What you can do to protect against fraud when trading online
A quick search online will bring up hundreds of articles which explain the importance of secure passwords, antivirus software and software updates. While these are essential components of secure web browsing, B2B trading often involves additional complexities when it comes to fraud prevention.
We recommend you follow these steps when trading online to ensure you have properly vetted suppliers, verified invoices and product conditions.
Request references or testimonials from new suppliers
It is crucial to verify a suppliers record by discussing their services with existing customers. This can be done by requesting references or testimonials from the supplier or through independent research and verification. Be sure to conduct due diligence on references provided by suppliers including verification of company information and their purchasing history with the supplier
Verify supplier ownership of the listed product
Request bills of purchase or registration on all products being purchased from suppliers online. This documentation should be confirmed with a third party (the previous owner or trade organization are a good place to start).
Verify the condition of the listed product
Photos of products online often aren’t enough to verify the condition of a product. Instead, request video evidence of the product in working condition including a complete explanation of product specifications. To verify the authenticity of any video provided, ask the supplier to reference the supplier company name, supplier contact, date, your company name and contact in the video alongside the product.
Verify supplier company information and your contact’s relationship to the company
Basic internet research will provide a lot of information regarding a company including trademark registrations, domain registrations, reviews and more. It is also important to check the reputation of suppliers by searching for their name alongside phrases such as “fraud”, “scam” and “complaints”. A short checklist for conducting this basic research should include:
- Verify the company has a website which is active
- Verify your contact through social media sites such as Linkedin
- Research reviews for the supplier
- Check the supplier reputation by searching their company with modifiers such as “fraud”, “scam”, “complaint” etc.
It is also important to confirm your supplier contact’s relationship to the company. Many fraudsters falsely claim to represent a reputable company through business identity fraud including forging company documents, identity theft from employees and requesting bank account changes for existing relationships.
Always contact the company directly to verify the identity of your primary contact and their awareness of your company and any potential deals.
Compare the listed cost of products against market prices
A product listed at an undercut price should be an immediate red flag. Be sure to conduct thorough research into suppliers who are offering large discounts as this technique is often used by fraudsters to increase the likelihood of buyers making an enquiry.
Ensure protection is in place for all financial transactions
When you are ready to make a financial payment to a supplier (you have completed all the steps above), you should ensure protection for payments including:
- Protection on credit card purchases
- Use of secure escrow services
- Insist on payment upon delivery of goods rather than prior to delivery
- Withholding deposits until you have completed all steps listed on this page
For more advice on fraud prevention, see:
- FBI - Non-Delivery of Merchandise
- FBI - Advance Fee Schemes
- FBI - Internet Auction Fraud
- Action Fraud - Corporate Fraud
- Action Fraud - Suppliers