Pepper exporter in Vietnam suffers nearly $600,000 loss due to payment-trap scheme

An exporter of pepper has reported losses of nearly US$600,000 in a suspected trade fraud case involving shipments to Karachi, Pakistan.

Contract, shipment and payment delays

According to the Vietnam Pepper and Spice Association (VPSA), from March to May 2025, a domestic company signed a contract to export 21 containers of pepper to Karachi for a foreign partner, without requiring a deposit.

The partner allegedly used multiple intermediary entities to build initial credibility, leading the Vietnamese side to trust the transaction and ship the goods. From late May to mid-July 2025, 20 containers arrived at Karachi port.

After the goods arrived, the partner repeatedly delayed payment for unclear reasons, while issuing formal commitments such as processing the transfer or awaiting bank confirmation. During this period, the partner reportedly provided fake remittance documents and requested unnecessary documents to extend the payment process.

Port detention and pressure to cut prices

The payment delay lasted from May to September 2025, during which the goods were detained at the port. This reportedly generated substantial storage and port charges and created severe cash-flow pressure for the exporter.

Taking advantage of the situation, the partner continued to demand a roughly 25% price cut from the original contract level, despite the offer being below market price. The partner also promised quick payment, which was not fulfilled.

Final settlement and estimated losses

Facing rising costs and the risk that the goods could be processed under local regulations, the company accepted a price adjustment to reduce losses. However, even after reaching an agreement, the partner continued to delay payment until the end of 2025, repeatedly sending fake documents and failing to meet its obligations.

In the end, even after some goods were salvaged, the total loss is estimated at nearly US$600,000 (about VND 15 billion). VPSA said the figure includes the price reduction, storage and logistics costs. The incident also reportedly harmed the exporter’s cash flow and its reputation with its transport partner and bank.

VPSA’s assessment of the fraud method

VPSA said the case reflects a deliberate fraud pattern: placing a large order without a deposit, prolonging payment to incur port storage costs, pressuring the seller to cut prices, and then continuing to stall to gain benefits.

Recommendations for exporters

VPSA recommended that pepper and spice exporters exercise additional caution when working with new partners, particularly in high-risk markets. The association advised that exporters should not ship goods without payment assurances such as a deposit, letters of credit, or bank guarantees. It also urged exporters to verify partners through multiple channels and coordinate with the Vietnamese Trade Office in the destination country, while tightening contract terms—especially provisions related to handling goods at the port in disputes.

Broader trade risk context

VPSA noted that in recent years, Vietnamese firms have faced export risks for pepper, peppercorn, cinnamon and other spices in some markets, often following a pattern of large orders without a deposit, extended payment delays, and fake bank documents.

In 2024, VPSA said some member companies also encountered issues exporting pepper to Malaysia for Mafipro SDN BHD, where the consignment was reportedly taken out at the port even though the sea-bill was still held by the Vietnamese side.

As pepper exports continue to grow, VPSA emphasized that trade risk controls should be prioritized. It reported that in 2025, Vietnam’s pepper exports reached a record value of US$1.66 billion, while production declined to 246,132 tons, supported by a sharp rise in average export price.