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Grow Your Business – Preventing Shipping Fraud (Part 1)

Posted on Tuesday, August 26th by

Many people seek advice in various places after falling victims to forwarders, shippers or intermediaries undertaking fraudulent activities of various kinds. Therefore, here are a few pieces of advice on how to protect yourself against shipping fraud.

Learn the trading terms



First of all, it is very important that you gain a full understanding of the Incoterms. Numerous mistakes and fraud or duping situations occur as a result of the trading terms being misused either by the buyer or by the vendor. Therefore, you should learn how exactly they apply to the particular activities you are interested in. Remember that the Incoterms do not provide universal solutions, so each transaction must be treated differently.

Do not be too trusting



Second of all, you should not jump into trusting any company you are working with for the first time. Let them earn your trust first. Take a few precautions. For instance, let us assume that you agree on a cash on delivery sale with a new buyer overseas. In such situations, it is recommended that you do not rush into issuing a Seaway Bill or a Telex Release but opt for an Original Bill of Lading and wait for your money to be paid. You should know that proofs of payment are not very reliable, often being used in a fraudulent way over time, so it is better that you wait for the money to reach your account. You can rely on banks to secure your money using various instruments such as letters of credit, for instance. In other words, trust should become a factor in time as you develop several fruitful collaborations with a particular business partner rather than be the starting point of these collaborations.

Check and differentiate



This tip goes hand in hand with the previous one in that it encourages you not to trust your business partners blindly. You can easily tell whether a company is reliable or not by doing a little background search on it. First and foremost, you should check whether the company you are about to develop a business collaboration with is genuine, whether it is a registered legal entity. Unfortunately, there have been many situations where people discovered that the suppliers, vendors or manufacturers they had contacted and trusted did not exist as legal entities. Even more unfortunate is the fact that such discoveries are usually made long into these collaborations. This piece of advice is even more valuable when it comes to new businesses, the risks of falling victim to fraud being even higher with them. Therefore, should you decide you want to do business with a company that has recently been set up, you should check out its headquarters and make sure that the products offered are genuine.

Of course, there are a number of precautions you can take to avoid falling victim to shipping fraud, but these tips serve as a good starting point in your endeavour. So remember them the next time you find yourself looking for a forwarder, manufacturer, vendor, shipper or any other partner in the trading business.

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