The Problem of Online Component Fraud

The Growing Problem of Online Component Fraud

There are many factors that explain why we are facing a global shortage market right now, varying from the pandemic to the China-US trade war. There is, however, another threat to businesses that the shortage market brings to all involved in the purchase of electronic components: online component fraud.

What is online component fraud?

Unfortunately, there are a growing number of cases of online component fraud. Fraudulent online “companies” are paying for premium placement on Google and forming websites to advertise stocked parts that they do not have. The apparent availability of these components will be enticing for many who are struggling with the current industry-wide shortages and are unaware of the illegitimacy of these sites.

Once the customer has paid for their order from these fraudulent sites, the stock is never delivered, and they have essentially had their money stolen. Because these “companies” are paying for prime spots in the search results, it is easy to see why some customers may believe them to be reputable and fall into their trap.

How is this different to fraudulent components?

Counterfeit components are components with inferior specifications or quality, marketed as legitimate, posing a significant risk if used in critical systems or devices. This current threat is different to the issue of fraudulent or counterfeit components, which is another risk to be aware of because, in this case, the components are never actually delivered.

What can we do?

This growing problem reiterates why you should only source parts through a trusted partner with a reputation for reliably delivering quality components, such as Rebound Electronics. Even when some OEMs and CEMs may be getting desperate for exact parts.

As tempting as it may be to shop on unknown sites promising stock delivery within days, if something seems too good to be true, then it most likely is.

It is also vital to raise awareness of this issue and spread the message to others in the industry to ensure they do not fall prey to these scams. These websites are taking advantage of those who are already struggling. We should all be united in keeping fraudulent activity out of our industry.

How can these fraudulent sites be identified?

ERAI (the Electronic Resellers Association International) has identified numerous websites run by malicious individuals. You can view the list here.

We highly discourage purchasing components from sites you are unfamiliar with, especially if any of the following red flags are visible on the site.

First of all, these “companies” only accept payment in advance and do not accept the popular alternative forms of payment such as PayPal or credit cards. You should never pay a company in advance that cannot provide verifiable trade references.

The component shortages we are currently facing are industry-wide. If trusted suppliers are out of stock, you should consider it very suspicious when an unknown site claims to hold stock of these components, especially at prices below the market value.

These sites often use identical language and formatting and may falsely claim to be authorised distributors of major brands or members of the ECIA.

Online component fraud puts the electronics industry at risk, so remember to buy components only through reputable vendors.

If you are struggling to source a component, it may be worth looking at the design and seeing if other, more readily available replacements could serve the same function.