Question:
I have read through you info on this site and found it very informative.
In regards to due diligence as well as doing the checks by cold calling and checking their website, is there a pack which I should put together to ensure the least risk possible.
Any pointers in the right direction would be much appreciated as these people can seem very trustworthy and I myself or employees of mine can have a set procedure in place to make sure we have covered ourselves as well as we possibly could.
Answer:
I am not aware of a 'package' of details that you can check, except for the resources we have compiled on our company page at: http://www.importexporthelp.com/company.htm which you and your employees are free to use any time - just scroll down the page until you see the "Due Diligence" sub-title.
These are not all that are available, I am sure, but if you follow that list you should be able to find any negative details on someone, if there are any on record.
I am not sure if you are in the USA or not, but the US has a program through their embassies that you can pay a couple of hundred dollars to have the embassy rep do a background check on the potential importer.
Another thing you can do is ask for references of other businesses they have dealt with and then actually contact those references. I know of one supplement manufacturer who would not even bother following up a lead if they would not provide them with at least one reference.
You will want to cross reference the reference also to make sure you aren't calling the guys brother or brother in law who is in on the deal with him.
Last, confirmed letters of credit (LOC) are about the safest way to go when it comes to payment, but they are often very difficult to get and much more expensive than regular LOC's.
Ultimately there are no guarantees of keeping you from getting ripped off. I have personally talked with several exporters and importers who had worked for some time with their buyers/sellersin smaller quantity orders. Then a larger order comes in and they end up never getting paid for it or if they are the importer, they send the money and never receive the merchandise.
This last type of deal is the old confidence game where they use small orders to gain your confidence, pay for them up front or shipthem right away and then hit you with a big order which is never paid for and you can never seem to find the person in their office at any time.
It is an unfortunate fact of business life (and personal) that you have to approach every transaction as if it is a fraudulent one and be very firm in your requirements of the other party.
Fraudsters are everywhere - in every country - unfortunately much of the scams come from the very countries that need legitimate trade the most and they are in Africa.
Many (not all) people have come to realize Africa is the main origin for the fraudulent activities so many of the fraudsters have now resorted to faking emails and other correspondence with actual names of legitimate companies in China or India.
The fraudsters will use the actual graphics or letterhead from a legitimate company but place their (the fraudster's) email or phone number (which is usually forwarded) in the correspondence.
Another fraudster technique is to use a color copier to duplicate an actual money order or cashiers check from a legitimate bank. Looks legit, you deposit it, have the goods shipped only to find out about 3-4 weeks later when you get a call from the bank telling you it has been returned. Guess what - it isn't the bank's responsibility and they will take you to court, if necessary, to get the funds from you.
Your qualification requirements have to be so firm that most fraudsters will consider them not worth the effort and crawl back under the rock from which they came - these strict requirements may cost you a real transaction from time to time but it is better to walk away.
Fraudsters know most companies and individuals are desperate to make a sale and they use this against you. If a deal seems too good to be real - it is. If you ever run into a deal that you just can not seem to resist but would like my input, feel free to call me and tell me the details without revealing who the party is and I will be happy to give you my opinion.
In most instances, you will probably not like my recommendation but you always have the final decision.
Hope this has helped and I wish you the best.
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