How To Avoid Fraudulent Wholesalers
Last Updated: 7 March 2006

The following articles were published in the March 2006 of the Wholesale Pages... UK Wholesalers & UK Dropshippers Directory newsletter, and are reprinted here by permission [pers.comm.03.07.06, Mark Johnson]. These articles contain information specific to the U.K., but the principles apply in Canada and the United States as well. We've provided the appropriate Canadian federal and provincial resources in the right-hand column.

How to detect and avoid fraudulent companies and wholesalers

As we mentioned in our previous newsletter, recently there has been an influx of fraudulent wholesalers and dubious bulk discount stores on the net. In this newsletter we will concentrate on how to detect such companies and what necessary checks you must carry out before investing in any business venture. Additionally we have also issued a warning against a company, which to a normal visitor would seem to be a legitimate and an authentic business but in fact is full of suspicion.

To detect whether the company you are dealing with is genuine or not, you must carry out these checks.

1. A professionally designed with a good layout is not an indicator that the business is genuine. A lot of wholesalers do not have great looking sites but are registered and authentic businesses. Never EVER get convinced by the design of the site.



2. Ensure that the company accepts payments via credit/debit cards and other online payment methods like paypal, nochex etc. If the company ask you to wire (BACS) money directly into their account then avoid trading with them as most definitely they are scamming you.



3. Try to talk to a representative of the company on the phone, it is always nice to talk to someone and clear your doubts.



4. Visit their contact page and look for their contact/postal address. Try to determine whether it is a physical postal address or just a mailbox. If it’s a mailbox, find out why the company doesn’t have a proper postal address and where do they actually trade from?



5. Request to visit their warehouse or trading office, even if you do not intend to do so. Any fraudulent company would be hesitant to let you visit their premises.



6. Visit the Companies House website (www.companieshouse.gov.uk) and use their search index to determine whether the company is registered with them or not. Sole traders do not have to register and as result this would only serve as a secondary check but none the less will definitely help to clear any doubts.

We hope these checks will help you to differentiate a scam company from legitimate wholesalers.

Warning – How we implemented these checks to reveal a scam

We would like to warn all our members against a company which might seem to be selling products at great bargain prices, however by paying close attention to details and visiting their website you will discover that you might be taken in for a scam. We are not directly accusing the company of setting up a scam but there are too many discrepancies to neglect, and as a result we are issuing this warning.

The company website address is: http://www.appliancesyouneed.co.uk/ (let's call this site 1)

They are selling home appliances like fridges, freezers, dish washers, laptops, plasma screens, etc at 40% reduced prices as compared to the market rate. Initially the prices, products and website layout seem great and give the felling that it’s a legitimate business with a long trading history. A normal visitor can easily get convinced that this is the bargain he/she has been looking for!

However here is the catch. If you look at the WHOIS details of site 1, the first thing that will strike you is that the website was only registered in January 2006, indicating that it has been recently set-up. Additionally it has been registered by an individual rather than a company:

Now lets visit another website and compare these two:
www.trade-appliances.co.uk (let's call this site 2)

The first thing to notice is the similarity in design and the range of products both of them are selling. On checking the prices you can notice that the RRP prices on the Appliancesyouneed.co.uk are exactly same as the prices on Tradeappliances.co.uk, however the actual selling price of every item on site 1 has been greatly reduced to lure and entice the visitors. Clearly all these points are raising more and more suspicion against site 1 but lets overlook everything for the time being and give site 1 the benefit of doubt.

Having mentioned that, there is one thing which cannot be overlooked.

Visit the following page:
www.appliancesyouneed.co.uk/index.php?pid=delivery
where site 1 boasts to have a fleet of 10 trucks for timely delivery, yet on their terms and conditions page, under the delivery section they state that deliveries can take up to 21 days. Additionally look carefully at the image on this page and compare it to the image on www.trade-appliances.co.uk/aboutus.html.
So the question is which company actually owns the fleet of trucks! Of course appliancesyouneed is trying to fool the visitors.

What Appliancesyouneed have done right to lure the customers

• Made a professional site to leave a lasting impression on the user.
• Provided a phone number so they can be contacted directly.
• Have shown comparison between their prices and RRP thus convincing their visitors that they are selling the items at bargain prices.

What Appliancesyouneed have done wrong
(Points to remember for protection against fraud)

• The website was registered only a couple of months ago indicating that they have not been trading for a long time.
• Have copied the products and prices from trade-appliances website.
• Did not provide a postal address on their contact page.
• Have provided a postal address for returns of orders and complaints on their terms and conditions page, which is a mail box and not a physical address.
• Have copied the structure of trade-appliances site and have pasted their images.
• Do not have an online ordering system.

As a result of this investigation we would like to issue a warning to our members to be extremely careful and vigilant whilst trading with this company as all the above information points towards the company being a scam, however we would like to refrain from accusing them directly and leave this decision to you.

Lastly, we have also contacted trade-appliances regarding this and they have confirmed that they have no connections with appliancesyouneed.co.uk and this is how they have responded to our mail.

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Dear Mark,

Thank you for forwarding this information to me, you are quite right, they seem to have copied and pasted pretty much everything from our web site.

As you point out, the truck image is a picture of our trucks and the building behind is where I sit typing this email!!!

I appreciate you taking the time to do this and will now be taking action to remove this web site.

Kind Regards

Emma Lowe
E-Commerce & Marketing Manager
Trade Appliances Group Ltd.
www.trade-appliances.co.uk

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Lastly, do remember that we are always here to answers your queries.

Best Wishes and Kind Regards.

Rob Kent
Wholesale Pages.
www.wholesalepages.co.uk