RECOMMENDATIONS FOR VIETNAM BUSINESSES TO AVOID INTERNATIONAL COMMERCIAL SCAMS AND FRAUDS

Along with the globalization and the development of information technology, commercial frauds are increasingly common, sophisticated and complex in a larger scale. Vietnam is a dynamic, highly open economy with extensive international economic integration, so trade and investment activities of enterprises are increasingly developing; Vietnamese enterprises, especially small and medium enterprises, are easy targets of fraud or complicated commercial disputes. This not only causes direct damage to our business, but also affects business trust and economic relations between Vietnam and its partners. Understanding this situation, on June 3, 2022, the Government Office issued Official Letter No. 4188/VPCP-KTTH approving the report of the Ministry of Finance on a number of commercial scams and frauds related to Vietnam and recommendations (“Report”).

This Report has outstanding contents that businesses need to pay attention to as follows:

Some common forms of commercial scams and frauds

1. Deception in import and export of goods, failure to pay or deliver goods as agreed: In the following manners: forcing a discount or refusing to receive goods after the goods have landed; disconnection; delivery delay, non-refundable deposit for non-delivery or failure to pay for imported goods, etc.
2. Establishment of “ghost” companies, business impersonation, provision of fake documents for transactions: In the following manners: enticing deposit money and then appropriating, or using service without payment, etc.
3. Using fake documents, representing the bank to get original documents, appropriating goods without payment: In the following manners: Forging accounts at banks or impersonating a bank officer, colluding with international fraud groups to forge documents, planting people to get original documents and appropriate shipments; or using excuses to request changes to contract terms, payment methods, or to offer to send all or part of the original bill of lading in advance for fraud, etc.
4. Fraudulently brokering concessional loans, aid and bidding projects: In the following manners: posing as a broker to entice Vietnamese businesses to participate in bogus foreign preferential loans and receive brokerage commissions; or enticing Vietnamese enterprises to participate in abroad fraudulent bidding packages and request a transfer fee to complete bidding procedures and then cut off contact, etc.

Recommendations for Vietnamese enterprises

Given the current situation and causes of Vietnamese enterprises being defrauded in international commercial activities, the Report of the Ministry of Finance has proposed a number of recommendations for Vietnamese enterprises, including:

1. Searching for partners through reputable channels: international trade fairs and exhibitions, business forums, through introductions of ministries, branches and overseas Vietnamese representative agencies (“RAs”) and the overseas Vietnam Trade Office, foreign agencies in Vietnam, trade promotion agencies, business associations, etc. If looking for partners via the internet, businesses should use official websites of associations, industries of countries.
2. Check and verify carefully and comprehensively the partner information by requesting for basic documents for self-verification; or the best way is to hire reputable consulting firms and lawyers in the locality or to ask the RAs to verify before negotiating and signing high-value contracts.
3. Carefully study the contract and implement the transaction on the basis of ensuring: (i) To grasp the principles and practices of international trade, the roles and responsibilities of the parties; (ii) To apply universal and secure payment terms; (iii) The contract should have a clause specifying the agency to settle the dispute and the time of transfer of original documents, transfer of ownership of the shipment, and the validity of the contract; (iv) To not to change the terms of the contract after the signature and the delivery of the goods; (v) To actively charter ships to transport and export goods under CNF or CIF terms to have better control over the original documents.
4. Enhance information with RAs, overseas Vietnam Trade Office, overseas Vietnamese business associations, and foreign business associations in Vietnam and intensifying seeking for legal advice and assistance when formulating and signing contract terms, especially high-value contracts with high-risk payment terms.