMahon pulled what is known in the wrestling’ biz as a “shoot screwjob”.
In collusion with referee Earl Hebner and Shawn Michaels, when Bret was in the Sharpshooter (pictured above), McMahon has the ref call for the bell on a short count before
Bret could break free. As a result he had to leave both that evening’s squared circle and the WWF itself without the championship. In front of his hometown crowd in Montreal, no less. That’s just wrong. And so is tricking a buyer in China.
In this Montreal- Zhejiang analogy, Vince McMahon is the factory owner. Shawn Michaels is the hacker and the foreign buyer getting pinned is represented by superstar Bret Hart. I guess that means the short count from the referee represents the lack of transparency in China; while Bret’s lost title symbolizes the failure of the legal system in China to do anything about it.
Is this reference too abstract? Probably.
My co-worker suggests Guan-geria (Guangzhou meets Nigeria)
Anybody got a better name?
About the blogger
Mike Bellamy is author of “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book), founder of PassageMaker Sourcing Solutions (www.PSSchina.com) and student of pro wrestling culture.
Now the story behind the story.
In the early 1990’s the author and friends in Washington DC were looking for job. They also happened to be fans of the WWF pageantry and submitted various characters and storylines to WWF management.
Characters in their interconnected storyline included:
“Preacher Man” (finishing move called “final call”)
“The Drinker” (finishing move called “last call”, signature move “keg stand”)
“Politician” (who utilized a sleeper hold while reading names from the yellow pages until the opponent passed out- called the “filibuster” of course)
“Lobbyist Lawyer” (“hidden agenda” and “PAC money” were his signature moves) was the handler/ tag team partner of “The Politician”.
If you were a fan of 90’s wrestling and don’t remember these characters…there is a reason- not one of them was selected by the WWF. And that’s when the author decided to move to Asia as an exchange student in the early 1990’s. So we thank Mr. McMahon for keeping Mike away from a life in the pro wrestling game. True story.