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Seven Tips For Preventing The China “Different Bank Account” Scam

Posted in China Business

Yes, we are obsessed with this scam, but only because at least once a week someone contacts us who has fallen prey to it and we really do not like having to tell people that there is pretty much nothing we can do. And like we are always saying, we are seeing smart and sophisticated and internationally savvy companies falling for this one. The scam to which we are referring is when an American or European company (that’s what it usually is) sends its China payment to the wrong bank account, and if you are doing business with China that involves your company making payments to a Chinese company, you should know about it and be on guard for it.

For more background on this scam, check out the following:

In a recent post, 7 Tips to Prevent the “Different Bank Account” Scam. Renaud Anjoran at the Quality Inspection Blog sees this scam as occurring “mainly in two forms”:

A crime organization hacks its way into the supplier’s email system and sends invoices to customers. Tracking the people behind these bank accounts is usually impossible.

A salesperson uses her personal email account for work (as is very common), then quits but doesn’t say it to customers, and asks for payment to another bank account.

Most importantly, Renaud lists the following seven things companies can to do to avoid this scam, though he rightly notes that “there is no silver bullet” for doing so:

  • Get to know your suppliers who speak English (if you don’t speak Chinese) and get your supplier’s landline phone numbers as that cannot be hacked. Call if you have any concerns.
  • Get your supplier’s bank account information in advance and ask them to refer to “bank account information document” on their invoices, rather than listing out full bank details every time.
  • Ask your suppliers to fax you their invoice and make sure the sending fax number belongs to your supplier’s company.
  • Do a first small wire to confirm the account.
  • Have a special procedure for confirming the company name.  Note also “that paying a Chinese company in mainland China is safer for you” than paying them overseas in Hong Kong, Taiwan or elsewhere.
  • Have a special procedure for confirming bank account changes. “Follow the same procedure as point 5, but also call several people in the company. They will understand your attitude if you tell them you are worried about the “different bank account scam” — they are also a victim when it happens to their customers.”
  • Pay by Letter of Credit (L/C). If your supplier will allow it, pay by L/C.

Any more tips?

  • bystander

    the small wire thing is a great suggestion. that’s what paypal and the like do (among other things) to confirm ownership of the account. the payer can ask someone in the company to confirm the amount of the transfer (make it an odd amount, like $1.23). then I suppose you just have to make sure the person doing the confirmation is not also in on the scam …

  • Ward Chartier

    Getting to know the top or a key accounting person at the supplier is also useful. If anything seems amiss, contact that person via landline. Accounting people also change jobs and sometimes do nefarious things.

    • http://www.qualityinspection.org/ Renaud Anjoran

      That’s right. Unfortunately they seldom speak English. But yes, any additional contact is valuable when something suspect comes up.

      • Ward Chartier

        I naively assumed that a company buying from suppliers in China would have somebody on its staff that was fluent in business Chinese and would also be available at odd hours to converse with counterparts in China across several time zones. After 10 years in Asia it becomes easy for me to take certain skills for granted.

        We Americans can often be internationally ignorant. Some of us expect that “everybody” in commerce will speak English, understand American slang and baseball expressions, and can accurately listen past whatever regional accents we have. And our ignorance of geography can be appalling. Examples: the marketing manager in New Hampshire who thought that Shanghai and Penang, Malaysia were “close” to each other; the HR staffer who sent my W-2 to “Penang, China”; and a year ago, the two mature sales people in California who thought that Shanghai is in Japan.

  • bendbrad

    Hi Dan,
    When I read your first post on this subject my heart sunk to my stomach! I had just wired a relatively small amount to a supplier that I had dealt with once before (had the supplier verified by AQF). The supplier had indeed changed their bank (from NB to SZ). While I thought this strange as the 2 cities are quite a ways apart and in different provinces. However, this being China, things that seem strange to me are “normal” in China. But, I had already made the transfer, so I had to wait. Well, the order was shipped and now I had freight, duties, etc. to pay. My anxiety went up as not only would I be on the hook for the freight charges, lose my payment and throw off my production schedule if the contents of the shipment were not what I ordered. The shipment was exactly what I ordered and arrived with no problems. Phew! Did I just dodge a bullet? I would like to know if my experience is unique? My concern now is, am I being set-up for a scam for my next order? I think hiring AQF or some other shipment verification company would be in order for peace of mind.