This dangerous scam is actively running now so buyers should be extremely careful to avoid it.
To have the scam running the fraudsters need to make some preparations.
1. First they create a website of an exporting company (company A). The company can export all kinds of products but the ones we have recently seen were involved in „trading“ with construction and building machinery like tractors, loaders, smaller excavators etc. The conmen can create several websites that belong to different „companies“, but the design, colours, sometimes contact numbers will be the same.
Some websites may look poor, but we have seen some good ones. Pictures of solid looking main offices are placed on the pages, photos of non-existent employees can be seen in the „contact us“ forms. Logos of banks, insurance companies and other financial institutions can be placed on the site to give the impression that the „company“ is cooperating with them.
The main purpose of the site is to attract as many buyers as possible and start negotiations with them.
2. So, the seller is created, now the scammers need to organise a „transportation company“ (company B) that also provides escrow services for its customers. Again, more work for web designers. Another nice looking website is born. This site MUST look solid and reliable. Like any other serious transportation company, our „transporters“ also provide customer registration, cargo trucking option, customers account management option etc. References of happy „customers“ are heavily featured, pictures of warehouses, trucks with company’s logo, ships sailing full of containers etc. the „Company“ has a long history of successful operations, as it is stated on the site, could have offices in several countries and many employees.
The main idea of this site is to give the impression of a solid, reputable and reliable company.
One remark: here we are talking about NVOCC (non vessel operating common carrier). The „company“ does not pretend to have its own vessels or planes as this would be very stupid to do since it is very easy to check if this is true.
Among forwarding services the „transporter“ offers escrow services for its customers. The company delivers the goods from the seller to the buyer and guarantees that the seller will be paid after the buyer receives the product. This is a very good and useful service, according to the testimonials on the site.
Please note! The potential customer cannot find any connection between the seller (company A) and the forwarder (company B). They are independent and each involved in its own business.
3. You are a company that is looking for a new supplier. In our case, the new supplier of used construction machinery. While searching the Internet you find among others a company that have the assortment you need, photos of the equipment etc. This is company A, of course! You decide to send a request for a machine you are looking for.
You receive a reply that the machine is in stock and can be sent to you immediately. And – surprise, surprise – the price is thirty-fifty% lower than the prices you have received from other companies. Of course, you are interested. But this is not the last surprise from the supplier. His delivery terms are very attractive and give the seller no way of cheating you. So what are they?
Step one. The seller and the buyer agree on the terms and conditions of the transaction.
Step two. The buyer has to contact the transportation company (company B) and become a registered user with them. The funny thing is that the seller does not accept any other transportation company and insists that company B is used in the transaction; he has such good experiences with them, has been using them for years, blah blah blah.
Step three. The transportation company will contact the seller and inform him where and when to deliver the loader (tractor, excavator or whatever). The seller ships the goods with all original documents to the buyer. The trucking number will be issued immediately after the shipment is done.
Step four. After the shipment is done, the buyer has to transfer 10-50% of the value of the cargo to the transportation company (not the seller). The money should be sent immediately after the shipment. The transportation company will keep them until the buyer receives the shipment and inspects the machine.
Step five. The buyer receives the equipment and tests it over five-fourteen days. If everything is OK and the buyer wants to keep it he should transfer the remaining amount to the transportation company and the seller will be paid. If the buyer is not happy with the purchase, he can reject it and return it to the seller without any explanations. The seller will cover the freight back and will instruct the transportation company to return the money to the buyer in full.
Good, isn’t it? According to these terms the buyer has no risk at all. His money is kept with the transportation company, he can check the equipment before paying in full and can even return it for free and get his money back! Who can reject such a deal?
So you decide to go ahead.
4. You contact the transportation company and register with it. Most likely you will have to sign some kind of a contract with the seller. It will be a very simple paper without much technical data and complicated import-export terms. It could even happen that the seller will send you your order without any papers, immediately after you contacted the transportation company. This is unlikely, but possible.
5. Within one day, two at the most the transportation company informs you that your cargo had been picked up and is on its way to you. To confirm the shipment the transportation company gives you a tracking number so you can put this number in the system of company B and see that your order has been sent.
6. Now you have to send the money to the transportation company. You receive a message from them that the money should be sent by Western Union or Money Gram and the receiver will be a private person. Strange, isn’t it? Why not by SWIFT transfer to a bank account? The explanation of course is because it is the usual way the company works, they are trying to avoid extra taxes, it is much faster since the goods will be with you very shortly etc.
Now two options are available: either you send the money as per their request or you do not.
OK, option number one. You send the money and wait for you shipment. We can talk about sums of 3.000-10.000 Euros. But, for some strange reason, your order never arrives. You start calling the seller and the transportation company but nobody picks up the phone. After some time the sites go missing too. Result: you money is gone and the chances of recovering it are close to zero.
