The aim of this thread is to offer a step by step guide on how you can verify suppliers before purchasing goods from them. There are many methods you can use, and most scammers will be easily caught by using a number of these methods combined. Good luck, and if you have any questions about a specific supplier feel free to post it in the Wholesale & Dropship Suppliers Discussion Forum.
In general, you can verify a supplier with little or no cash investment by:
- Proactively pursuing verification, using techniques listed under business registration verification, phone number and address verification, financial checking, reputation checking and website authentication. See our list of pointers in each category.
- Being aware of red flags in areas such as product knowledge and transaction practices.
If you have the cash and the time, you can shoot for a higher level of verification. See our list of high ticket verification options at the end of this guide.
1. Business Registration - General
Every company, regardless of country, has a business registration number of some kind. Ask the company to send you proof of its registration. However, don't assume that a registration document is adequate proof. Document forgeries are simple and common on the Internet. The registration number is your first step.
Next you need to find the business verification site in the country where the company is registered and check for the legitimacy of the number you have been provided. Here are some of the major sites you need to know:
Worldwide
You can run a credit check on any registered company worldwide by using D&B- Dun & Bradstreet -Global Risk, Credit, Sales, Marketing, and Supplier Management Solutions (for a fee)
United States
US Corporate records by state can be found at Research RoundUp: Business Filings Databases Updated | LLRX.com. If the company is publicly traded, you can check at Filings & Forms.
Canada
http://www.businessregistration.gc.ca/
Australia
European Union
National Business Register - Search
EUROPA site - Validation
United Kingdom
WebCHeck - Select and Access Company Information
National Business Register - Search
Italy
Infocamere
Hong Kong
http://www.icris.cr.gov.hk/csci/
China
Every legal company in China has to register with the Chinese government and obtain a unique company number. You should obtain your Chinese supplier's business registration number, then verify the number with the Chinese government.
Unfortunately, that’s easier said than done. The primary registration body is the Bureau of Industry & Commerce, the only government agency responsible for the registration of legitimate companies or enterprises in China. This agency has local authorities at the provincial level throughout China. Unfortunately, their sites are only in Chinese (http://www.csaic.gov.cn) so they are not accessible to most non-Chinese speaking people.
Here is a list of a number of verification sites in China you can use to check if a company is known:
www.yp.net.cn
www.cnaic.org.cn
www.114win.com
Of these, only the Chinese Yellow Pages, www.yp.net.cn, has an English version of the site. And unfortunately, the Yellow Pages is not as popular an advertising medium in China so if you don’t find the supplier listed, it doesn’t necessarily mean that the company does not exist.
Another option you have for China based suppliers is to verify their ICP number. Every Chinese company with a website must have and display an ICP number on their home page. If they don't you should automatically exclude them from your sourcing (Hong Kong websites are excluded from this requirement). You can use the manufacturer's website ICP number to determine the website ownership, and check whether there have been any complaints about the supplier (view our guide on verifying Chinese suppliers for more details on how to verify an ICP number).
Bottom line, it may not be easy to verify a business registration number for a Chinese company.
TIP: Since the only barrier between you and verification is the language, try contacting your local business association, e.g., Chamber of Commerce or small business administration to find a Chinese translator. Pay a small fee to have that person check the registration number. If the number is valid, ask for the whole page associated with the company to be translated, or use Google Translate. If you are unwilling to trust the translation, get a backup translation through Elance.com.
Other Countries
To find a verification website in another country, Vietnam for example, use www.google.com, and type � google vietnam � in the search bar, to find the google Vietnam website, then check “only English pages” to refine your search results. Then type “verify company” for access to the country’s verification agency or agencies.
CAUTION: Scam artists register their companies so it's very possible that you will find a middleman or scam artist listed as a legitimate business when you check. Part II of that check is to determine how long the company has ben in business. Most scammers don't make it past one year. If the business has a track record that is longer than one year, that's a good sign.
If you don’t find such service, ask your wholesaler for the address, phone number and fax of the chamber of commerce/business where their company is registered.
You can make use of an international company’s consulate in your country or your embassy or consulate in their country. Contact the appropriate group and ask if they are familiar with the company. The representative you speak with may not have personal knowledge of the company but will likely have access to lists of legitimate companies in the country as well as scammers.
