How to prevent trade fraud?

In the import and export business, the last thing you want to encounter is trade fraud. Liars are becoming more sophisticated in their deception, and even experienced traders can’t escape being played with. But as long as we know how to prevent trade fraud, we can effectively avoid falling into the trap. That is we are careful when signing a contract carefully, use revolving credit, and verifying our clients through a professional company.

How to prevent foreign trade fraud?

I. Be careful when signing a contract

Compared to the quality of the order, some salespeople value the quantity and size of the order more. Once the customer decides to place an order, some salesperson will sign regardless of whether the contract is true or not, and believes that signing the contract is just a trivial process——this is totally wrong.

The written contract is serious and rigorous, with strong certainty, openness, and caution. In the event of a trade dispute, the contract is the strongest evidence of the wrongdoer. Therefore, we need to avoid falling into the trap of foreign trade fraud and prevent buyers from colluding to damage their own interests. We need to sign detailed and rigorous contracts, which include the list of prices, quality, payment methods and transportation, and strict arbitration treaties.

If the contract is to be drafted by the client, we need to read the relevant entries carefully before signing. For the doubtful and worrying parts, we should point out and agree on an executable method. This can effectively reduce the losses suffered by the company due to malicious clauses and fraudulent clauses in the contract.

How to prevent foreign trade fraud?

II. Using revolving credit

In foreign trade transactions that involve large amounts or deliver in batches, it is very easy for criminals to exploit a loophole. We must take the necessary measures to mitigate risks, including the use of revolving credit.

Revolving credit is different from a general credit: the latter becomes invalid immediately after use; the former can be used repeatedly. Its advantage lies in that the importer can save the issuance cost by not having to issue a license many times, and it can also simplify the procedures of the exporter’s certification, renewal, and other procedures. And this is exactly what the scammer does not want to see.

The review of customers’ credit is also very important. Once you found your clients use counterfeit credit or “soft clause” credit, you can use the law to defend your rights.

How to prevent foreign trade fraud?

III. Verifying clients through a professional company

When we develop new customers, we need to conduct a comprehensive investigation of them, especially their creditworthiness and reputation. Only when the investigation is clear can we cooperate with confidence.

It’s a good idea to go to a client company for a field survey, but often it’s too expensive, or we don’t have time to go from house to house. Even if we go to the field to investigate, we will worry that the supplier will pretend that everything is going well in order to make us trust them. In such a case, it is a very wise choice to ask a third-party professional team to help you investigate your suppliers. They look up vendor registration information, check the company’s reputation and history, investigate their annual returns, and more information you need to know. Verifyfull is such a professional company. It helps you judge whether the supplier is reliable in a more professional and objective way.

We all hope to harvest a large number of orders, but it is necessary to verify customers and avoid fraud. Today, there are endless cases of foreign trade fraud, we need to learn to protect ourselves.