"Chip trading: Payment received, but the goods were nearly scammed away! This classic fraud is making a comeback."

01 what happened?

Recently, Ming, a chip distributor, shared his experience of a chip fraud he encountered recently. The scammer assumed multiple fake identities and forged information of several upstream and downstream companies. Posing alternately as buyer and seller, the fraudster nearly tricked Ming out of his goods.

More than half a year ago, a salesperson added Ming’s contact and inquired about components on several occasions. Ming did not have the requested stock and truthfully replied each time. No transaction materialized after multiple conversations, so Ming simply regarded him as a potential client to keep in touch. It was this period of intermittent communication that made Ming lower his guard against the contact.

Recently, this so-called "potential client" reached out to Ming proactively, claiming he had an industry peer looking to purchase a batch of chips and wanted to refer the business to Ming. He said he would only ask for a commission if the deal went through. Since this kind of arrangement is reasonable and commonplace in the trade, Ming agreed.

Shortly afterwards, "End Buyer B", supposedly downstream of this contact, followed the same tactic. He offered to introduce his own "Client C" to Ming. Eventually, Ming signed a purchase contract worth tens of thousands of yuan with "Client C". Nevertheless, Client C asked Ming to deliver the goods to the address of "Buyer B", claiming the components needed to undergo testing.

After the contract was signed, the party immediately sent a bank slip showing a successful corporate transfer and repeatedly urged Ming to send samples and bulk goods as soon as possible. Remaining cautious, Ming asked his finance team to verify the transaction first. Once it was confirmed that the payment had arrived in the corporate account, he proceeded to arrange shipment.

However, on the very morning the goods were dispatched, the legitimate legal representative of the company purporting to be “Buyer B” contacted Ming’s firm. He enquired whether anyone from Ming’s company had been quoting prices to his business and requesting a deposit. This raised Ming’s suspicions. Together with his supervisor, he began verifying the identities of all contacts and called the number listed on the official website of Client C for confirmation.

The investigation revealed that the initial “prospective client”, “Buyer B” and “Client C” were all fictitious personas created by the same fraudster.

Furthermore, the scammer impersonated staff from Ming’s company. He approached the genuine Client C, claimed to have the required chips, and closed the deal. He instructed the real Client C to remit payment to Ming’s corporate account — which explains why Ming’s company actually received the funds.

Therefore, the truth behind this scam is as follows: what the fraudster really aimed to obtain was the goods belonging to Ming’s company. While posing as a purchaser placing an order with Ming, he also impersonated staff from Ming’s firm to persuade the genuine Client C to transfer payment into Ming’s corporate account. This created the illusion that payment had been received, tricking Ming into believing the transaction was legitimate and arranging shipment without hesitation.

The scammer invested neither capital nor inventory to seize the goods through deception. This constitutes a classic ABC scam.

Z, another chip distributor, shared a nearly identical fraud case he once encountered.

The scammer stole the real supplier B’s company information, together with product photos and videos, to lure Z into signing a contract and arranging payment. Fortunately, Z acted promptly and headed directly to the premises of the genuine Supplier B upon making the transfer. When he arrived, staff at Supplier B were completely unaware of any such deal and confirmed that no one had been assigned to deliver goods. Z then realized he had encountered a fraudster.

Luckily, the remittance was processed via corporate bank transfer. He contacted the bank in time to halt the transaction, preventing the funds from being lost entirely.

02 What kind of scam is this?

The incidents experienced by Ming and Z are long-standing ABC scams prevalent in the chip industry, also known as "get-rich-quick schemes with zero capital outlay". Fraudsters assume multiple fabricated identities to set traps between buyers and sellers. Without investing any capital or inventory of their own, they swindle genuine cash or physical goods.

ABC scams come in different variants. One type can be described as the "staged performance scam": several fraudsters collude in chat groups, pretending multiple parties are scrambling to purchase a certain popular component. They create artificial demand to lure victims into buying goods from them. Once the victim takes the bait and pays a substantial deposit, the scammers abscond with the funds.

The cases encountered by Ming and Z fall into another category. Fraudsters steal credentials and identity information of legitimate companies, impersonating both buyers and sellers to broker transactions between multiple victims. By fabricating price margins, exploiting information asymmetry and manipulating transaction procedures, they enable real goods or funds to circulate within the deal, before intercepting them midway to profit without any upfront investment. The widely reported "White Pigeon Scam" once circulating in Huaqiang North also belongs to this category.

Scams of this type are carefully staged to look nearly identical to legitimate transactions.

Take Ming’s case as an example. The payment received in his company account was negotiated by the fraudster with Client C while impersonating Ming’s firm. The scammer had no intention of stealing this payment. Instead, he leveraged the transfer to create the illusion that payment had arrived and the deal was genuine, persuading Ming to ship the goods without suspicion. In other words, even though the funds were genuinely credited to the account, the goods and the payment did not belong to the same authentic transaction.

This points out a critical red flag for identifying such fraud: in a normal business deal, goods and payment generally flow directly between the same buyer and seller. If the party remitting payment, the party requesting goods, and the designated consignee are three different entities with ambiguous third parties in between, you should treat such a so-called closed-loop transaction with extreme caution.

To avoid falling into the traps laid by fraudsters, first and foremost, remain calm before signing any contract whenever you encounter chips offered at abnormally low or high prices or deals with seemingly excessive profit margins. Stay highly vigilant, as scammers most commonly use such tempting windfalls as bait.

Secondly, with regard to ABC scams, you should flatly reject any opaque instructions, such as requests “not to attach delivery notes”, “not to state prices” or “not to disclose pricing to the other party”.

You also need to verify whether the transaction forms a genuine closed loop. The loop presented by the counterparty may appear procedurally flawless, yet it is very likely a “fake closed loop”. In a legitimate closed-loop transaction, goods and payment must circulate directly between the buyer and seller of the same deal, rather than being transferred or rearranged via third-party 

How should verification be carried out?

- The name of the receiving account, the full company name and the contracting entity must be completely identical, and the company's operational status must be verifiable through business registration records. If the counterparty refuses to disclose who their upstream or downstream partners are, immediately heighten your vigilance.

- Before making payment, verify the identities and intentions of key personnel at the counterparty's company via phone, video call, or even in person.

- Cross-check whether the logistics waybill, delivery note, invoice title and fund flow are consistent with each other.

- All deliveries, sign-offs and goods inspections must be supported by traceable documentation.

- Share lists of suspicious accounts, companies and contacts with industry peers and trade associations.

As the chip market fluctuates, scammers are constantly refining their tactics. In the business world, it is always better to exercise extra caution than to be caught off guard by carelessness.