2. Email Address
Verify that the email address the company's representative is writing from is in fact owned by the company. It is not uncommon for scammers to impersonate a legitimate company by using a free email address. Contact the company from their official website and ask them to confirm that the email you are corresponding with belongs to them.
3. Visiting Subsidiaries in Your Country
Ask if the supplier has an office in your country. Larger legitimate suppliers often establish offices in major trading countries with staff who can sign contracts, accept deliveries and generally smooth the way. The lack of a local office does not necessarily mean that the wholesaler is not legitimate, however.
4. Reputation
There’s a lot of free information on th Internet.
1. Search on the company's name and the word “scam” “complaints” “refund” or “fraud” in several search engines. Example search strings you can use:
companyname scam
companyname complaints
companyname refund
companyname fraud
websiteurl.com scam
websiteurl.com complaints
websiteurl.com refund
websiteurl.com fraud
Carefully evaluate any information that you find.
2. Check to see if the company has been vetted on any of the major wholesale directories (view our list of wholesale directories for guidance).
Be aware, however, that sites which rely on advertising revenue often exchange ads for listings. This means that listed suppliers may not have been vetted; they simply placed advertising on the site. It is safer to rely on sites that have a serious vetting process that you may have to pay to access. These sites have the expertise to verify a supplier's status and that's generally worth a membership cost.
3. Ask participants on this forum if they have any feedback about the supplier. You can pick up a lot of good information from people in the field that way. Use the appropriate Wholesale & Dropship Suppliers Discussion forum to post your questions about an individual supplier.
CAUTION: You cannot always expect an answer in a public forum. Good wholesale sources are strong proprietary information and you won’t find traders giving that information away publicly. However, if you send a private email to a forum contributor and ask if they have any personal knowledge, you may well get an honest, private response.
4. Ask the supplier for customer references from buyers in a developed country, including the reference company name, contact person, business address and contact number.
Check the references by phoning them; call them at several times of the day and ask for general information. In addition to speaking with the reference company by phone, do the research to be sure they are legitimate, e.g., search for a website. Be aware that this method may not always be effective. Some suppliers may be unwilling to provide information on their customers or they may worry that you are a competitor trying to take business away from them.
5. Trade Shows
Ask the supplier which trade shows they have attended in the past 2 years. Verify with the trade show organizers (by visiting their website or by sending them an email) that the supplier has attended the trade shows they as indicated.
6. Website
1. If the supplier has a website, use Whois lookup and Domain name search to verify who has registered the supplier's web domain name. If the contact information provided publicly in the whois differs from the contact information offered by the supplier, ask for an explanation and evaluate their response.
2. Legitimate websites will have authentic photos of product inventory. You can check the legitimacy of photos by right clicking on a photo and selecting “properties” in the menu that opens. The images should have an address that originates within the website. If the address originates elsewhere, the actual wholesaler is probably at that base domain address.
7. Bank Account Vetting and Credit Checking
1. Ask the supplier for a bank reference then check out the bank. Locate and call the bank and ask if the company does business at that bank. Be very concerned if you discover that the contact has provided a personal bank account rather than a business account; this may indicate that they are too new to have a business account or that they simply do not have a business at all.
TIP: Many banks will not release information on a bank account. Try this: explain them you are trying to transfer money to the supplier's account and that you are experiencing problems sending them your payment and therefore need to verify their details.
2. Use a credit check company to run a financial check on the company.
8. Product Info Red Flags
Wholesalers should be experts in the products they are selling. If your wholesaler is fuzzy on specifics, look again before you buy.
1. If you know the specific product you want to sell, find the manufacturer and ask for a list of authorized wholesalers. You can find the product manufacturer’s name by looking on the product packaging, or sometimes the name of the official importer of the product. Call the manufacturer’s or importer's sales division and ask for a list of authorized wholesalers to check whether your wholesaler is on their authorised list.
2. A legitimate wholesaler will be aware of any certifications that are necessary to sell a product in your country and will be able to demonstrate compliance. Go to a store and look at similar products. Identify any required labeling or certifications. Ask the wholesaler for evidence that products have received the appropriate certifications.
3. Ask technical questions about the product you are looking to buy. Test the supplier's knowledge of the product. Ask about the features included. Be cautious when a supplier always replies positively to your requests for product features, it is often an indication the supplier only wants to get your order as quickly as possible, either because they are a scammer or because the goods you are being sold do not match your requirements.
