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Every third order my company receives from Nigeria is a scam. The cheap, effective and over reaching solution to this issue is to simply stop shipping to Nigeri

by johnnyg 16y ago

Every third order my company receives from Nigeria is a scam. The cheap, effective and over reaching solution to this issue is to simply stop shipping to Nigeria. This is the path I chose and the one that most small business owners will choose. Perhaps we're missing out on some money but the cost in time and effort to capture that little bit of money isn't worth it relative to other projects. I'm in business to ship product to those who will reliably pay, not to figure out which of my customers will actually pay ahead of shipment. If I can't know, I won't risk it. I don't think my experience is unique. I think this situation has repeated itself in most small businesses in America. I think this group of individual experiences has been generalized as "It costs too much to do business with Africa". Unfair? Sure. Poor Logic? Absolutely. Am I going to change this? No. Its not worth my time and effort. I'm also going to be very skeptical of business deals or services originating from Nigeria. Do you see a mint.com or inDinero taking off in Africa? Would you personally trust your financial data to such a service and if so, what are your reasons given your lack of recourse through rule of law? I believe what I'm saying here is what most are thinking, but won't say. I want to lay out what it looks like in the trenches on this side. I fully realize that I am half of the reason that this situation exists. Until I need your money more than you need my services, I do not see it changing. I know that is harsh, but I sincerely believe it to be the case. I hope things improve. I hope bad experiences are replaced with good ones and Nigeria specifically and Africa generally are looked at as reliable business partners. I hope you create a ridiculously successful business. Most importantly, I hope you'll take this post in the spirit in which its offered.

seldo 16y ago
Very interesting, but a few questions: 1. Really one in three orders was a scam? How big is the sample -- how many times did you ship to Nigeria? How long ago did you stop? 2. You list two problems: determining if a customer really can pay, or as a startup, having customers trust you with financial data. In both cases, the problem is trust & reputation. Foreign customers do not trust Nigerian businesses or customers. So the missing piece of the puzzle is either better police enforcement and government regulation, or some kind of third-party who can engender trust and verify identity to and from African businesses and customers.
- johnnyg 16y ago
  1. Before we stopped completely, we would get two kinds of orders: a. Orders over $1000 to Fancy Sounding Expediters Co XYZ Address Nigeria b. Smaller orders to <Big Oil Co> <Some Compound> Nigeria I shipped one and only one of type a. This happened in ~2001. I took this hit as a business 101 tuition fee and stopped shipping this kind of order. I continued to ship to people on compounds working for Shell/BP/etc. During this time, I got my rough sample size. For every 3 of this kind we would get, we'd get one of type a. It was years ago and it could have been 2:1 or 5:1. It was not 10:1. After a few months of this, the "type a fraudsters" figured out the pattern and we started seeing smaller dollar orders to "compounds" come back fraud. At this point, I just shut the whole thing down. The way this works now is that someone in Nigeria in a big oil compound will order to their home and have someone forward it. No USA address, no shipment over. 2. Exactly so. If government won't fill the trust gap, perhaps a private enterprise can. They would face a steep challenge. There has to be enough money in Nigeria seeking to buy goods internationally but unable to because of people like me for it to work. Is there enough "domestic pull" to make it viable?
  - notahacker 16y ago
    I believe some international freight forwarders and delivery services offer part of the service described in (2) - a US address that pays for and receives goods and an African facility to forward them onto and collect payment from the end user.
    - johnnyg 16y ago
      We've tried some of these services out, though not specifically to solve this issue. When you add the cost of they add, the legit customers balk, driving volume down to the point where its not worth doing for our business. As a result of this, what we do and what I suspect others do is ship to areas with low fraud rates direct, eat any losses and call it good. Anywhere that you eat more than you make, you simply stop. The margin on something that would provide the security and keep small businesses interest would have to be razor thin. It would be a challenging or impossible business to run.
madair 16y ago
>>> I believe what I'm saying here is what most are thinking, but won't say I'm not thinking that, and if I was I would slit my risks for being a douche. If you think Halliburton, Goldman Sachs, or Google|Apple|Microsoft|Oracle are a step up then, well, that's stoopid

by johnnyg 16y ago

seldo 16y ago

Very interesting, but a few questions: 1. Really one in three orders was a scam? How big is the sample -- how many times did you ship to Nigeria? How long ago did you stop? 2. You list two problems: determining if a customer really can pay, or as a startup, having customers trust you with financial data. In both cases, the problem is trust & reputation. Foreign customers do not trust Nigerian businesses or customers. So the missing piece of the puzzle is either better police enforcement and government regulation, or some kind of third-party who can engender trust and verify identity to and from African businesses and customers.

johnnyg 16y ago
1. Before we stopped completely, we would get two kinds of orders: a. Orders over $1000 to Fancy Sounding Expediters Co XYZ Address Nigeria b. Smaller orders to <Big Oil Co> <Some Compound> Nigeria I shipped one and only one of type a. This happened in ~2001. I took this hit as a business 101 tuition fee and stopped shipping this kind of order. I continued to ship to people on compounds working for Shell/BP/etc. During this time, I got my rough sample size. For every 3 of this kind we would get, we'd get one of type a. It was years ago and it could have been 2:1 or 5:1. It was not 10:1. After a few months of this, the "type a fraudsters" figured out the pattern and we started seeing smaller dollar orders to "compounds" come back fraud. At this point, I just shut the whole thing down. The way this works now is that someone in Nigeria in a big oil compound will order to their home and have someone forward it. No USA address, no shipment over. 2. Exactly so. If government won't fill the trust gap, perhaps a private enterprise can. They would face a steep challenge. There has to be enough money in Nigeria seeking to buy goods internationally but unable to because of people like me for it to work. Is there enough "domestic pull" to make it viable?
- notahacker 16y ago
  I believe some international freight forwarders and delivery services offer part of the service described in (2) - a US address that pays for and receives goods and an African facility to forward them onto and collect payment from the end user.
  - johnnyg 16y ago
    We've tried some of these services out, though not specifically to solve this issue. When you add the cost of they add, the legit customers balk, driving volume down to the point where its not worth doing for our business. As a result of this, what we do and what I suspect others do is ship to areas with low fraud rates direct, eat any losses and call it good. Anywhere that you eat more than you make, you simply stop. The margin on something that would provide the security and keep small businesses interest would have to be razor thin. It would be a challenging or impossible business to run.

madair 16y ago

>>> I believe what I'm saying here is what most are thinking, but won't say I'm not thinking that, and if I was I would slit my risks for being a douche. If you think Halliburton, Goldman Sachs, or Google|Apple|Microsoft|Oracle are a step up then, well, that's stoopid