HD Trade Services puts the brakes on trade fraud

Most consumers are likely oblivious to the issues of international trade fraud, but for businesses that rely on overseas suppliers, it’s becoming an increasingly large problem. The issue stems from the lack of communication between businesses, which makes it easy for fraud of all varieties to take place.

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HD Trade Services aims to reduce fraud for distributors of high-value goods with its high-definition video inspection. It’s also offering a way to make business-to-business deals more efficient with its management platform. The company is making its debut today at DEMO Spring 2012 in Santa Clara, Calif., an event which is co-produced by VentureBeat.

In a survey of more than 1,200 senior executives for its latest Global Fraud Report, the consulting firm Kroll found that 42 percent of companies listed “Vendor, supplier or procurement fraud” as one of their biggest vulnerabilities last year. That’s an increase from just 26 percent in 2010.

Using high-definition streaming video, HD Trade Services lets companies keep a closer eye on their overseas goods. The company’s technology lets you get a close look at the quality and quantity of goods before you actually make a purchase. Logistics providers can get “HD Certification” from HD Trade Services, which will allow them to perform live inspections via desktop and mobile app. And with its Deal Manager, you can forgo manual data entry and automate deals with distributors, freight companies, and the like.

In the demonstration, the founders showed how a customer could click to view details on a deal with an overseas supplier, then click on a button to view live HD video from the site where the goods are being shipped, and either pass or fail the inspection. Internet troubles interrupted the live video in the conference room, however, suggesting a potential flaw in the technology: It depends on a reliable connection on both ends.

To address that significant challenge, the company’s founders say they’re pursuing partners with global freight-forwarders to install HD video inspection stations. Presumably, high-speed internet connections will be an important component.

“Since our founding, the problem of trade fraud has grown at a staggering rate,” said HD Trade Services chief technical officer Daniel Sugarman in a statement today. “Last year, over 100 employees of the world’s leading B2B marketplace were caught aiding fraudsters. In addition to this, trade fraud was one of the main topics of this year’s State of the Union Address.”

“In terms of global trade, it comes down to trust. So I wonder if HD video is really the best way to create trust,” said David Friedberg, The Climate Corp., in an investor panel after the HD Trade Services presentation. Friedberg suggested that social networks might be a better way to vouch for a company’s trustworthiness.

The company was founded in 2011 by Sugarman and CEO Daniel Sperling-Horowitz, who has spent years researching international trade fraud. Sperling-Horowitz first ran into the issue when trying to import electronics from Alibaba.com, but was shocked to find many complaints from a supposedly trusted supplier. That spurred him on to make several trips to China to further investigate trade risk at its source.

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Garden City, New York-based HD Trade Services currently has 5 employees and has raised $100,000 so far from Prime Transport.

HD Trade Services is one of 80 companies chosen by VentureBeat to launch at the DEMO Spring 2012 event taking place this week in Silicon Valley. After we make our selections, the chosen companies pay a fee to present. Our coverage of them remains objective.