LAHORE: In e-trading, where physical interaction is minimal or non-existent, prudence is not optional -- it is essential. Fraud, misrepresentation, and sham transactions are frequent threats, making due diligence the e-trader’s first and most crucial line of defence.
While e-trading continues to grow in popularity globally, it is also rapidly expanding in Pakistan, where regulatory frameworks remain underdeveloped. Pakistani e-traders supplying goods overseas must exercise particular caution, especially in verifying letters of credit (LCs) and bank details. Before dispatching goods, it is vital to confirm the authenticity of the LC, assess the credibility of the issuing bank, verify its SWIFT code, and review the shipping terms, including validity, ports of loading and unloading, and expiry dates. A significant number of scams involve fake or weak LCs issued by obscure or shell banks.
Agreeing to post-delivery payments from overseas buyers is not advisable unless the buyer is a long-standing and reputable client. Delivering goods without securing payment or a guarantee carries substantial risk. Legal recourse across international borders is often time-consuming, complex and costly. It is therefore safer to insist on advance payment, escrow services or confirmed LCs from reputable banks. At the same time, e-traders must enter into clear, written trade contracts that define the quantity, quality standards, pricing, delivery schedules, and payment terms. These documents should be preserved for at least three to five years, depending on legal and tax regulations, and may serve as crucial evidence in the event of a dispute or fraudulent activity.
Sending free samples, particularly to international clients, can often lead to exploitation. If a buyer is genuinely interested, they should be willing to cover the sample cost or at least the courier charges. E-traders must recognise that authentic business intent typically involves some degree of financial commitment -- even at the evaluation stage.
Budding e-traders should remain alert to suspicious contact details. For instance, if a company uses the same phone or fax number for multiple identities, provides only a fax number, or lacks a verifiable office address or website, these are clear warning signs. Such entities are frequently dubious, poorly established, or entirely illegitimate. Moreover, greed and unrealistic offers are classic traps. E-traders must avoid falling for implausibly low purchase prices -- often involving substandard or non-existent goods -- or exaggerated promises of large orders at inflated prices, which are typically bait for advance payments or the extraction of sensitive information. Deals of this nature usually mask deeper risks such as advance fee fraud or complete loss of goods.
E-traders must blend technological innovation with prudent decision-making, sound judgement, and professional scepticism. The potential for growth in online trading is vast, but only for those who operate with caution and rigour. It is essential to verify the business registration and licences of counterparties and, where possible, confirm physical addresses via Google Maps or by requesting utility bills. Companies should be asked to provide professional email domains and official websites, as opposed to using generic free services such as Gmail or Yahoo. Traders are advised to research prospective partners online, checking for complaints or reviews on platforms such as Alibaba or scam-watch forums. Contact numbers and fax lines must be verified, and caution exercised if one line is used for several aliases.
LC terms must be scrutinised in detail, including the identity of the issuing bank, payment clauses, and shipping details. Verification of the bank’s authenticity through SWIFT or consultation with the trader’s own bank is strongly advised. All communication and documentation should be retained in scanned format. For first-time buyers, advance payment -- either partial or full -- is preferable. Where available, confirmed irrevocable LCs issued by internationally recognised banks or escrow accounts facilitated by trading platforms such as Alibaba or TradeKey offer a greater degree of safety. E-traders should avoid using Documents against Payment (DP) or Documents against Acceptance (DA) terms unless dealing with long-standing and trustworthy clients. Open-account trading with unknown buyers poses significant risks.
For shipping and delivery, reputable logistics partners should be engaged, and appropriate insurance coverage arranged, depending on whether terms are Free on Board (FOB) or Cost, Insurance and Freight (CIF). In the event of any dispute, parties should agree in advance to resolve the matter through arbitration under the rules of an established body such as the International Chamber of Commerce (ICC), Pakistan Arbitration Act, or another mutually agreed forum. English should be the governing language for all contractual matters. Neither party should be held liable for delays or non-performance caused by events beyond their control, including natural disasters, war, or trade embargoes.
E-trading offers unprecedented opportunities for expansion, but only those who combine ambition with caution, and innovation with diligence, are likely to thrive in this complex and often perilous arena.
