$12.5B
FTC-reported fraud losses in 2024
FTC says consumers reported losing $12.5 billion to fraud in 2024.
fake supplier scam
A fraudulent supplier offers products at below-market prices, collects payment, and either delivers counterfeit goods, inferior products, or nothing at all.
“small business scam”
↑ 68.4%Key indicators
Usually targetsSmall business owners
Often hitsFreelancers and contractors
Common regionUnited States
Last updated2026-04-04
Estimated impact
$960
median reported loss
Typical range$60 – $6.0K
Recovery rate~15%
Scam breakdown
1
The scammer creates a professional-looking website or Alibaba listing with stolen product images and fabricated company details.
2
They offer bulk pricing well below competitors to attract cost-conscious small businesses.
3
After receiving full payment via wire transfer, they either ship counterfeit goods or disappear entirely.
What to do first
Verify the supplier's business registration, physical address, and trade references before placing orders.
Related terms
wholesale fraudfake manufacturer scamcounterfeit supplier schemeSmall business scamsEmailSurgingSmall business ownersEntrepreneursFreelancersFreelancers and contractorsSmall business ownersPayroll, HR, and finance teamsUnited StatesUnited KingdomCanadawholesale fraudfake manufacturer scam
Real-world example
How this scam plays out in practice
Based on reported patterns. Names and details are illustrative.
The setup
Fatima, 45, a small business owners, encountered what appeared to be a legitimate small business scams situation while using Email. The scammer creates a professional-looking website or Alibaba listing with stolen product images and fabricated company details.
Step 2
What happened next was calculated: They offer bulk pricing well below competitors to attract cost-conscious small businesses.
Step 3
The pressure escalated quickly: After receiving full payment via wire transfer, they either ship counterfeit goods or disappear entirely.
The outcome
Fatima realized something was wrong when prices significantly below market rate with no reasonable explanation. By that point, significant damage had already been done — money sent, personal information shared, or trust exploited.
The lesson
Verify the supplier's business registration, physical address, and trade references before placing orders. Fatima's experience shows why prices significantly below market rate with no reasonable explanation and the supplier has no verifiable business address, reviews, or trade references are the clearest early warning signs.
How to identify it
- Prices significantly below market rate with no reasonable explanation
- The supplier has no verifiable business address, reviews, or trade references
- Payment is required in full upfront via wire transfer with no escrow option
- Pause before paying, clicking, or sharing information. Scammers rely on speed.
- Verify the sender, company, or agency using a phone number or website you already know is legitimate.
- Treat secrecy, urgency, and off-platform payment requests as strong scam signals.
What to do now
- ✓Verify the supplier's business registration, physical address, and trade references before placing orders.
- ✓Use escrow services or payment methods with buyer protection for first orders with new suppliers.
- ✓Report fraudulent suppliers to the FTC, your bank's fraud department, and the platform where they were listed.
What to save before reporting
- ✓Save the message, profile, phone number, email, or URL that was used.
- ✓Keep payment confirmations, receipts, and account alerts before you dispute or delete anything.
- ✓Write down the timeline while the details are still fresh.
- ✓Keep the full sender address, domain, attachments, and—if possible—the raw email headers.
How big is this problem
You are not alone — this scam affects millions of people.
These numbers come from government agencies and official reports. If you have been affected, know that this is a widespread problem — not something that only happens to careless people.
FTC 2024 fraud losses
Imposters
Most common FTC fraud category in 2024
FTC says imposter scams remained the most commonly reported fraud category in 2024.
History and evolution
- This scam family tends to persist because the social-engineering pressure works even when the exact scripts, platforms, and payment methods change.
- The specific packaging evolves over time, but the core pattern usually stays the same: create urgency, control the channel, and push action before verification.
- The BBB Scam Tracker reports that purchase scams, including fake supplier schemes, are among the most reported types affecting small businesses.
Recovery and follow-up
- ✓Save the messages, receipts, account alerts, and transaction details before you block or delete anything.
- ✓Report the scam through the official platform or government channel that best matches where it happened.
- ✓Verify the supplier's business registration, physical address, and trade references before placing orders.
- ✓Use escrow services or payment methods with buyer protection for first orders with new suppliers.
- ✓Report fraudulent suppliers to the FTC, your bank's fraud department, and the platform where they were listed.
Why this pattern keeps working
Even when the story changes, most scams still use the same pressure pattern: urgency, authority, and a request to move money or data fast.
The BBB Scam Tracker reports that purchase scams, including fake supplier schemes, are among the most reported types affecting small businesses.
BBB Scam Tracker 2025
Where to report it
If you have been targeted by this scam, reporting it helps authorities track the pattern and protect others. United States has dedicated agencies that handle fraud reports.
ReportFraud.gov
Federal Trade Commission
Central U.S. consumer fraud reporting portal.
File an IC3 complaint
FBI Internet Crime Complaint Center
FBI portal for internet-enabled crime reports.
Start identity theft recovery
IdentityTheft.gov
Official U.S. identity theft recovery plan builder.
Explore further
Understand the bigger picture
Who is most at risk
Who this scam targets
Primary targets
Small business owners, Entrepreneurs, Freelancers, Startups
Geographic concentration
United States, United Kingdom, Canada, Australia
Primary channel
Email — Small business scams
Why this group is vulnerable
Small business owners are particularly vulnerable because this scam exploits trust in familiar brands, authority figures, and time-sensitive decisions. The rapid increase in reports suggests that awareness among this demographic remains low.
Sources and methodology
How we verify this information
OpenScam tracks scam patterns using a combination of government consumer protection databases (FTC, IC3, Action Fraud), platform-specific fraud reports, and verified consumer complaint data. Each entry is cross-referenced against at least two independent sources before publication.
Severity ratings are based on financial impact potential, reversibility of damage, and volume of reports across multiple reporting channels. Trend velocity reflects the rate of change in report volume over the most recent 90-day window.
This page was last verified on 2026-04-04. Red flags, recovery steps, and reporting resources are reviewed quarterly against current agency guidance.
Evidence and indicators
- The BBB Scam Tracker reports that purchase scams, including fake supplier schemes, are among the most reported types affecting small businesses.
Source notes
- BBB Scam Tracker 2025
Frequently asked questions
Common questions about fake supplier scam
How does the fake supplier scam work?+
The scammer creates a professional-looking website or Alibaba listing with stolen product images and fabricated company details. They offer bulk pricing well below competitors to attract cost-conscious small businesses. After receiving full payment via wire transfer, they either ship counterfeit goods or disappear entirely.
What are the warning signs of fake supplier scam?+
Prices significantly below market rate with no reasonable explanation The supplier has no verifiable business address, reviews, or trade references Payment is required in full upfront via wire transfer with no escrow option
What should I do if I encounter fake supplier scam?+
Verify the supplier's business registration, physical address, and trade references before placing orders. Use escrow services or payment methods with buyer protection for first orders with new suppliers. Report fraudulent suppliers to the FTC, your bank's fraud department, and the platform where they were listed.
Who is most at risk for fake supplier scam?+
This scam primarily targets Small business owners, Entrepreneurs, Freelancers, Startups. It is most commonly reported in United States, United Kingdom, Canada, Australia and typically appears on Email.
Is fake supplier scam getting worse?+
fake supplier scam is currently surging — reports are increasing rapidly. It has been reported across US, UK, CA, AU. Last updated 2026-04-04.
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Help someone avoid this scam.
Scammers succeed because people do not talk about it. If you or someone you know has been affected, there is no shame in it — it happens to millions of people every year. Share this page with friends and family so they know what to look for.
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