Beware of trade fraud

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Exporters need to raise their vigilance and carefully evaluate their partners to avoid being scammed in transactions.

To avoid losses, import-export enterprises need to actively research their partners and choose appropriate payment methods.

Subjective, greedy for profit is easy to be deceived

Recently, especially during the Covid-19 outbreak, international trade fraud increased. The recent case was that 74 containers of cashews exported to Italy were defrauded. After more than five months, the case has been handled successfully.

Although facing the risk of losing dozens of containers worth hundreds of billions of dong, Vietnamese export enterprises have not lost a single container to fraudsters, but this was a cautionary event with many valuable lessons.

A representative of the Ministry of Industry and Trade said that fraudulent tricks in trade have become more sophisticated with various forms such as unpaid delivery; fake papers, even banks’ papers to get goods; sending fake people to get export documents; using hackers to infiltrate the email addresses of the two businesses that are having transactions, monitor the progress of negotiations when the buyer is about to transfer money to buy goods, they will "hack" the email or create a fake email account to send fraudulent account information, and when the buyer transfers money to the fraudulent account, the object will immediately withdraw the money and disappear.

In addition to the above case, in March 2022, the Trade Office of the Vietnamese Embassy in Morocco also issued an urgent warning to Vietnamese export enterprises to avoid dealing with fraudulent importers, which was KN Universe Plastic Company.

This enterprise has scammed a Vietnamese company exporting plastic materials with a new trick: telling the exporter that a family member was suffering from Covid-19 so they would pay later to prolong the time.

At the same time, they colluded with others related to the customs clearance of shipments but do not pay, avoiding all contact. KN Universe Plastic is actually the new name of Fisherlab Sarl Company, which had a history of defrauding Vietnamese businesses that the Moroccan Trade Office warned the domestic business community in early April 2020.

Previously, for a long time, especially in 2020 during the Covid-19 pandemic, the Trade Office and the Vietnamese Embassy in the United Arab Emirates (UAE) continuously received, detected, and handled many cases where Vietnamese enterprises had received invitations to sell, purchase goods, and sign commercial transaction contracts with signs of fraud from several businesses based in the UAE.

In spite of warnings and notes for domestic enterprises, due to subjective psychology, high profits, limited foreign trade, and the Covid-19 pandemic, travel, face-to-face work meetings or goods inspection were interrupted; many Vietnamese enterprises were deceived, causing heavy losses in transactions.

In the case of cashew businesses being cheated to export to Italy, Bach Khanh Nhut, Standing Vice Chairman of the Vietnam Cashew Association (Vinacas), said: “The cause of businesses being deceived is because they trusted the brokerage company too much and do not check their partner’s information. During the pandemic, with large orders, businesses want to sell goods despite risky payment methods."

Choose the right payment methods

Vietnam is a dynamic economy with high openness and extensive international economic integration. Trade and investment activities of enterprises are growing day by day. Therefore, Vietnamese enterprises, especially small and medium units, easily become targets of fraud or complicated commercial disputes.

Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade) said that to limit risks such as recent fraud cases, businesses must pay attention to understanding customers and partners carefully before conducting transactions.

Enterprises need to learn about the market, check, assess, and rate the credit and business risks of foreign partners. The verification can be done through public sources, purchasing services from companies specializing in providing credit verification services, through associations in importing countries, diplomatic missions, Trade Offices, and Trade Office Branches in importing countries.

Phuc Sinh JSC is an exporter of agricultural products with experiences in dealing with and avoiding fraud in international trade transactions. Nguyen Huy Hung, Sales Director, Phuc Sinh JSC, said: “More than 10 years ago, when the company delivered 37 containers of pepper worth US$2.43 million, the partner requested to deliver the bill of lading to them so that they could control the path of the goods. This made businesses suspicious and checked the partner's bank account. After checking, the business stopped the transaction because this customer did not have any bank account."

Hung said that to limit risks, import-export enterprises need to carefully learn about customers' information through Vietnamese Trade Offices abroad, and foreign embassies in Vietnam. Enterprises must know partners’ banks. When doing business, it is not allowed to give the bill of lading number to the customer. An important point noted by Hung was that enterprises must absolutely avoid haste, negligence, and fundamental errors in international payments.

Also emphasizing the payment factor, Nguyen Duc Thanh, Counselor of the Mission, Embassy of Vietnam in Italy said that enterprises need to draft a signed contract in accordance with the company's capacity, with a reasonable payment method, because no payment method is perfect, and there are certain risks. “Export enterprises should ask buyers to deposit 10% to prove they have a bank account. This is proof of the buyer," said Thanh.

The Ministry of Foreign Affairs recommended that for the payment, businesses should pay attention to learning international principles and practices to understand the roles and responsibilities of related parties, thereby considering reasonable payment methods and conditions, ensuring benefits for enterprises. Enterprises should not use the form of D/A payment (Documents against acceptance) or money transfer by Western Union for payment.