First of all, let's discuss how to identify a real wholesaler. This is a really simple step, and in the previous installment, we touched upon this topic. As I mentioned, no real wholesale supplier can or will sell to the general public. For this reason, they must have proof that you are a real business owner before they can do business with you.

A real wholesale distributor will REQUIRE that you fill out an application and provide them with proof of your Federal and State Tax ID. If they do not ask you for this information, they are not a wholesale supplier. It's that simple. One step and you'll know if they are a real wholesaler or if they're just masquerading.

You should really do your research before doing business with any company that doesn't pass this test. In most cases, you should avoid doing business with these types of businesses altogether. There are a few exceptions, and we'll touch upon those in a later edition of this ecourse.

The second topic I want to discuss today is how to protect yourself from fraudulent sellers. Unfortunately, there are a number of scammers out there eager to take advantage of retailers. For this reason, I recommend that you purchase everything through one of two options:

1 - Pick it up and pay for it in person

2 - Use a Credit Card so that you may file a chargeback if you are defrauded by the seller

3 - Only use PayPal IF you fund the payment by a credit card. (Explained Below)

These three payment methods will almost guarantee your protection from wholesale scams, and I only advise paying using another method if you know a supplier as honest, or you highly trust the recommendation of a colleague. When first doing business with a wholesaler, DO NOT use a money order or cashiers check, and run the other way if you're approached by a seller wanting you to pay by Western Union. This is the payment method of choice for many overseas scams.

Every major business should offer credit card sales as an option, and if they don't then it's probably not worth the risk of doing business with them. They should at the very least offer PayPal as a payment option; however, if you do use PayPal, please take the following advice seriously.

If you pay attention to only one thing from these reports, please let this be it. If you are using PayPal, DO NOT FUND YOUR PURCHASE WITH MONEY IN YOUR PAYPAL ACCOUNT. Pay by credit card through PayPal so that you may file a chargeback through your credit card company if you are defrauded.

But why? PayPal offers a Buyer Protection Policy, and I feel safe with PayPal.

This is exactly what PayPal would like you to believe, but it just isn't true. I know because I've been on the receiving end of a major beating at the expense of PayPal's worthless Buyer Protection Program. I made a purchase for $2500 with a company that I thought to be an honest seller. They didn't deliver, and I learned the hard way that the Buyer Protection Program is not all that it's cracked up to be.

PayPal's Buyer Protection Program will only protect you if they can recover funds from the scammer. If they can't recover funds, you receive nothing. And of course, by the time they find out about the scam, the scammer is either long gone, or he's in custody and thousands of victims are trying to get their money back out of the little money that's left. PayPal will likely never recover funds from the scammer, and you'll never see your money again.

Your credit card company, on the other hand, will protect you from fraud regardless of whether or not they recover funds from the merchant. For this reason, you must pay for PayPal purchases with a credit card on file in order to be fully protected from fraud.

So, before making any major purchases through PayPal, please follow these steps:

1 - Clear all of the funds from your PayPal account. You must do this because PayPal requires that you use funds available in your PayPal account first before external funding sources.

2 - With your account balance at $0.00, you can then use a credit card on file in your PayPal account to fund your purchase.

So now, in the event that something goes wrong with the sale, you can circumvent PayPal's worthless customer service team and Buyer Protection Program and deal with your credit card company directly to file a chargeback and receive your money back.

About the author:

John Hodgeman has researched and uncovered numerous scams in the corrupt online dropship industry. He has written special articles to help people avoid dropshipper scams.

With five years of experience in the online dropshipping industry, John has discovered over two dozen legitimate drop ship compananies, wholesalers, independent suppliers and buyer/seller communities he would encourage you to do business with.

He provides this report in a valuable information package on his website,

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