9. Transaction Red Flags
Wholesalers are business people. They can’t make money unless they operate in a business-like way. If your wholesaler operates very differently than most wholesalers, take a second look.
1. Be wary of anyone who wants you to escrow money with their lawyer or with a little known escrow company; many of these companies and people are frauds.
2. Legitimate wholesalers will not require a membership fee; they make their money on the markup from selling goods to you, not on additional fees. However, a legitimate wholesaler may ask for a small, refundable set up fee. This fee deters non-serious buyers from creating an account that will never be used. In this type of transaction, the set up fee is usually credited on the first order.
3. Legitimate wholesalers are not usually out on the Internet trying to entice you to do business with them. While wholesalers are usually glad to sign on new customers, you will not find them actively seeking you out; that behavior is much more typical of scammers who are spending a lot of advertising money to find you and lure you into a bogus arrangement.
4. One of the many scams on the Internet offers you a fully operational website that
is stocked with the “wholesaler’s” products. This arrangement sounds like a dream come true but it’s really not true at all. You will find yourself hopelessly burdened with hosting and other fees while selling the same products as thousands of others.
5. A supplier who is setting up an account for you should request your tax ID number; any legitimate wholesaler needs that ID number as proof that you are a retailer and therefore entitled to wholesale pricing. If this information is not part of the requested data exchange, you are not dealing with a legitimate wholesaler.
CAUTION: These pointers may not definitively tell you whether you have a legitimate wholesaler or a scammer. The point is to combine the pieces of information into a picture that either makes you feel comfortable moving forward or causes you to reconsider.
10. Verification In Person
On the other hand, if you have the resources, you can get a much higher level of verification by using one of these suggestions.
1. Visit the supplier. The cost of a trip pales in significance if you plan to spend large sums of money buying from that supplier.
TIP: Even if this is not your plan, inform the supplier you will be visiting them. Evaluate their response to your announcement.
2. Hire a third party agent to visit the supplier on your behalf. Ask wholesaleforum.com members to recommend good agents for a specific country/region or by calling your country’s consulate in that country.
3. Visit major trade shows in the country you want to source from; this is a great way to find new contacts and possibly source at even lower prices. Be aware that trade shows are often frequented by factory agents, who are effectively middle men between you and the factory. While some factories will only work through agents, many will accept direct orders.
If you have a novel way of verifying a supplier, please feel free to add to this thread by posting your suggestions and ideas.
In general, you can verify a supplier with little or no cash investment by:
- Proactively pursuing verification, using techniques listed under business registration verification, phone number and address verification, financial checking, reputation checking and website authentication. See our list of pointers in each category.
- Being aware of red flags in areas such as product knowledge and transaction practices.
If you have the cash and the time, you can shoot for a higher level of verification. See our list of high ticket verification options at the end of this guide.
Every company, regardless of country, has a business registration number of some kind. Ask the company to send you proof of its registration. However, don't assume that a registration document is adequate proof. Document forgeries are simple and common on the Internet. The registration number is your first step.
Next you need to find the business verification site in the country where the company is registered and check for the legitimacy of the number you have been provided. Here are some of the major sites you need to know:
Worldwide
You can run a credit check on any registered company worldwide by using D&B- Dun & Bradstreet -Global Risk, Credit, Sales, Marketing, and Supplier Management Solutions (for a fee)
United States
US Corporate records by state can be found at Research RoundUp: Business Filings Databases Updated | LLRX.com. If the company is publicly traded, you can check at Filings & Forms.
Canada
http://www.businessregistration.gc.ca/
Australia
European Union
National Business Register - Search
EUROPA site - Validation
United Kingdom
WebCHeck - Select and Access Company Information
National Business Register - Search
Italy
Infocamere
Hong Kong
http://www.icris.cr.gov.hk/csci/
China
Every legal company in China has to register with the Chinese government and obtain a unique company number. You should obtain your Chinese supplier's business registration number, then verify the number with the Chinese government.
Unfortunately, that’s easier said than done. The primary registration body is the Bureau of Industry & Commerce, the only government agency responsible for the registration of legitimate companies or enterprises in China. This agency has local authorities at the provincial level throughout China. Unfortunately, their sites are only in Chinese (http://www.csaic.gov.cn) so they are not accessible to most non-Chinese speaking people.
