AfricanTrade.com Information Center |
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Safe Trading Practices
To make your trading experience safe and simple, we provide as much information as possible about potential buyers and sellers.
Business is about people: Learning more about your trading partner is a critical part of business decisions. In global trade - especially online import and export - there is little room for error in choosing a trustworthy supplier or relying on a credible buyer.
The vast majority of internet introductions result in a successful partnership which generates profit for both the importer and exporter. Nevertheless, it is important that you protect yourself from the unlikely possibility of fraud that may occur, due to the concealment of a partner's true identity and/or intentions.
There are a number of actions you can take to research your potential business partner whom you have met on the internet, so that you can reduce the risk of being subject to a fraudulent transaction or business misunderstanding.
There are several actions you can take if you suspect an Importers.com member of fraud:
• Contact the member and arrange a telephone call or face-to-face meeting. This usually resolves the situation. Most buyers and sellers are honest and dependable and problems may simply be a matter of misunderstanding due to language or cultural differences.
• If you suspect your potential partner of fraud, we recommend that you inform law enforcement authorities.
• You should also report any suspected abuse of our website by members, so that we may review the status of the member's account.
Safe Trading Tips:
1 - Know Your Trade Partner
Check the credentials of potential partners before engaging in business. Be sure to verify contact information of all potential partners before engaging in any business over the internet. Always confirm if the address, phone number and email address given to you by your trading partner belongs to the same company.
It is always advisable to contact the potential partner by telephone prior to the exchange of goods, money or contracts. If a trader provides inconsistent contact details, for example an address in Nigeria and phone number from another country, we recommend that you look up the address in the local phone directory to obtain the phone number. Call this number to confirm that the person you are in touch with actually works for the company. Be suspicious of any trader who uses only an e-mail address and cell phone and is reluctant to reveal a telephone number.
Background checks from independent third-party sources includes a search for legal registration and credit reports. In many countries the existence of a company and its legal status is a matter of public record. You can check the backgrounds of established manufacturers or wholesalers with trade institutes, local or online credit agencies, or online services such as Dunn & Bradstreet (D&B).
Check with the company's registry in the partner's country to ensure that the company exists with a valid registration. If you cannot get independent access to the trader's registration information, ask your partner to provide you with a Certificate of Good Standing issued by the companies registry of his country or state/province.
You can also gain further knowledge about your partner by ordering a credit history report from a local credit agency. Credit history reports contain information about the partner's business history in their relationships with banks and other trading partners. Unfortunately, few resources are available to verify the legitimacy of newly established businesses. Be especially careful when dealing with new businesses.
Finally, whenever possible, meet your business partner in person and visit the company's facilities. The internet may provide extensive information on your potential partner, but there is no substitute for face-to-face contact.
2 - Prepare a Clear Contract: You should prepare a legally binding trade contract and keep it for the specified period to prevent argument and be sure in advance, the terms of the sale. The contract should include sales conditions, payment method, an arbitration clause, product specifications, quality inspection, etc. Stay in frequent contact with business partners.
3 - Protect Yourself Against Payment Risk using a Letter of Credit (LC or L/C) or escrow are the recommended payment methods. If the seller seems more focused on payment than any other issue, or indicates that cash payment must be made urgently, more caution should be given to the transaction. Be extra cautious when the seller asks you to send money to an account whose real owner cannot be traced.
Letter of Credit (L/C): A Letter of Credit is the most preferred payment method in international trade. However, there is some possibility of fraud due to incorrect or forged shipping documents. Minimize the potential for fraud by contacting the L/C issuing bank. Be sure to check the L/C number, opening date, opening place, name and address of the issuing bank, shipping date, valid date, loading and unloading port, applicant, period of presentation, amount, as well as details of trans-shipment, partial shipment, etc.
Escrow: Escrow.com is a transaction settlement service used by many of the leading eCommerce websites, including eBay and others. Escrow.com acts as a secure third party to protect Buyers and Sellers.
Avoid Telegraphic Transfer (T/T) payments.
Importers: It is NOT wise to accept an overseas supplier's request for pre-payment. In most cases, a request for T/T payment involves attempted fraud.
Exporters: It is NOT wise to agree to accept payment from an overseas buyer after they have received products. Once a buyer has received samples or products without payment, it is very difficult to get them back.
4 - Don't Expect or Send Free Samples, Exporters: Request a nominal payment for samples. When an unknown buyer requests samples while hinting at a large order, it is always wise to request at least a nominal pre-payment. Importers: Request samples to check the quality of product. Order a sample before committing to a significant purchase order to be sure that the product meets your requirements. Be prepared to pay for samples - including shipping costs.
5 - Avoid Shipping Risk: If you are a buyer, you can protect yourself against poor quality by ordering a pre-shipment inspection of the products. You can demand the inspection as a condition to payment. Pay close attention to shipping or contact addresses located in countries with a high reported incidence of online fraud and many e-commerce web sites have found a high incidents of on-line fraud as well, such as Nigeria, Benin, Togo, Macedonia, Colombia, Romania, etc.
6 - Be Wary of Over Generous Offers: Be wary of potential partners who offer an especially high or low price. It is easy to be tempted by such offers, but they are often attempts to defraud. In business, the expression "you get what you pay for" is often painfully true. Be especially diligent to check the contact information, identification and any claims a suspicious trade partner makes. If it sounds unbelievable, it probably is.
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