Sending money to a supplier you have never met is one of the most nerve-wracking moments in the wholesale business. The good news: a few unglamorous checks, done in order, will weed out the vast majority of bad actors before a single dollar leaves your account. Here is the process we would use ourselves, plus the warning signs that should make you slow down.
Start by confirming the business actually exists
A real distributor leaves a paper trail. Before anything else, confirm the legal entity is registered and in good standing.
- State corporation lookup. Almost every US Secretary of State offers a free online business search. Look up the company name, confirm it is active (not dissolved or delinquent), and check that the registered address and formation date are consistent with what the supplier told you.
- Match the details. The name on invoices, the website, and the bank account you are asked to pay should all point to the same entity. Mismatches are a quiet but serious red flag.
- EIN / reseller credentials. A legitimate wholesaler will typically ask you for a resale certificate and may share their own business information for tax purposes. A two-way exchange of documentation is normal and healthy.
Ask for documentation, and read it
Documents are only useful if you actually examine them. Request the following and treat vagueness as information.
- A real invoice or pro forma invoice on company letterhead with itemized products, quantities, unit costs, and total. “Just send the deposit and I’ll sort the paperwork” is not acceptable.
- Product specifics — brand, condition, packaging, and quantity on hand. For secondary-market goods, expect honest answers about condition and packaging rather than glossy stock claims.
- A clear written policy on returns, defects, and what happens if a shipment arrives short or damaged.
One honest note on documentation: brand authorization letters (LOAs) are not a standard part of most wholesale deals. They only come into play on select large or brand-specific transactions, so do not expect one by default. Secondary-market sourcing means you are buying genuine, branded goods, but the seller is not an authorized reseller of the brand — and that is normal for this channel. Be skeptical of any supplier promising “guaranteed” brand approval or guaranteed Amazon ungating for every category; that is a sign of overselling. Whether a category opens up depends on your account and Amazon’s review, not on a supplier’s promise.
Check references and marketplace presence
Scammers can fake a website in an afternoon. A track record is much harder to fake.
- Ask for references from current customers and actually contact one or two. Buyers who have been burned are usually happy to help others avoid it.
- Look for a real footprint: a website with a working phone number and physical address, a LinkedIn presence, consistent business listings, and reviews that are not all five stars posted in the same week.
- Search the company name plus words like “scam,” “review,” or “complaint.” Five minutes here has saved a lot of people a lot of money.
- Talk to a human. A quick phone or video call tells you more than a dozen emails. Suppliers who refuse any live contact are worth questioning.
Pay in a way you can recover
How you pay matters as much as who you pay. The core principle: do not send irreversible payments to parties you have not verified.
- Be cautious with wire transfers, ACH push, crypto, gift cards, or peer-to-peer apps for a first deal with a new supplier. Once that money is gone, it is usually gone for good.
- Prefer methods that may offer some recourse where appropriate. Recourse varies by payment method and by the agreement between you and the supplier, so no method is guaranteed-recoverable — but some leave you far more options than others if a deal goes wrong.
- Always confirm bank details directly with a known contact, not just from an email, since payment-detail fraud is common. The account name should match the business name you verified earlier. Being asked to pay a personal account or a third party in another country is a major warning sign.
Start small, then scale
The single best protection is a small first order. A modest opening purchase lets you confirm the goods are genuine, the condition matches the description, the packaging is what you expected, and the supplier communicates and ships on time. A trustworthy partner welcomes this; it is how good long-term relationships start. Only after a clean first transaction should you scale up your order sizes and your exposure.
Red flags that should stop you cold
- Prices far below market with no plausible explanation.
- Pressure to pay right now or “lose the deal.”
- Only irreversible payment methods accepted, or payment to a personal/third-party account.
- No verifiable business registration, address, or phone.
- Refusal to provide an itemized invoice or any references.
- Free email domains only, sloppy or copied website content, or details that change between messages.
- Guarantees that sound too good to be true, like guaranteed Amazon approval or guaranteed profits.
None of these alone proves fraud, but two or three together is your cue to walk away. There will always be another deal; there will not always be a refund.
A quick pre-wire checklist
- Verified the entity on the state corporation lookup and confirmed it is active.
- Names match across invoice, website, and bank account.
- Received and reviewed an itemized invoice.
- Checked references and confirmed a real marketplace presence.
- Spoke with a real person by phone or video.
- Chose a payment method with some recourse and confirmed account details directly.
- Placed a small first order before committing larger funds.
Vetting suppliers is not about paranoia; it is about doing a handful of boring checks every single time so that trust is earned, not assumed. Work with established distributors, keep your first orders small, and let a clean track record open the door to bigger volume.