The Poland Import Export Chamber Of Commerce Online

Protect Against Fraud

Know your customer to protect against fraud. When you start a business you will have to learn how to protect yourself against fraud.

Buyer fraud and seller fraud are commonplace on the Internet. But buyer of fraud is, by far, the bigger problem.

Protect yourself by knowing your customer and implementing safe business practices.

As a Seller you are sure to understand that you have to establish a trust factor with your buyer before that buyer gives you money.. At the same time, you have to assure yourself that your buyer is as the buyer represents. You have to know your customer.

You should set up a set of fraudulet buy screening standards to which you rigorously adhere. If you don't you are likely to waste time and be taken for more money that you would ever consider.

As a first step, when it comes to credit cards, it is always best to use a third party to process your payments. They are experts in handling credit cards and can protect you to a large degree from credit card fraud.

These service providers will charge you some small amount for each transaction. Even though they are small, those numbers can add up. But they can be a lot lower than the numbers that you will lose if you try to take credit cards without having their screening and verification capabilities.

Here are two processing companies that you can consider. There are many more but we have used these to for years and find them reliable.

2Checkout - For normal e-commerce.

PayPal - For normal e-commerce. Note their system of verifying accounts.

A reseller has some other things to consider.

If you are acting as a wholesaler the amount of each sale will be larger and you have to be very careful of with whom you are dealing.

Below is a fraud screening process that we have found to be very effective. But before you use it, a couple comments are in order.

Above all, when using this screening process, what you are looking to do is create a two way trust relationship with a potential customer. You have to know your customer and establish a mutual trust level.

You will find yourself dealing with many new people who want to start a business. Many of these people will have little or no idea of how to run a business, communicate on the Internet, or even use a computer for that matter.

If someone is new and just starting a business they are likely to not have an office and quite possibly will be working from home. That is fine as long as they tell you. Don't discount people like this because many a business, such as the empire started by Walt Disney, started in a garage. They can be good customers.

But if they do not have an office, have not formed the company, and are shielding those facts from you, then you have to be careful. If they attempt to deceive you or hide things from you in the beginning, you can rest assured that that is probably what you can expect in any future dealings.

It is then up to you to decide as to whether you want to continue working with someone who starts out by trying to deceive you.

We have found it better to have someone contact us and say, "I am new in the business, I don't have a company, I don't have a lot of money, but I want to …. . " They may be a little difficult to deal with because you will have a lot of educating to do, but they are more likely to be an honest and good customer once they develop.

We have an internal screening process that we use. There are many factors involved and the final judgment is really based on a gut feeling. Each of the factors is a signpost or warning sign. Too many warning signs and we decline to serve the customer.


Screening Procedures


  • Email

    The first indicia of fraud is the use of a free email account in a business transaction.

    Established companies have a website and domain and routinely use an e-mail address over their company name when involved in commercial transactions.

    No email with company name points to the possibility of no company.

    Domain names with an e-mail address only cost $10 per year. If a company has not committed $10, then there is something wrong.

    Once again, always keep in mind that people in the startup mode may not know this. But if someone is telling you that they are running an established company and they are using a free e-mail address, you should ask them for an e-mail address over that domain name. If they do not provided it, proceed with caution - if you proceed at all.


  • Web Site Address

    A website address is a mark of permanence. A website address is like a Yellow Pages listing. An established company should have a web site address.

    The website may be under construction. Even one under construction shows a commitment.

    Some people will give you excuses that they do not have a website for their particular profit center, or that it is under construction and they do not have the website address. Or they can't read company email out of the office so they need a free email account and don't have a web site address that goes with it.

    First they can give you the web site address of the main company.

    And there are many email readers such as Mail2Web that can be used to read mail from anywhere.

  • Phone Number

    Any business should have a phone number. If nothing else a business can have a Skype In phone number with an answering machine. Skype In

    If the company does not give you a phone number it is highly likely that the company is being run from a home, or from an employer's office space.

    It is also likely that the firm does not yet exist.

    If they give you a mobile number and not an office number, they may be hiding the fact that there is no office number. It is a further indication of it being run from a home.

    The company may also be a competitor or fraud and is hiding information from you. Throw away mobile phones are often used in internet transactions.

    By way of example, we had one person contact us and hide information. We did our usual due diligence. Our staff finally traced that person to an office in the United Nations in New York City. That person was attempting to run a business from the United Nations office rather than to spend her full time working on her job saving children.

    Generally if someone does not give you a phone number they don't want to talk to you. They are afraid that if you talk to them you will ask questions that they are not ready to answer.

    If we cannot talk to the customer on the phone to get to know our customer, we decline to deal.

  • Use Of Capital Letters

    The use of capital letters in an e-mail can tell you a lot. They are generally the Indication of an amateur, a fraud or someone filled with self-importance.

    On the Internet, capital letters are used to shout. They are impolite. They are used by fraudsters who send out the scam e-mails.

    They are also used by people think that they are going to establish some important position above you by writing with capitals.

  • Lack Of Specificity

    When selling wholesale orders, it is important to be able to know by how much the customer typically or plans to order at any time.

    A customer should be able to tell you whether they order $500 in product at a time, a pallet load at a time, a container load at a time or some other quantity.

    If the customer tells you that the quantity depends on the price and will not give you an estimate of what they buy, what they might buy or an indication of what they currently buy when buying other products from other suppliers, you are probably dealing with a startup or a fraud

    The above applies to other responses from the customer along the lines that "the quantity depends on the quality" and "we can't tell until we do market research."

  • Request For All Prices or for many products

    Sometimes you will get requests from people to send your catalog with all your prices and all of your product's.

    You have to temper your response in this case. You should look at all the factors above to see whether the account is real. Requests like these often come from competitors and frauds in the Far East and Africa.

  • Final Consideration

    The larger a company, the more established a company is, the more experienced business person, and the more serious they are, the more you can expect to get detailed information in their first contact to you. They do not have time to waste and they know that you do not either.

    You will get less information from startups, frauds, competitors, and amateurs. The less you get, the more likely the request is from one of these.

    In all cases it is best for you to follow-up and request further information. It is best to pick up the phone and call. Skype Out is cheap. Any company can afford to call from anywhere to anywhere.

    If the buyer is legitimate, it will responds with specific information. .

    But if it dances around without answering your specific questions, or ignoring your request to do something simple, proceed with caution if you proceed at all. In this case, we generally do not proceed

Final Note

Deviate from your rules and you will regret it.

If you are a buyer, take the advice to heart. You may get better service and responses that you were never able to get before.