Here is a list of a number of verification sites in China you can use to check if a company is known:
www.yp.net.cn
www.cnaic.org.cn
www.114win.com
Of these, only the Chinese Yellow Pages, www.yp.net.cn, has an English version of the site. And unfortunately, the Yellow Pages is not as popular an advertising medium in China so if you don’t find the supplier listed, it doesn’t necessarily mean that the company does not exist.
Another option you have for China based suppliers is to verify their ICP number. Every Chinese company with a website must have and display an ICP number on their home page. If they don't you should automatically exclude them from your sourcing (Hong Kong websites are excluded from this requirement). You can use the manufacturer's website ICP number to determine the website ownership, and check whether there have been any complaints about the supplier (view our guide on verifying Chinese suppliers for more details on how to verify an ICP number).
Bottom line, it may not be easy to verify a business registration number for a Chinese company.
TIP: Since the only barrier between you and verification is the language, try contacting your local business association, e.g., Chamber of Commerce or small business administration to find a Chinese translator. Pay a small fee to have that person check the registration number. If the number is valid, ask for the whole page associated with the company to be translated, or use Google Translate. If you are unwilling to trust the translation, get a backup translation through Elance.com.
Other Countries
To find a verification website in another country, Vietnam for example, use www.google.com, and type � google vietnam � in the search bar, to find the google Vietnam website, then check “only English pages” to refine your search results. Then type “verify company” for access to the country’s verification agency or agencies.
CAUTION: Scam artists register their companies so it's very possible that you will find a middleman or scam artist listed as a legitimate business when you check. Part II of that check is to determine how long the company has ben in business. Most scammers don't make it past one year. If the business has a track record that is longer than one year, that's a good sign.
If you don’t find such service, ask your wholesaler for the address, phone number and fax of the chamber of commerce/business where their company is registered.
You can make use of an international company’s consulate in your country or your embassy or consulate in their country. Contact the appropriate group and ask if they are familiar with the company. The representative you speak with may not have personal knowledge of the company but will likely have access to lists of legitimate companies in the country as well as scammers.
Verify that the email address the company's representative is writing from is in fact owned by the company. It is not uncommon for scammers to impersonate a legitimate company by using a free email address. Contact the company from their official website and ask them to confirm that the email you are corresponding with belongs to them.
3. Visiting Subsidiaries in Your Country
Ask if the supplier has an office in your country. Larger legitimate suppliers often establish offices in major trading countries with staff who can sign contracts, accept deliveries and generally smooth the way. The lack of a local office does not necessarily mean that the wholesaler is not legitimate, however.
4. Reputation
There’s a lot of free information on th Internet.
1. Search on the company's name and the word “scam” “complaints” “refund” or “fraud” in several search engines. Example search strings you can use:
companyname scam
companyname complaints
companyname refund
companyname fraud
websiteurl.com scam
websiteurl.com complaints
websiteurl.com refund
websiteurl.com fraud
Carefully evaluate any information that you find.
2. Check to see if the company has been vetted on any of the major wholesale directories (view our list of wholesale directories for guidance).
Be aware, however, that sites which rely on advertising revenue often exchange ads for listings. This means that listed suppliers may not have been vetted; they simply placed advertising on the site. It is safer to rely on sites that have a serious vetting process that you may have to pay to access. These sites have the expertise to verify a supplier's status and that's generally worth a membership cost.
3. Ask participants on this forum if they have any feedback about the supplier. You can pick up a lot of good information from people in the field that way. Use the appropriate Wholesale & Dropship Suppliers Discussion forum to post your questions about an individual supplier.
CAUTION: You cannot always expect an answer in a public forum. Good wholesale sources are strong proprietary information and you won’t find traders giving that information away publicly. However, if you send a private email to a forum contributor and ask if they have any personal knowledge, you may well get an honest, private response.
4. Ask the supplier for customer references from buyers in a developed country, including the reference company name, contact person, business address and contact number.
Check the references by phoning them; call them at several times of the day and ask for general information. In addition to speaking with the reference company by phone, do the research to be sure they are legitimate, e.g., search for a website. Be aware that this method may not always be effective. Some suppliers may be unwilling to provide information on their customers or they may worry that you are a competitor trying to take business away from them.
Ask the supplier which trade shows they have attended in the past 2 years. Verify with the trade show organizers (by visiting their website or by sending them an email) that the supplier has attended the trade shows they as indicated.
