Is this a scam?
May 29, 2011 9:32 PM   Subscribe

Am I being scammed? Philippines-based distributor wants to import products (DVDs) from my site and sell to their retail clients over there. They asked to purchase "one of every title" in two categories of interest. Is there a risk they just take those and copy them? YANML

I run a drop-shipping site for educational DVDs (which I won't plug here). Recently, I had a company based in the Philippines contact me via email asking about importing the products on my site to sell through to their retail clients.

At first they asked for free sample copies to show to their clients, and when I inquired about which titles they were considering ordering, they said they wanted to purchase one of each title from two academic subjects. This comes out to about 700+ titles (including packs) with retail value of over $30,000.

Now as I mentioned above, I am a drop-shipper, meaning I don't actually produce the titles, nor do I stock them. Basically its like being an affiliate but I actually process payments. I will be talking to my vendors (about 5 in question here) about the situation, but I wanted to query the hive mind about this as I've got very little experience dealing with this stuff since the site is only three months old, and I've never dealt with international shipping in my entire life let alone international copyright legal issues and enforcement.

MAIN QUESTION:
Is this company just trying to get initial copies to duplicate and then sell? Is there any way to protect myself with American law in the Philippines? Are there any things I can do to protect myself with my suppliers?


One of them that I spoke to initially said to make sure to get a pre-payment for the full amount (which this company seems ok with). This is also the same vendor that said they just had a legit $10k order from Nigeria so it seems like international business can actually be ok.

Please let me know if any additional details are needed here. I will be talking to my vendors to see what their thoughts are and see what I can get from them in writing to cover myself but I really have no experience with these things and this is not worth the hassle to hire a lawyer (nor do I know if that would even be appropriate here). Standard disclaimer that you are NOT my lawyer applies.

Bonus Question: How do I actually accept a large payment like this and make sure it is 100% legit and clears so I'm not left owing anything? Right now I process via Paypal Website Payments Pro.
posted by Elminster24 to Work & Money (10 answers total) 1 user marked this as a favorite
 
It sounds pretty fishy. Basically, don't do anything until you have the pre-payment for the complete order. No free samples either. If they are serious they can speak to your references.

Legally, what they do with the DVDs after that is not really your business (Amazon aren't on the hook when someone pirates a DVD they bought off them, are they?) but that may be another matter ethically.

Also keep in mind you may have to pay import taxes and duties. This may sound like overkill, but it may be worthwhile contacting the Filipino embassy for advice.
posted by smithsmith at 9:56 PM on May 29, 2011


Is this company just trying to get initial copies to duplicate and then sell?
No way to tell; possibly yes, possibly no.

Is there any way to protect myself with American law in the Philippines?
Protect yourself how? If they are buying them, and pay for them before you ship it...you don't need any protection.

Are there any things I can do to protect myself with my suppliers?
You have 2 choices here:
1. Sell to them
2. Let someone else sell to them.

If you think you can prevent copyright infringement by not selling to someone you are sorely mistaken. They will just get it from someone else.
posted by hal_c_on at 9:59 PM on May 29, 2011


Bonus Question: How do I actually accept a large payment like this and make sure it is 100% legit and clears so I'm not left owing anything? Right now I process via Paypal Website Payments Pro.

This right here would be a dealbreaker for me - as you imply being aware, Paypal doesn't do well with sudden large payments, particularly internationally. $30k from the Philippines suddenly in a mostly-American account would probably result in a freeze. I would consider Just Saying No to avoid that headache alone. That's my take, however; Paypal is also quite good about eventually unblocking the money given enough documentation, but I wouldn't want to be on the hook with suppliers for that, plus it'll disrupt your regular business something fierce.

Perhaps try talking with the bank you use for your business account and have them provide advice on how you can receive international payment through them and be notified when it's 100% cleared fraud-wise and the like. Ideally get it in writing, of course.
posted by pahalial at 10:07 PM on May 29, 2011 [1 favorite]


For international trade, banks use a variety of methods to protect the buyer and the seller. These include providing proof of shipment, proof of receipt, proof of funds availability etc. Someone at your bank should be able to guide you through it. $30k is a big enough amount that you should use a reliable payment method.
posted by vidur at 11:39 PM on May 29, 2011 [1 favorite]


If you think you can prevent copyright infringement by not selling to someone you are sorely mistaken. They will just get it from someone else.

This is true. On the other hand, do you think your suppliers would think that you should have flagged this sort of transaction? Will they stop doing business with you if this ever comes to light?
posted by grouse at 12:54 AM on May 30, 2011 [1 favorite]


IAAL, IANYL.

One option is for you to contact the U.S. Foreign Commercial Service at the U.S. Embassy in Manilla. One of FCS's main functions is to help U.S. companies increase their exports. They may not be able to tell you if this specific company is legit, but they might be able to give you the general lay of the land, tell you if this is a common scam, help you find local resources, etc.

If you are considering lawyering up, make sure that your counsel drafts a sound agreement with strong IP protections and is aware of how to structure an agreement to go after foreign defendants. Getting a judgment against this company is a U.S. court may be worthless if that Philippine company has no assets in the United States. If so, this might mean considering structuring the agreement to have the dispute heard by a Philippine court under Philippine law. This is definitely a tricky issue.

Just FYI, the Office of the United States Trade Representatives pushes an annual report of IP violators throughout the world. Their 2011 report is here. Philippines is included under the "Watch" list, meaning that it has some level of IP enforcement problems, but its problems are nowhere near the level of those in China or Russia. Plenty of other countries are on the Watch List too.
posted by hawkeye at 6:24 AM on May 30, 2011 [1 favorite]


If I were you I would definitely talk to my bank about payment, and you might consider requiring payment by wire transfer for that large a sum from overseas. Your bank can guide you.
posted by gudrun at 7:18 AM on May 30, 2011 [1 favorite]


I'm not in your business, however I do work with many e-commerce companies and increasingly with drop-shipping only businesses...

Your initial thought to check with your vendors to see if they can/will even facilitate this type of large order is probably the most crucial as you want to stay in their good graces... particularly if you have a steady business now that is healthy without this slightly-sketchy order.

Could you possibly lean on your vendors & their assumed legal precedents? I'm sure this isn't the first time this has happened and they might have forms for you to get signed, etc...

You also probably want to be slightly careful with how you address. You still do want to somehow capture the business and as mentioned before, someone has the money to spend (provided that is confirmed however you can, apologies, I don't have info on that) and will to procure...

In many ways, and considering the black market today, couldn't they have already ripped off everyone already & NOT tried to pay for something? Just a thought.
posted by priested at 7:32 AM on May 30, 2011


One of each? Yep, they're going to copy them.
posted by musofire at 8:45 AM on May 30, 2011 [2 favorites]


This sounds scammy for a few different reasons. Of course the only authority I have is speaking as someone who lived in Manila for a few years and regularly rented movies that ended up being copies that were quite badly filmed in theaters.
posted by brilliantine at 4:48 PM on May 30, 2011


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