Attorney Shao Shiwei | Legal Alert: Beware of Cross-Border E-Commerce Scams Involving the “No Inventory” Model!

Xiaomei is a stay-at-home mother who sought part-time work while caring for her child. One day, while browsing short videos, she encountered a streamer teaching people how to engage in cross-border e-commerce. Hearing that one could work from home, with platform support for dropshipping without holding inventory, low initial costs, no risk, and high profits, Xiaomei was tempted and decided to give it a try.

Under the step-by-step guidance of the other party, Xiaomei registered accounts on the cross-border e-commerce platform “TARGET” and the crypto assets exchange app “OKX.” A few days later, Xiaomei began receiving orders from overseas buyers. Citing the need to pay for goods, Xiaomei followed the instructions to first purchase USDT on OKX and then transfer it to a wallet address designated by the other party. The other party informed her that once the buyers confirmed receipt of the goods, Xiaomei could withdraw funds from the TARGET platform.

After completing several orders, Xiaomei noticed that the order prices from buyers on the platform kept increasing, and the waiting time for withdrawals grew longer. She decided to stop, but when she attempted to withdraw funds and close her store, she found that her requests remained in a “pending review” status, and she has been unable to withdraw funds to date.

The “no inventory model” refers to the concept of “dropshipping” in the e-commerce industry. Sellers without their own inventory list products from online sourcing websites such as 1688 on their own online stores through dropshipping arrangements, without needing to purchase, ship, or stock goods themselves.

The import and export model for cross-border e-commerce dropshipping is illustrated below[i]:

For small and medium-sized enterprises and individual operators, this business model has a low barrier to entry, low capital costs, and requires minimal time investment, making it a viable side hustle. However, for novices, information asymmetry makes them highly susceptible to falling into traps set by criminals.

Common Scam ScenariosCriminals provide victims with fake cross-border e-commerce platforms. These fraudulent platforms generally fall into two categories[ii]: One type involves impostor websites that closely resemble genuine mainstream foreign platforms (online e-commerce platforms such as Amazon, eBay, Lazada, Shopee, Wayfair, Lelong; offline retail platforms such as Costco, Target). These fake sites may differ from the real ones only slightly in domain names, web design, or names, making them difficult to distinguish. The other type consists of entirely fictitious cross-border e-commerce platforms created by criminals, such as SUEZ, Starday, and Metashop. These platforms enhance their credibility through online marketing campaigns and media endorsements.

Methods Used to Defraud VictimsAre largely similar[iii]:

Criminals add victims as contacts under the guise of providing operational guidance. They instruct victims to register accounts on designated platforms and explain the processes for accepting orders, purchasing goods, shipping, and withdrawing funds. Soon, victims receive their first order. Criminals then guide victims to pay for goods and complete the purchasing and shipping processes. Initially, after buyers on the platform confirm receipt, victims can successfully withdraw funds. However, criminals then induce victims to continuously increase their procurement investments. When victims later attempt to withdraw funds, they encounter failures attributed to reasons such as “system maintenance” or “operational violations,” ultimately realizing they have been defrauded.

Although this is a new type of scam, public security bureaus in many regions have already issued related warning cases, as shown below:

Whether it involves well-known schemes urging people to invest in wealth management products by depositing funds into so-called wealth management apps, following leaders to trade cryptocurrencies, or the no-inventory cross-border e-commerce scams discussed in this article, the modus operandi is consistent: establishing trust with victims through online communication, inducing them to deposit funds, and then creating various obstacles to withdrawal, ultimately defrauding them of their money.

Although the cross-border e-commerce industry holds significant development potential, it has passed its earliest period of windfall profits. Today, market competition is extremely fierce, and intense internal competition is commonplace. Even for those who have been deeply involved in the industry for many years, doing business is no easy task.

Therefore, if someone tells you that you can “earn passive income” from foreigners simply by clicking to place orders, ask yourself: If making money were truly this easy, why wouldn’t these people do it themselves instead of teaching you? If an opportunity sounds too good to be true, it is likely a scam. This is especially important for newcomers to remain vigilant against various risks.

[ii] New Cross-Border E-Commerce Scams Rampant, Numerous “Sellers” Report to Police https://mp.weixin.qq.com/s/0xPxH0hZcAloSP4INoGBuA

[iii] [Urgent Warning] No-Inventory “Cross-Border E-Commerce” is a Fraud Trap! https://mp.weixin.qq.com/s/kaoKihVH4K80V-tWfzHNzw

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