6. Website
1. If the supplier has a website, use Whois lookup and Domain name search to verify who has registered the supplier's web domain name. If the contact information provided publicly in the whois differs from the contact information offered by the supplier, ask for an explanation and evaluate their response.
2. Legitimate websites will have authentic photos of product inventory. You can check the legitimacy of photos by right clicking on a photo and selecting “properties” in the menu that opens. The images should have an address that originates within the website. If the address originates elsewhere, the actual wholesaler is probably at that base domain address.
7. Bank Account Vetting and Credit Checking
1. Ask the supplier for a bank reference then check out the bank. Locate and call the bank and ask if the company does business at that bank. Be very concerned if you discover that the contact has provided a personal bank account rather than a business account; this may indicate that they are too new to have a business account or that they simply do not have a business at all.
TIP: Many banks will not release information on a bank account. Try this: explain them you are trying to transfer money to the supplier's account and that you are experiencing problems sending them your payment and therefore need to verify their details.
2. Use a credit check company to run a financial check on the company.
8. Product Info Red Flags
Wholesalers should be experts in the products they are selling. If your wholesaler is fuzzy on specifics, look again before you buy.
1. If you know the specific product you want to sell, find the manufacturer and ask for a list of authorized wholesalers. You can find the product manufacturer’s name by looking on the product packaging, or sometimes the name of the official importer of the product. Call the manufacturer’s or importer's sales division and ask for a list of authorized wholesalers to check whether your wholesaler is on their authorised list.
2. A legitimate wholesaler will be aware of any certifications that are necessary to sell a product in your country and will be able to demonstrate compliance. Go to a store and look at similar products. Identify any required labeling or certifications. Ask the wholesaler for evidence that products have received the appropriate certifications.
3. Ask technical questions about the product you are looking to buy. Test the supplier's knowledge of the product. Ask about the features included. Be cautious when a supplier always replies positively to your requests for product features, it is often an indication the supplier only wants to get your order as quickly as possible, either because they are a scammer or because the goods you are being sold do not match your requirements.
Wholesalers are business people. They can’t make money unless they operate in a business-like way. If your wholesaler operates very differently than most wholesalers, take a second look.
1. Be wary of anyone who wants you to escrow money with their lawyer or with a little known escrow company; many of these companies and people are frauds.
2. Legitimate wholesalers will not require a membership fee; they make their money on the markup from selling goods to you, not on additional fees. However, a legitimate wholesaler may ask for a small, refundable set up fee. This fee deters non-serious buyers from creating an account that will never be used. In this type of transaction, the set up fee is usually credited on the first order.
3. Legitimate wholesalers are not usually out on the Internet trying to entice you to do business with them. While wholesalers are usually glad to sign on new customers, you will not find them actively seeking you out; that behavior is much more typical of scammers who are spending a lot of advertising money to find you and lure you into a bogus arrangement.
4. One of the many scams on the Internet offers you a fully operational website that
is stocked with the “wholesaler’s” products. This arrangement sounds like a dream come true but it’s really not true at all. You will find yourself hopelessly burdened with hosting and other fees while selling the same products as thousands of others.
5. A supplier who is setting up an account for you should request your tax ID number; any legitimate wholesaler needs that ID number as proof that you are a retailer and therefore entitled to wholesale pricing. If this information is not part of the requested data exchange, you are not dealing with a legitimate wholesaler.
CAUTION: These pointers may not definitively tell you whether you have a legitimate wholesaler or a scammer. The point is to combine the pieces of information into a picture that either makes you feel comfortable moving forward or causes you to reconsider.
10. Verification In Person
On the other hand, if you have the resources, you can get a much higher level of verification by using one of these suggestions.
1. Visit the supplier. The cost of a trip pales in significance if you plan to spend large sums of money buying from that supplier.
TIP: Even if this is not your plan, inform the supplier you will be visiting them. Evaluate their response to your announcement.
2. Hire a third party agent to visit the supplier on your behalf. Ask wholesaleforum.com members to recommend good agents for a specific country/region or by calling your country’s consulate in that country.
3. Visit major trade shows in the country you want to source from; this is a great way to find new contacts and possibly source at even lower prices. Be aware that trade shows are often frequented by factory agents, who are effectively middle men between you and the factory. While some factories will only work through agents, many will accept direct orders.
If you have a novel way of verifying a supplier, please feel free to add to this thread by posting your suggestions and ideas.
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