Unfortunately, wholesale scams are a real risk. Here are three ways you can determine whether a supplier is someone you can trust. This is a short list I’ve compiled and I want you to bookmark it now, print it out — whatever suits you best — and make sure you refer to it whenever you find a new supplier you want to work with.
Note: When you are working with suppliers from the SaleHoo Wholesale Directory, you do not need to run background checks, as each of them has already been verified as safe. These steps are only necessary if you are dealing with suppliers outside of SaleHoo.
1. Check that the supplier accepts safe payment options
Without a doubt, this is the most important step you can take to protect yourself from fraud. Safe payment options are credit card and third-party payment services like PayPal, Paymate, Escrow and Moneybookers. These payment methods are safe because they offer you a level of protection if something goes wrong with your transaction.
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Credit card companies, banks and third-party providers like Paypal hold funds for around 30 days (depending on provider). The companies secure your money and pay it to your supplier later.
This gives you a chance to report fraud and get your money back before it is handed over to the fraudster. That's why scammers don’t use these payment options — because they are very unlikely to get paid.
Furthermore, credit card companies and banks will reverse charges if you report fraud, which is an extra layer of protection.
Payment methods to avoid:
Western Union, wire transfer and bank deposits. None of these options gives you control or protection if something goes wrong. Western Union freely states that you should only use the service to send money to people you know and trust.
When dealing with suppliers, beware of suppliers who tell you they will give you a discount if you pay via unsafe methods. This is a common way to lure you over to an unsafe method. They will likely tell you that PayPal/credit card fees are high and that you can have a 10 percent discount if you pay using another method. While it is true that PayPal and credit card fees are slightly higher, think of it as a safety levy and ignore these requests!
2. Order a sample and review the supplier's service
This is another tried-and-true method of determining whether a supplier is worthy of your trust.
Many scams don't actually hold stock. They only advertise that they do, so by ordering a sample, you can see whether they actually have the products they say they do. Obviously you will have to pay for your sample order, but you're only risking the cost of one single item, rather than hundreds or even thousands if you are placing a wholesale order.
The benefits of ordering a sample don't stop at being able to see whether the supplier is actually legitimate: You can also assess the supplier's customer service throughout the transaction, too. How quickly do they reply to your emails? How soon does the item arrive? Is it well packed? Does the item match the description on the website?
Don't be surprised or alarmed if you are charged an inflated price for a sample. This is standard practice. For example, a pair of jeans might be $12 at wholesale price, but when you order a sample, don't be surprised if you have to pay $30. Again, don't be alarmed by this — it's not a scam! Wholesalers do this to protect their pricing and ensure that they cover the costs of processing your order.
3. Review the supplier's contact information on their website
If your order doesn’t arrive from your supplier, or you are short changed by only getting half what you paid for, would your first step be to call or email your supplier? What if they don't have contact information on their website?
Sounds like a pickle, doesn't it? That's why we insist that before you place an order with a supplier, always look for contact details. There will usually be a dedicated "Contact Us" page on the website.
When you review the contact information, check to see if the supplier has a phone number you can call. Pick up the phone and call. Listen out for a professional greeting such as "ABC Wholesalers, how may I help?"
If you get a greeting that is something like "Hi, Mike speaking," they’ve failed the test. This isn’t, of course, a sign that your supplier is a scammer, but it’s not great either way, so keep checking things out.
You should also look to see whether the supplier has a Google Map and/or a physical location listed.
If so, enter that location into Google Maps and take a look at the street view. You want to see an industrial area or warehouse. If you are looking at a residential address, it could be a warning sign. The image below shows the location of a trusted supplier. See how they have a large warehouse in an industrial area? This is a good sign.
Note: Some suppliers do not list their physical address on their websites because they don’t want to publish it live on the Internet, where thieves look for wholesale factories. Wholesale factories and warehouses are great for robbers, as they can pick up a ton of stock in one swoop. Unlike retail stores, wholesale warehouses are often in areas with few residents living nearby, which makes them appealing targets.
A supplier is not untrustworthy just because they don’t list their address on their website, but it's worth checking.
Another thing to check is whether their email address matches the website URL. For example, if a supplier’s email address is ABCwholesale@gmail.com or @yahoo.com, this is a bad sign. What you want to see if info@abcwholesale.com, or an email address that isn’t using a free email service like Yahoo.
Once again, this is not a sure sign of a scam, but it helps to put a picture together.
Above all else, remember that safe payments are your best defense when you are working with new suppliers. If you want to skip the time and risk involved with working with suppliers that you don't know, join SaleHoo and get instant access to more than 8,000 verified legitimate suppliers who have been vetted by our team to ensure that they are safe to deal with.
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