goWholesale

Given the number and extremity of recent scams I think it would be useful to share techniques on dealing with new sellers. Specifically, when considering doing business with someone new what do you look for, ask them for, and how do you limit your risk of being defrauded? This will help newbies but also be useful for those of us who have been doing this for a while but are not immune to the risks.

To get some obvious ones out of the way:
1. Never wire money to a new seller you've never done business with.
2. Never mail payment to a new seller
3. Use common sense regarding the price, origin, and market demand for the product being offered.

In my opinion the following are also useful techniques:
1. Keep initial order(s) small; request a sample order even if the price is higher
2. Make payment for initial order(s) through CC or PayPal or a trackable, recoverable form of payment.
3. Document all communication with your seller
4. Request physical address, full name, contact information, company information
5. Search for feedback/comments/experiences on this and other forums; check Ebay or other feedback if available
6. Request photos or proof that the goods are in their possession

One of the fundamental dilemmas most new wholesale buyers face is that established, reliable sellers have little problem finding larger customers and often don't want to waste time placating the paranoia of a new buyer by sending photos, info, and by accepting small orders and less convenient forms of payment. However, most sellers who are professional enough to be worth dealing with would offer these very basic forms of reassurance to a new customer. The bottom line is that sacrificing caution to get in on a good deal is not worth the risk.

Common mistaken assumptions:
1. "PayPal is always safe." Many have reported experiences where a chargeback fails because the seller's account is empty. A deliberate scammer will move the money as soon as it clears.
2. "Sellers with no negative comments on the forum - or positive comments - are safe." Many of us have had negative dealings even with sellers with established reputations.
3. "A reliable supplier means there's no risk." Because many goods are flowing through a multi-level supply chain, you need to be equally concerned about your supplier's supplier, though a reliable supplier should be competent enough to only buy from good sources.

This raises another problem: most of us are on the lookout for the classic scammer - the premeditated fraud where the supplier disappears with our money. But we're less wary when it comes to the unintentional scams - or scams one level removed from us. Most of the disasters on this forum involve people who gave their money to a seller with a decent reputation who appeared competent and reliable, but who did not take proper precautions with their source and lost a lot of people's money to a scammer. This may be the most difficult aspect of a transaction for us buyers to control since we cannot verify information about the supplier one level up (since the people we deal with don't want to give away their source and get cut out of the transaction).

Hoping for a good discussion here, I think we will all benefit from hearing the precautions others take, business practices and guidelines to stay safe. There's certainly a lot of money to be made but equal opportunity for big losses.

Jon

maybe a mod can make this a stick

how safe is credit card especially if they make you use a waiver saying you will settle disputes with themselves only

The best advice I can give to newbies is DONT FOLLOW THE HERD Seems like everybody who gets started in this business gets caught up in wholesale dropshipping on ebay. If you want to break into the wholesale market without the scams then go to a tradeshow or check the trade mags that follow the market. Also, be very careful of buying merchandise overseas as most are scams/blackmarket ripoffs.

1. "PayPal is always safe." Many have reported experiences where a chargeback fails because the seller's account is empty. A deliberate scammer will move the money as soon as it clears.

Paypal Is only safe if you are dealing with a reputable company. If you are dealing with a scammer you will never see your money again. They close up shop and remove credit card info therefore leaving you holding the bag.

What about merchants that scammed? Should they continue to accept credit cards and continue to get scammed so the next guy feels good about his purchase? Should they continue to pay the 3% the credit card companies and the chargeback fees to make the next buyer feel safe? Most companies are reducing the amount of credit card purchases they will take for these reasons and are justified in doing so.

Our personal policy on credit cards is:
First time buyers, $1000.00 limit
Repeat customers, $4500.00 Limit, and with long term customers we have been known to go over that amount.
New Electronics, salvage, pallets and truckloads, Bank wire only.
Paypal First timer, $2500.00 limit
and even with that we get scammed but it is best to get scammed out of a few hundred bucks then thousands.


There are bad customers just as there are bad merchants.

My suggestion would be to do a lot of research before buying. Go to the location and meet the company first hand. Find out whether or not the company has the product first hand or is just a broker. Start off with a small purchase to see how it goes.

As a seller it is much harder than you think. Everyone’s expectations are different.
You can post oodles of pictures, large descriptions, disclaimers, etc, etc and you are still going to have customers that are not happy because they couldn’t make what they wanted on ebay.

IMHO one of the biggest problems with scammers and people being scammed is because many are looking for that deal that is too good to be true and scammers know it. It stands to reason that if you buy $500.00 handbags for $20.00 that they are going to be fake, doesn’t take rocket science. As long as you have the buyers looking for these incredibly low wholesale deals you will have scammers sitting back just waiting to take their money. We all have to just use good common sense when purchasing from someone new. Go to the boards, there are many of them. Google the merchant, check there address, check there phone number, check with the state they are registered with, etc, etc.

how safe is credit card especially if they make you use a waiver saying you will settle disputes with themselves only

Credit cards aren’t safe either, if it a scammer they empty the account and you get nothing. The only thing safe and not 100% is good judgment and good research.

On your last point Lisa, are you sure that a merchant can close up their credit card account and prevent you from winning a chargeback? I thought I read somewhere that when you file a chargeback, your card issuer goes after the merchant's bank and the bank is responsible for showing proof that the goods were sent.

Jon, Most of these guys will use free merchant accounts like CLICKBANK for example. All they have to do is open up account with bogus info, collect all the monies and close up shop. It is really easy to scam people because there are so many just looking for it...Sorry guys.

It is really easy. Go to click bank, open an account with bogus info and bogus SS#
Have monies go to a PO Box under whatever name you decide to open one in.
Take all the checks to a check cashing service with your bogus ID and there you go.
You do a chargeback and there is no money in the customers account and therefore you do not get your money back.

Another example: Scammers can open up two paypal account, charge your card with one account and then forward the money to their second account. Once they have all the money they need they close down the second account and open another and move on to the next set of victims. It is much easier than you think.

Honest sellers, credit cards and paypal. The bad part about all of this is that a lot of honest sellers have to deal with impatient buyers as well as buyers that have been previous scammed or afraid of being scammed. These buyers are the absolute worst to deal with. As soon as their package is a day late or you get slow in responding to email they immediately threaten you with a chargeback…this is why most sellers steer away from taking these payments. If you search through these posts you will see exactly what I am talking about. There is a post on here where someone waited two days and then did a chargeback. There is another post where they waited a week and threaten on a public forum that they would do a chargeback. Then you have the scammer customer that decides they just don’t want to pay for the goods and do a chargeback and never return the merchandise.

Just because a company does not take credit cards or imposes a credit card limit and makes a customer sign a waiver does not mean it is a bad company. It just may mean they too have been scammed and are simply tired of it.

So, like I said in my last post….what about the merchant? If they offer credit cards can the customer guarantee that they will be a good customer and not a threatening one, a patient or a scamming one

All above are my views and opinion only.