Everything you need to know about prevention, and detection, so it doesn’t happen to you.
By PHIL ROPER
I’ll never forget the AWKWARD SILENCE of my dad staring in HORROR at the picture of his digger that had just arrived in his email inbox. The digger had just arrived at New Zealand customs from China…
But it wasn’t the one he ordered!
Dad was EXPECTING a clean, late model, low kilometer Komatsu excavator. However, the one that had just arrived was dirty, covered in mud, dents, and rust. It wasn’t even the same make, model, or size; it also had a crazy number of kilometers on the odometer.
Like a KNIFE TO THE HEART was the feeling of betrayal, anguish, and HORROR, seeing a $27,000 purchase come in the form of a rusty old PIECE OF JUNK!
A hundred thoughts go into your head WONDERING how, why, and what just happened?
How could this happen to me, and what can I do to get my money back after BEING SCAMMED? And then there's the EMBARRASSMENT of it all!
In 2017, over ten million dollars in scams had been reported in New Zealand alone, with the average amount scammed being over $10,000. Unfortunately, small business fraud is becoming more and more common.
But like ours, a lot of these scams could have been AVOIDED.
So, I thought I tell you a bit about our story and what we learned in the process of having been scammed, and how you can PREVENT it from happening to you.
Types of Fraud
There are a lot of different kinds of scams and fraud. I’m not going to go into too much detail about all of them, but here’s an overview of just a few methods scammers use to get your money.
Fake charities – These scammers will attempt to play on your generosity and compassion and try to manipulate you into giving money to a pretend charity.
Investment fraud – These scammers are in the stock or commodities market deceitfully persuading people to invest and make purchases based on false and misleading information.
Unexpected money – Unexpected money scams usually involve a large sum of money such as an inheritance, rebate, or cash in holding that requires a small payment to help them transfer and share it with you. The idea is to get you to part with your money or share your credit card details.
Dating & Romance - Scammers take advantage of people searching for a romantic partner. By acting as a potential companion, they play on your emotions to get you to give them money, gifts and other personal details.
Seller Fraud – This is when the scammer misrepresents themselves, or the products they're selling to take advantage of the buyer.
Identity Fraud – These scammers will use another person's personal information, without their authorization, to commit crimes or to deceive that other person or even a third person.
Phishing – Fake internet banking login websites may come into your email inbox requesting account login, password, and other personal information. Once these scammers have this information, they then use it to steal money from your account.
Card Fraud – This involves the scammer stealing credit card information and making unauthorized purchases with it.
How to prevent being scammed when buying
Buying from someone you don’t know can be RISKY, especially from a different country.
If you’re considering shipping something in a container from overseas, there’s no foolproof way of guaranteeing you’re going to get what you paid for short of being inside the shipping container yourself when it sails.
However, there are things you can do to ensure the smallest possible chance of being scammed which I have included in these points below.
1. Proceed with caution
Scammers have a way of making things seem real, and often use an incredible offer as the bait to attract you and draw you in. They play on your VULNERABILITIES and trust and EXPLOIT them for personal gain.
2. Don’t be deceived
Lengths a professional scammer will go to are extreme. Professional website, logos, sometimes even a physical location is not out of the equation!
Scammers are capable of getting personal details about you by HACKING your computer and using those details to build trust and form a relationship with you.
Don’t always assume because someone knows something about you, that they have something genuine to offer you; it doesn’t prove anything.
In the case where we were scammed, the lengths the scammers went to prove authenticity were very EXTREME; these scammers even went as far as to comply with Alibaba’s strictest verification standard which includes a check on the companies:
· Business license
· Business type (e.g. trading company, manufacturer or both)
· Company / Factory location
· Ownership status of the premises
· Photos of supplier's operations
· Contact information
· Certifications from subsidiaries, partners, and contractors
So, in short, they will go to lengths that slip through even the world’s largest supplier directory company’s detection methods!
