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A Chinese Company Asks You to Pay to Its Bank Account outside China? It May Be a Scam-CTD 101 Series

Thu, 13 Oct 2022
Contributors: Meng Yu 余萌
Editor: C. J. Observer

Because it might deny afterward that it was its account, and thus that it received your payment.

This post was first published in CJO GLOBAL, which is committed to providing consulting services in China-related cross-border trade risk management and debt collection. We will explain how debt collection works in China below.

One client told us that he wanted to sue a Chinese supplier for failing to deliver after receiving the advance payment. And he could not get in contact with the supplier anymore.

This client did not sign a formal order or contract with the Chinese company but paid to the account opened by the Chinese company in a US bank.

We had to tell him that he was unlikely to win this lawsuit since the Chinese supplier could probably deny receiving payment.

This Chinese company opened a bank account in the US with an English name.

One quick note here – All Chinese individuals and enterprises have their legal names in Chinese, and they have no legal or standard names in foreign languages. In other words, their English names or names in other languages are named by themselves randomly. Usually, it’s hard to back-translate their weird foreign names to their legal Chinese names.

This Chinese supplier could deny that the English name in the bank account is its name and thus could deny that the account belongs to it.

Therefore, our client cannot prove that the Chinese supplier has received the payment.

If it were you, What should you do?

i. If your Chinese supplier is registered in China, you’d better pay to its Chinese bank account.

Because Chinese courts have the power to investigate the true identity of the account owner at a Chinese bank in a lawsuit.

ii. If a Chinese supplier requires you to make payment to its bank account outside China, it shall present you a document affixed with its official seal, which states that you need to make such payment at its request.

This way, this Chinese supplier will not be able to deny it because the official seal makes the document binding on the Chinese company. For more information, please read ‘What Is the Chinese Company Stamp and How to Use It?’.

 

 

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(2) Debt Collection
(3) Judgments and Awards Collection
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(5) Company Verification and Due Diligence
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Contributors: Meng Yu 余萌

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