A French importer(“French Importer”) defrauded an export company in Jiangsu, China(“Jiangsu Exporter”) for more than US$1.6 million of e-cigarettes and liquid by only a few thousand U.S. dollars.

After getting in touch with the Jiangsu Exporter through the e-commerce platform, the French Importer continuously boasted that the EU e-cigarette market was very huge, and promised to occupy the EU market and help the Jiangsu Exporter gain huge profits. The French Importer continuously placed orders with the Jiangsu Exporter and prompted shipments. When the Jiangsu Exporter asked for payment after the shipment, the French Importer refused to pay on the grounds of low efficiency of the banks of France. In case prompted toughly, the French Importer made some payment of thousands of dollars through Western Union or banks. The French Importer's orders were getting larger and larger. After receiving more than US$1.6 million of goods, the French Importer falsely claimed that it had remitted US$400,000 through bank transfer and asked the supplier to deliver more than US$800,000 of goods. When the Jiangsu Exporter discovered that the wire of US$400,000 never hit, and it realized that it had been scammed, it then decided not to ship the goods any more. The Jiangsu Exporter then kept prompting the payment, but the French Importer totally ignored it.

After being retained, after preliminary investigation, we found out the French Importer had opened nine stores in France with the delivered goods. In addition, the members of the French Importer company had bad credit records, and several companies previously managed by them had gone through bankruptcy. We commissioned a French local lawyer to issue a lawyer's letter to the importer requesting payment of the account receivable. The French Importer completely ignored it.

We considered filing a lawsuit in a French local court and asked the Jiangsu Exporter to provide relevant supporting evidence. However, the exporter could only provide hundreds of pages of chat records with the importer on SKYPE. The two parties did not sign any master agreement or sales contract, and the order form was very irregular. In addition, the place of receipt is in third countries and changes randomly, and the identity of the recipient of the goods cannot be determined. After assessing the evidence provided by the Chinese exporter, the French lawyer believed the probability of winning the case was very small if filing a lawsuit with such evidence in a French court. It was then recommended to report the case to the police where the importer is located.

In 2014, I accompanied the Jiangsu Exporter to report the case in France. In 2020, the scammer was finally convicted and sentenced to prison, but only for a few months. The scammer would go to jail rather than return the cheated goods, and all the property of the scammer had been transferred. The Jaingsu Exporter suffered heavy losses.

Lessons and enlightenment:

1. The exporter lacks basic risk prevention awareness. The owner of the export company is very young, who was eager to get orders so that the criminals could take advantage of it.

2. For large transactions, a basic credit investigation is necessary.

3. The amount of accounts receivable should be kept within a reasonable range. If the amount of accounts receivable is too large, normal importers could also be bad-hearted to default on its debts. Obtaining international trade orders is not easy, but do not neglect to collect accounts receivable in time.

4. Regulate every aspect of the transaction and develop the habit of retaining evidence.