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Dealing with new cell phone suppliers and how to avoid getting scammed

Discussion in 'Dropshipping & Wholesale Hookups' started by naturalbornthriller, Nov 14, 2012.

  1. naturalbornthriller

    naturalbornthriller BANNED BANNED

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    HOW TO AVOID GETTING SCAMMED BY CELL PHONE SUPPLIERS


    ***First rule of thumb:

    Never ever buy anything from a supplier with a free email address like a gmail or hotmail address. Scammers almost always use free email addresses. A legitimate supplier or business should have a company website with a matching company email address.

    ***Second rule of thumb:
    If a supplier/seller sends you pictures of physical stock, it means absolutely nothing. Anyone can get pictures from an actual supplier or off the internet and pass them off as their own. You can do a whole lot of things with Photoshop, including taking someone else's pictures and making them look like your own.

    ***Third rule of thumb:
    Payment options are the biggest thing when dealing with a new supplier. If anyone says that they accept credit cards, Paypal, Moneygram, Western Union, or Wire Transfer/TT in full upfront,
    STAY AWAY FROM THEM!!! Legitimate bulk wholesalers/suppliers will typically accept one or all of the following payment methods:

    1. L/C(Letter of Credit)
    2. Escrow(Can be done through either an attorney or through a company like
    http://escrow.com/)
    3. POF(Proof of Funds Letter): This is where your bank will supply you with a letter stating that you or your business are capable of paying for your entire order. You give the letter to your supplier, and they will typically ship your phones to a freight forwarding warehouse for inspection. You inspect the phones, then you wire the full amount of your order to the supplier, and they release the phones to you.
    4. BG(Bank Guarantee): This is a guarantee from your bank that your order will be paid in full to your supplier.
    5. Fly and Buy: This is where you can physically go to your supplier's business or warehouse, inspect, and pay in full on the spot.

    Sometimes you will find a supplier that requires a deposit upfront, and then the rest after inspection. There are legitimate suppliers who operate this way, but there are a lot of scammers who use this method as well. Never ever use this payment method unless you can 100% verify the legitimacy of the supplier. And
    NEVER do a wire transfer upfront for the full amount of an order under ANY circumstances.

    ***Fourth rule of thumb:
    When talking to a possible supplier, here are some things you need to ask for in order to verify them:
    1. Company Name, Address, Website, and Phone Number
    2. Company Documents (business registration/articles of incorporation, Tax ID#/EIN, etc.)
    (If your supplier has a corporation, you should be able to do a google search for the corporations division of which ever state your supplier is incorporated in to verify that).
    3. References (your supplier should be able to give you at least 3 good references) (google the references before you call them to see how legitimate their companies are as well) (When you talk to the supplier's references, find out things like: How long have you worked with the supplier, how many orders have you completed with them, when was your last order with the supplier, have you ever had any issues with the supplier, etc.)
    You don't necessarily need to get all of the above information, but try to get as much as possible from the supplier in order to check them out as thoroughly as possible.
    Do a google search on your supplier's company name. Just see what you can find. It is possible that a good business may have some complaints online, but if you find multiple complaints about them online, it's best to stay away from them. Sometimes a buyer will order from a legitimate company, and not understand everything, or their delivery takes a couple days longer then expected, and they are quick to post negative comments online about the supplier. Just do your research and be careful.

    ***How to make your business more credible:
    Whether you are a buyer, broker, or whatever, get a website and a company email address. It will make you look more credible when dealing with real suppliers. Also, get a Federal Tax ID#/EIN from the I.R.S. if you are operating in the U.S. It's free, and you can get it online immediately after you complete a short application. If you can incorporate, that is a big help too when it comes to credibility You can use "incnow" to do that for you. We used them, and it cost between $250-$300 for us to incorporate in Delaware. Delaware is the best state to incorporate in. Almost no restrictions or rules. Just google "incnow" and check out their website if you decide to go that route. You want to form an LLC(Limited Liability Corporation). Another thing you can do to make your business look better is to get a DUNS number. That is a number you get from Dunn & Bradstreet. They are the business credit reporting agency that almost every legitimate business uses. You can get a free DUNS number by going to this website address:
    https://iupdate.dnb.com/iUpdate/getUserInfo.htm
    Sorry this was so long, but I want to make sure everyone does their homework properly before dealing with a new supplier. I don't want to see anyone get ripped off or scammed. There are a million scammers, and only a fraction of legitimate suppliers out there. Good luck to everyone!
     
    • Thanks Thanks x 1
  2. naturalbornthriller

    naturalbornthriller BANNED BANNED

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    Another tip I forgot to mention in my thread:
    If anyone is ever selling or offering a "Buy 3 get one free deal", or any kind of deal where you get any phones free when you order a certain amount, stay away from them! These are scammers guaranteed. There is not enough profit margin in iPhones to be able to just give them away under any circumstance.

    The key to making money with iPhones, or cell phones in general is in volume. You will likely make only $2-$5 for every iPhone 4S or iPhone 5 you sell. Sometimes, depending on who and where you are getting them, you may be able to push it up to $5-10, possibly even more. It's pretty rare to make much more then that on an iPhone.

    If anyone suspects that a supplier might be a scammer, you can email me or IM me on BHW. I will see what I can find on the supplier for you. Also, I have a list of scammers that I can look through to see if your possible supplier is in there.
     
  3. antboy

    antboy Newbie

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    How is using a credit card or paypal bad? You can just do a charge back if something goes wrong right?
     
  4. naturalbornthriller

    naturalbornthriller BANNED BANNED

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    If someone charges your credit card, the money hits their account and they withdraw it, your credit card company won't be able to collect from them if your order doesn't show up. All they can do is attempt to overdraw their bank account. Same deal with Paypal. You pay the supplier, they transfer the funds to their bank account and empty it. Paypal can't recover the funds from them. They will just close their account. People think Paypal is safe, but it isn't guaranteed. Plus, any legitimate supplier isn't going to accept Paypal. That is for scammers and amateurs, not legitimate businesses.
     
  5. Icemantbi

    Icemantbi Newbie

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    You can also stick with Cellpex.... You usually have to buy in larger quantity, but they are legit phones on there, and not as many scammers.
     
  6. PhilP

    PhilP Newbie

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    Hello,
    the cellphone market is way to competitive, your profit will be very low.You will never get the latest cell phone, original of course, for less than 30% of the retail price, except you buy big numbers e.g. 10.000 pieces.If it's to good to be true it's a scam.
    In my 8 years I have seen many LoC scams and escrow is very expensive.I think we can all agree that WU or MG isn't for serious business.
    A free email provider doesn't mean you are not legit.I use a free email provider and never scammed anybody.
    Fly and Buy, never heard of it but this is def. the safest method.
    Just my 2 Cents.
    Kind regards
     
  7. jphung71

    jphung71 Newbie

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    Just do COD (cash on delivery)
     
  8. john1444

    john1444 Elite Member

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    First of all "naturalbornthriller", I will say stop pointing the gun at me, you are scaring me off from saying the truth here. I disagree with the payment method you listed, CC seems to be risky but PayPal is been used by virtually all business that want to play the safe mode, why discredit it. Besides when am buying from other sources that are not popular website I know am running at risk. eBay for instance has buyer protection guide, many that sells there use gmail. Its just where you are buying from period and not the payment method you are using.
     
  9. stefon

    stefon Newbie

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    It's insanely easy to incorporate a business. I would highly recommend anyone who is competent enough to fill out a form just DIY.