4 Common International Trade Frauds

In 2018, foreign traders have been frightened! The United States provoked a trade war and the trade between China and the United States was frustrated. Under the influence of a strong dollar, the once emerging markets suffered a sharp fall in their currencies, and had to adopt import restrictions to stabilize the exchange rate. Good market makes smoke. In addition to the buyer discards caused by the uncontrollable international trade situation, the most troublesome thing is that you have encountered trade fraud again. Why are you always injured?

These four classic trade frauds can not be avoided by foreign traders.

Xinzi has summarized four classic cases of trade fraud for you. Please strengthen the awareness of wind control and strictly adhere to the bottom line of payment when you encounter similar situations.

01New customers borrow new companies to spread the net

In foreign trade transactions, new customers are often cautious in their first transactions, but there are also some new customers. After the contract stipulates a clear payment method, customers temporarily request changes in the process of transactions. For example, when the goods have arrived at the port, you are required to deliver the goods without payment, and then pay for the goods before they are sold, or the goods will be returned. In most cases, because the goods have been produced or shipped to the port, sellers have to compromise and hit the customer’s trap.

It is understood that such customers often buy goods in a short period of time, and then cancel the disappearance of the company without trace, thus making a big profit.

02New customers sign contracts by counterfeiting others’companies

Sometimes, you have CITIC, and it doesn’t help. In a recent case of our company, after investigation, it was found that the Italian buyer denied that there had been a transaction with the seller, and the contact given by the seller was not an employee of the Italian company. Although CITIC insured, but ultimately did not pay.

(Section screenshot of CITIC Survey Feedback)

Buyers use the convenience of asymmetric information to defraud other companies. In this case, insurance will not be paid.

03Old customers apply for bankruptcy during the debit period

This usually happens long after the two sides cooperate, the transaction is stable and the two sides cooperate harmoniously, the buyer has 30 days or longer account period. When the buyer is not well-managed and needs to apply for bankruptcy protection, he often delays payment by virtue of the trust accumulated in the previous transaction and the advantage of the account period. In fact, he has been operating bankruptcy application in secret.

04Old customers’orders disappeared after a sudden increase

There is a kind of “old customer”, in fact, first through a few small orders to gain your trust, credit seems very good, in essence, is to set a trap. This calls for more relaxed payment methods and large orders. It is easy for sellers to ignore the transaction risk at this time. Once sold on credit, such an order will be enough for the buyer to make a big profit and disappear naturally.

How to avoid the above risks of trade fraud? Naturally, the first method is to judge the buyer’s creditworthiness.

A small credit report, covering the basic registration information, business development, payment records and other credit information and industry background analysis, is equivalent to a “physical examination report”, so that you can see each other’s true face.

Common application scenarios of credit reporting

1. Pre-transaction review of new customers

Credit report can conduct a comprehensive survey of new customers from various dimensions such as “registration information”, “business information”, “financial information” to verify the identity and strength of new buyers.

Fabricate identity

In international trade, there are many successful cases in which all the documents of the importer and even the name of the enterprise are completely forged. In fact, as long as the buyer investigates, it can be found that the company does not exist at all, and this risk can be avoided completely.

Pretend to be somebody else

A real case is that the exporter makes electronic products while the importer makes clothes. In fact, the goods are not printed correctly. However, the exporter rushes to deliver the goods without investigating the situation of the importer. As a result, the other party runs away after receiving the goods. After investigation, it is found that the business scope of the importer has nothing to do with the electronic products. It is someone else who forged the relevant documents of the importer. More than fifty thousand dollars were lost in vain.


In the process of inquiry, in order to gain the trust of exporters, new customers often exaggerate their strength and scale of operation. Through the modules of “registered capital”, “shareholder information” and “financial data” of customers in credit report, we can grasp the actual operation situation of new customers.

Shell Company Setting up Sets

Our company’s large number of case data show that new companies registered within one year are the disaster areas of fraud cases. Importers often register new companies to erase their previous fraud records and continue to exercise fraud as “innocent”.

High-risk companies

Certain importing companies are in fact poorly managed, in arrears with many suppliers and on the verge of bankruptcy. It has to find new suppliers, such enterprises, once the exporter delivers the goods, the generation of overdue arrears is almost inevitable. At this time, through the “financial information” scan, you can help you to avoid the risk to the maximum extent.

2. Regular Physical Examination of Old Customers

Up to 80% of the cases we accept are owed by old customers. Exporters often think that they are familiar with old customers, and there is no risk of collecting money. In fact, the operation of enterprises is not unchanged. By periodically reviewing the credit of the old customers, we can lock in the business risks of the old customers in time and avoid the hidden danger of collecting money because of blind trust.

Shareholder Change Risk

The change of the actual controllers of enterprises will have a greater impact on the future operating conditions. What’s more, the new person in charge will evade or deny the previous debt. For him, it is more “cost-effective” to replace suppliers directly than to pay the debt.

Linkage reaction of affiliated companies

If there are general rules for affiliated companies