Option number two. You became suspicious and wait with the money transfer. You contact the seller asking for more details about the company, the equipment etc. Remember, your equipment has been shipped and is on its way! It will arrive within some days (it does not matter where you are located – Australia, USA or Europe – the delivery time and price is the same for any destination! What a great transportation company!)
You continue with more questions. The seller starts to suspect that the transfer may not be done and becomes more aggressive.
You will receive a letter where the seller is angry with you for not following the deal (remember, sometimes the contact has not even been signed before the machinery left!). The seller blames you for being dishonest in business, tells you that he has already shipped the machine and it will arrive to your country in some days.
The scammer informs you that he was in contact with his lawyer (he might need one very soon!) and if you do not send the money you will be prosecuted and will have to pay all the costs connected to the deal. The scammer threatens you that he/his lawyer will report you to the police, Interpol, Internet Crime Complaint Center (IC3) and you will suffer the consequences of your behaviour.
You might receive a sales contract (if you have not made one earlier) that you need to sign and a copy of the seller’s passport as a proof of his honesty. The seller insists that you send the money immediately otherwise you will be in trouble.
The letter is very emotionally written and has only one purpose – to press you into transferring the money. If you do it, see the option number one above. If you decide to find a better use for you money, absolutely nothing will happen. Probably you will receive one or two letters from the scammer or from his lawyer with more threats. And, for some reason, the equipment will still be in transit…
It is obvious that the main idea of the scam is to steal your deposit made to the transportation company. The „seller“ and the „transportation company“ are partners in this business that is run by the same scammers. Normally this fraud is running for two-three months. During this time the fraudsters find several victims that have transferred the money, then the sites are closed and appear again, most likely, in a different industry branch.
To avoid this scam and save your money, we can give several recommendations and point to some „red flags“ that will help you to identify the fraud.
- Price of the product. If it is much lower than the prices for the similar machines (or any other goods) this is a serious „red flag“. The scammers use it a lot to attract new victims. Just contact several suppliers and get an idea of the current price level for the product you are looking for.
- Terms of sales are too good to be true and very unusual for your industry. Just think: will any company ship you any product without having payment guarantee from you? You can easily receive the shipment, test it and pay nothing to the seller except the deposit. So do not be naïve thinking that somebody will send you anything without payment.
- Carefully study the information on the seller’s website. Look for obvious grammar, style, punctuation mistakes. Pay attention to the general design of the site, it should not contain texts in different formats and styles. Check the contact details of the seller. Companies involved in trading with heavy equipment should have strong finance and an annual turnover of several millions Euros or dollars. Companies of such a scale can afford a professional website without any mistakes.
- Check when the site was registered and who the register is. If it is stated on the site that the company has been in business for several years, but the site is registered just two-three months ago, it is a very strong „red flag“.
- Search for the sites that look almost the same as the one of your potential „supplier“. Probably you will find a website that looks pretty much the same, but the name of the company will be different as well as the contact details.
- Check the Internet. If the company has been in business for a long time it should be visible on the Internet: Offers, published on different trade boards, references from other sites, published articles, participation in professional events etc. If the company is legitimate, it will not be a problem to find all kinds of information about it. The same check should be done for the „transportation company“.
- If you are located in a country with complicated customs procedures, ask the seller how he is going to deal with the customs authorities in your country. Remember that the seller promises to deliver your machine to your door, means DDP. Most likely, you will get no reply to this question.
- If the seller promises to deliver the cargo for, let’s say, 2.000 USD to any country in the world and that the delivery will take the same time irrespective of the country, you have another „red flag“.
- Just ask the seller for a complete sales-purchase contract where all details of the deal are clearly stated. In the contract you should have an official name of the exporting company. Check its registration using our „registration check“ services. Then you will see if the company really exists.
- If you are still in doubt, check the registration of the „transportation company“ as well.
- Most probably, you will not find these „companies“ in the national registers, but if they exist, it is worth checking their background and financial data. It is possible that the scammers use dormant companies for their activities or steal the names of other firms. Use our „company check“ services to be on the safe side.
- Call the „transportation company“ and the „seller“ and ask as many questions as possible. „What shipping line will you use?“, „Do you insure the cargo?“ „Can we get a copy of the insurance policy?“, „Can you send me more details about the technical condition of the machine?“, „Can we pay by a Letter of Credit?“ etc. If the seller insists that you must use this „transportation company“ only, you can be very sure that it is a scam.
- If the „seller“ or the „transportation company“ asks you to send the money by Western Union, Money Gram or any other similar companies, you can be very sure that you are talking to a scammer. Normal business practise is to use banks for the transactions, not these services designed for general public.
Our example with heavy equipment is just one of the possible scenarios. A similar scam can be used in many other industries.
Remember that if the deal seems too good to be true, it is probably is. Use your common sense and take some time to investigate the companies involved in the transaction. Pay attention to the „red flags“ and you will be secured against the scammers.