3. Verify the seller
This is HUGE; I really can’t emphasize this enough. One massive mistake we made was that we didn’t do a thorough background check on the supplier. Had we done so this, we would have prevented this scam from EVER HAPPENING.
Here’s an easy, practical way of verifying them
Do a Google Check
1. Take the companies name, phone number, email address, and physical address and do a Google search on each one.
2. Take note of any other companies that share the same information listed on Google.
3. Check each companies name that relates to this information, if you get different 5 companies with the same phone number that’s a big RED FLAG.
4. Do a search on the company’s name with the word “blacklist” next to it and see if anybody else has reported a scam from the same company.
Had we done a check first, we would have found the company in about 5 minutes, however for us, by that time IT WAS TOO LATE. After some more digging, I discovered about 10-15 other fake companies run by the same people. I also found quite a few other TRAGIC STORIES of people being scammed tens of thousands of dollars by these fraudsters.
4. Ask questions and request information about their company
Don’t be afraid to ask questions about them; if they get OFFENDED; it’s a good sign they could be HIDING something. Ask for photos of the product you are buying in their warehouse, if it’s a vehicle, ask for a picture of the speedometer or other SPECIFICS they couldn’t just copy from somewhere.
Get on the phone with them, Skype them, ask for a copy of their business license. Do everything you can to PROTECT YOURSELF.
Remember, some of these guys are true professionals at what they do. I’ve heard a report where an overseas buyer went and visited the factory for himself, and after purchasing the digger and paying for it, had a pile of junk arrive in his country!
5. Don’t rely on the logistics company to investigate the package.
This is another MISTAKE we made. After doing a little research on the different importing companies, we choose to spend a bit more on an independent logistics company that guaranteed a professional service with 30 years’ experience.
Expecting the logistics company to check that the digger that was getting sent to New Zealand was the same one on the promo invoice, we were surprised when it arrived that it wasn’t the same model, year or weight; even the size was DIFFERENT.
Don’t expect the freight company to do a thorough inspection of the item you are buying, they will weigh it, check the dimensions of the container - that’s about it.
6. Get a third party in if you can
This isn’t 100% foolproof, but If you’re making an expensive purchase, getting a third party to do a pre-shipment inspection is probably a good idea. They’ll check the description of the product matches with the product you are buying; they can even watch them load it into the shipping container.
As I said early, there’s no 100% method of detection, some of these guys are true professionals, you can do a lot of preventive checks to ensure the risk is incredibly low, but its never guaranteed.
In one case I was reading, a person who bought an expensive bulldozer had a third party go with them to check the correct product was loaded into the shipping container. After it had landed, he opened it up only to find the fraud company had SWITCHED the container with a different bulldozer in it that was good for nothing but scrap metal! OH MAN!
7. Does it look too good to be true… It probably is
Scammers are trained to make a deal seem incredibly appealing but are also smart enough not to make it suspiciously under-priced.
If your gut tells you the deal is too good to be true, it either is, or there’s a good reason why.
In our case, it looked as if we were saving about 10-20% compared to other competitors. It was enough to make the deal sound really good, without making us overly suspicious, and that’s where we were CAUGHT OUT.
8. Communicate where it can be traced
If you’re buying a product from an online commerce company such as Alibaba as we did, do not do any communication outside of Alibaba or the website from which you started the conversation with them.
One thing a lot of scammers try after enquiring through websites such as Alibaba is to get you to communicate through their personal email rather than through Alibaba’s online message center. This is because emails sent outside of Alibaba’s message center cannot be TRACED by them and therefore cannot be used as evidence against them.
How we recovered from being scammed
Unfortunately for us, we didn’t practice a lot of these tips. Although the supplier was extremely good at appearing legitimate in some areas, they were sloppy in others and had we done a simple Google search of their company; we would have quickly discovered this.
We got in touch with the Serious Fraud Office. However, the response we got was this:
“Your complaint and the information you have provided has been considered. It is our view that we have no basis to suspect that an investigation may disclose a serious or complex fraud. You may wish to seek independent legal advice in relation to this matter”.
