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Avoiding Wholesaling Scams

Oct 10, 2007
When one is first researching drop shipping and wholesaling on the internet, the first step to success is finding quality suppliers. When doing this, it can often be a daunting task to find legitimate suppliers that are not in existence to scam you out of your cash. Getting ripped off by a phony company can result in thousands of dollars of lost money and cause one to lose faith in the potential that lies in making money on the internet.

The biggest fear of new drop shippers is being ripped off by a company that will simply take the money and run. Believe it or not, there are still scam artists out there that will collect money and never deliver what they promise. However, if you know how to spot these before you do business with them, you can avoid the scams and continue to build working relationships with legitimate, profitable suppliers.

The easiest way to avoid being scammed by an illegitimate supplier is to use a secure form of payment. The most secure forms to use when establishing a relationship with a supplier are PayPal and credit cards. Each of these has anti-fraud protection, and the money can easily be tracked. If it so happens that you fall prey to a wholesaling scam, a secure form of payment can work with you to track the funds and possibly stop it before it is delivered. If not, the anti-fraud policies of PayPal or your credit card may entitle you to have the funds returned to you if a company rips you off.

It is a major red flag if a company requests that you pay with a service such as Western Union. These services have no tracking and do not prevent against fraud. Therefore, if you send a scam artist money via this vehicle, it is easy for the other party to take it and never be caught.

It is also a good idea to speak with someone at the company to ensure that there is someone that can be contacted. Furthermore, some companies will send you a sample of the goods before you begin to do business with them. While this does not always prove a companies legitimacy, they are necessary steps in the due diligence that is required before doing business with a wholesale company.

Finally, word of mouth can be your best friend in the industry. If a fellow entrepreneur has had success with a particular wholesale company, it is a good idea to research their inventory and their prices to determine if they are a company that is worth doing business with.

Although there are a number of wholesale scams on the internet, they can be spotted if you perform your due diligence. Those who are ripped off are usually those who do not take the time to research a company, or those who do not take the advice of third parties who supply lists of legitimate wholesale sources.
About the Author
For information on legitimate wholesale directories and suppliers, see Worldwide Brands and Salehoo.
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