A Chinese Supplier Denies Receiving Your Redirected Payment: Must You Pay Again?

Take the urgent steps first

Contact your sending bank using its established official details. Report suspected payment diversion and provide the transfer time, amount, currency, reference and beneficiary details. Request tracing, interception or recall and contact with the receiving institution. Keep the incident reference and every response. Recovery depends on the transfer stage, location of funds and applicable procedure; there is no universal guaranteed recovery window.

Reach the supplier through an independently verified historical phone number or other trusted channel. Do not verify a suspicious change by calling a new number supplied in the same email. Stop further transfers to the suspect destination, including purported verification or release fees. Report to the appropriate police or reporting channel and keep the reference. These steps do not resolve the underlying contract dispute by themselves.

The FBI and Australian official cyber guidance both emphasise immediate contact with financial institutions and account-security action. Coordinate preservation of original emails and logs with ending unauthorised sessions, changing credentials and enabling multifactor authentication. Evidence collection and containment should proceed together; do not delay the bank while preparing a perfect report.

Map three separate chains

This article concerns commercial payments connected with a Chinese supplier. It does not assume that the supplier, employee, recipient or bank committed an offence. A lookalike address, a compromised genuine mailbox, an employee exceeding authority and a genuinely authorised third-party collection arrangement may look similar.

The PRC domestic rules discussed below apply only where they govern the issue. Contract payment, agency, tort and unjust enrichment can require separate choice-of-law and jurisdiction analysis. International goods sales also require a CISG scope check. A Chinese supplier does not automatically bring every overseas recipient within one Chinese proceeding; a Hong Kong or other foreign account needs its own local remedy assessment.

• Contract chain: seller and buyer identities, original account, agreed change procedure, and payment and shipment dates.
• Instruction chain: account used, message time, known operator, authority to act for the seller, independent confirmation and any later ratification.
• Funds chain: transfer reference, stated beneficiary, bank-confirmed receipt information, bank jurisdiction and trace results. A name printed on a receipt is not necessarily proof of the actual controller.

Did the payment discharge your obligation?

Civil Code Article 509 addresses agreed performance; Articles 170–172 address acts within an employee’s authority, unauthorised agency and apparent authority. Use the following fact layers to organise the analysis, not as automatic liability categories.

• A genuine, effective company instruction: establish its terms and authority and whether your payment complied. Failure to credit the seller’s former account does not, by itself, establish non-payment.
• An employee instruction with disputed authority: examine role, mandate, established practice, earlier confirmations and the company’s response. Authority to negotiate price is not necessarily authority to redirect payment to an unrelated individual. Ratification and apparent authority need separate analysis.
• Impersonation or mailbox compromise: a familiar display name, old email thread or seal image alone does not establish assent to change the payee. Technical authenticity is not the same as legal authority.
• Unclear authority and irregular conduct on both sides: preserve your position while obtaining evidence. Do not prematurely sign an admission allocating all loss to either side; assess the debt and any damages claim separately.

Does a compromised supplier mailbox make the supplier wholly liable?

Not automatically. Establish where the interference occurred, how the instruction connects to the company, the relevant contractual duties and the causal link to loss. Article 509 includes good-faith duties such as notification and assistance in light of the transaction’s nature, purpose and practices. The existence of a hacker does not decide either party’s exemption or full liability.

For a contractual damages claim, Articles 577 and 584 require analysis of breach, loss and foreseeability. Article 592 addresses each side’s breach and reduction of damages where the injured party contributed to the loss. There is no universal fifty-fifty allocation for email fraud.

The supplier may point to an obvious beneficiary mismatch, a bypassed dual-verification requirement, prior warnings or an email never sent by its systems. The buyer may point to established authority, independent confirmation or delayed warning. These are issues to prove, not facts established merely by assertion. A damages claim also does not automatically authorise deducting the amount from a supplier invoice without analysing set-off requirements.

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An evidence checklist organised by purpose

SPC Evidence Provisions Articles 93–94 address the reliability and integrity of electronic data, including generation, storage, transmission and extraction. A payment receipt may prove a transfer but not the supplier’s authority for it. Authenticity of a message and authority of its author remain separate.

• Terms and authority: complete contract, original bank instructions, change-control clause, authorisation records, previous transactions and independent call records.
• Interference: native emails with full headers, original attachments, complete chat exports, original and altered invoices, login and forwarding-rule logs. Record who extracted them, when and in which time zone; keep unedited copies.
• Transfer and destination: bank-confirmed payment information, reference, beneficiary and account details, trace and recall responses. Share complete account numbers only through an agreed private channel.
• Discovery and mitigation: when the issue was noticed, bank and supplier notifications, report references, cancelled further transfers, necessary forensic work and expense records.
• Continuing contract: the supplier’s actual denial or refusal to ship, payment and delivery dates, stock position and additional charges. Preserve ordinary transaction records as well as the suspect message.

Match each recovery route to the correct party

Against the recipient, Civil Code Articles 985–987 may support unjust-enrichment analysis where PRC law applies. Identify the proper defendant and prove the benefit and absence of legal basis, while addressing defences such as an innocent recipient whose benefit no longer exists. An account bearing a company name does not itself prove that company knew of the fraud. The bank is not automatically obliged to reimburse the transfer.

Against the supplier, the facts may support effective payment and continued delivery, or damages for a proven breach. Check the contract’s court or arbitration clause and its scope; it does not automatically bind an unrelated recipient. Different claims may require different proceedings. Avoid double recovery.

Bank action, criminal reporting and civil claims serve different purposes. Do not assume a civil case will necessarily proceed, be stayed or await a criminal judgment. The overlap of facts, procedural stage and current civil–criminal rules requires specific review. A criminal complaint should not be treated as a blanket extension of every civil deadline.

Funds may have moved on; a recipient may have no assets; overseas service and access to bank records can add difficulty. Assess assets, lawful evidence routes and costs before choosing proceedings. Preservation requires the applicable legal conditions and process. A lawyer’s demand does not freeze an account or guarantee recovery.

If the supplier demands payment again

Do not ignore a payment deadline merely because money left your account, and do not automatically pay again without verification. Seek a short written arrangement covering any hold on collection or shipment, ongoing production, evidence cooperation, treatment of interim payments, later recovered funds and reservations. If agreement is refused, assess delay exposure and available procedural options promptly.

Where a further payment is commercially necessary to protect delivery, verify the real account and agree how duplication, recovered funds and final reconciliation will be handled. A unilateral bank reference may not bind the supplier. Avoid a broad release of unidentified responsible parties before the facts are understood.

Time limits and practical China-side assistance

Bank tracing and preservation are immediate tasks; a civil limitation period is not a waiting period for mitigation. Where PRC law applies, Article 594 provides four years for international goods-sale contract disputes. Article 188 generally provides three years for civil claims from knowledge, actual or imputed, of the infringement and obligor, subject to special rules. Contract, unjust-enrichment, insurance and foreign claims should not all be assigned the same deadline. Accrual and interruption require individual checks.

An initial enquiry can identify the parties, payment and discovery times, amount and currency, banking jurisdictions, next deadline and a brief account of the disagreement. After a conflict check and agreement on scope, complete banking and mailbox material can follow through the agreed channel. China-side work can include entity and authority analysis, evidence organisation, contract negotiations and appropriate proceedings, with banking, technical and overseas professionals involved as needed.

Seek advice alongside initial containment if money may still be intercepted, another payment or shipment is imminent, logs may be deleted or an immediate liability admission is requested. Do not wait for every investigation to finish.