So, in short, we were out of pocket $27,000,
in this particular case, it wasn’t going to be worth pursuing as it probably would’ve cost more time and money than it was worth.
Oh bummer right?
It SUCKS getting scammed. When someone intentionally takes advantage of your trust to make a quick buck.
If you’ve ever been in this situation, or are in this situation, the first thing you probably asked is “what do I do now?” or “what can I do to get my money back?”
Here’s a guide to HELP you what to do, although in our case there wasn’t a lot we could do, there might be more than can be done in your situation, and if our story can help you catch on to a potential scam, it’s a win for us.
What to do when you have been scammed?
Ok, you’ve been scammed, that sucks, now what?
1. The first thing to do is stop contact with the scammer
As soon as it becomes evident that this is a scam, it’s pointless to continue any kind of conversation with them. Hang up the phone, block them if necessary. Keep any emails and messages as evidence but don’t reply to any of them.
2. Contact your bank or other services you used to send the money through
Check with your bank or service provider to see their policy in dealing with fraud. Whether it was through PayPal, Western Union, or a TT bank transfer, there may be something they can do to protect you, so it always pays to check with them right away.
Try to avoid TT bank transfer or Western Union payments if possible as their policies don’t offer as much protection compared to being scammed through PayPal.
3. Report the Scam
I understand that having been scammed can feel a little embarrassing at first, but you owe it to yourself and others to report their crime to help others avoid this kind of scam happening again.
If it was through Alibaba or some other kind of online stores like eBay, Amazon, or TradeMe, they might be able to work with the authorities to help with the situation, so let other people get involved, they’re there to help you.
List of government agencies that can help
If you live inside New Zealand, there are plenty of government agencies that specialize in catching scammer that you can get hold of - they may be able to help you.
Here’s a list of New Zealand Scam Agencies provided by “www.consumerprotection.govt.nz”
Netsafe - Helps New Zealanders stay safe online, with expertise in online bullying, harassment and abuse under the Harmful Digital Communications Act and all types of scams.
CERT NZ - Supports individuals and organisations affected by online incidents, such as online scams or cyber security incidents. Helps people recognise and avoid online scams and fraud.
Phone: 0800 CERT NZ (0800 2378 69) Email: cert.govt.nz(external link)
NZ Police - Liaises with overseas agencies. Prevents, investigates and prosecutes crime within our communities. In an emergency, call 111
Victim Support - 24/7 support, information, and advice for victims of crime.
Phone: 0800 842 846 Email: victimsupport.org.nz(external link)
Banking Ombudsman - Helps resolve and prevent banking problems, including scam-related issues.
Phone: 0800 805 950 Email: email@example.com
Commission for Financial Capacity - Support and education for helping kiwis get savvy on scams.
Phone: (09) 356 0052 Email: cffc.org.nz firstname.lastname@example.org
Financial Markets Authority - Takes investment scam reports. Provides a warnings list and information on how to avoid scams.
Phone: 0800 434 566 Email: fma.govt.nz
Department of Internal Affairs - Regulates the Unsolicited Electronic Messages Act 2007, which prohibits the sending of spam.
Phone: dia.govt.nz Email: email@example.com
The Commerce Commission - Enforces the Fair Trading Act, which prohibits misleading conduct and unfair selling practices by those 'in trade' in New Zealand.
Serious Fraud Office - Investigates and prosecutes serious financial crime, including bribery and corruption.
Wrapping it up
So, to wrap it up, I want to offer encouragement to anyone that’s about to make a big purchase, do your research, ask questions, follow through, and be suspicious of deals that sound too good to be true.
If you’ve been scammed, you’re not alone, and there’s NOTHING to be embarrassed about. Reach out, because people like me want to help you find solutions to bring these guys down.
This concludes number 3 of the EPIC FAILS we made in business, if you missed the last one about how we were SHUT DOWN, you can check it out > HERE <.
In my next post I’ll be telling you a story of work relationship which ended TRAGICALLY.
Until next time...