rules** for all employees—especially sales

• avoid sketchy clients and legal “willful ignorance” exposure.

“traffic-light” checklist**

Green = Go, Yellow = Pause, Red = Walk Away.

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🟢 GREEN LIGHT – Say YES

1. Clear Identity
   The prospect has a real domain email, active LinkedIn, and a business address you can Google in 30 s.

2. Clear Business Model
   In one sentence they can explain how they make money (e-commerce, leads, SaaS, donations, etc.).

3. Clear Budget & Contract
   They sign your MSA & SOW without haggling over every clause and pay the first invoice before work starts.

4. Clear Content Ownership
   They hand over logos, text, and images they own or licensed (no “my cousin found this on Google”).

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🟡 YELLOW LIGHT – Escalate to PM / Legal

1. “Just replicate this site I like” (no license).
   → Ask for written permission or redesign from scratch.

2. Rush jobs with overnight deadlines and a cash bonus.
   → Extra money ≠ extra immunity; slow the process and document everything.

3. Industry buzzwords: CBD, crypto, payday loans, nutraceuticals, drop-shipping “branded” goods.
   → Run a 5-minute compliance check (Stripe, PayPal, AdWords restrictions).

4. Third-party payment flow: they want you to plug in their “special” merchant account.
   → You must see the MSP agreement; otherwise, you may inherit PCI-DSS or money-laundering risk.

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🔴 RED LIGHT – Politely Decline (Document Why)

1. “Don’t ask, don’t tell” requests
   “We don’t need contracts, let’s keep it informal.”
   → Willful ignorance starts here; no contract = no protection.

2. Anonymity insistence
   “Leave the domain owner privacy on, use my Gmail, bill to crypto only.”
   → Classic sign of brand-jacking, phishing, or IP theft.

3. Illegal or deceptive purpose
   Fake testimonials, cloaked affiliate buttons, spoofed login pages, pirated content.
   → You can’t claim you didn’t know if a 30-second search proves otherwise .

4. Prior takedown history
   Wayback Machine or Lumen Database shows DMCA complaints against their last site.
   → Walk away; the next takedown will list your server IP.

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Quick “Sketchy Smell Test” (30 s)

1. Google “[client name] scam”, “[domain] lawsuit”.
2. Check WHOIS – creation date <6 months + hidden owner = caution.
3. Reverse-image-search their product photos; if they appear on 20 Alibaba listings, it’s dropship counterfeits.

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Remember

“I didn’t ask” is not a legal defense.
Under willful-blindness doctrine, suspicion + deliberate avoidance = guilty knowledge .

Put these rules on a laminated card or Slack shortcut; if in doubt, tag Compliance and save the chat.

knockoff sellers

“dropshipping branded goods” is a YELLOW-light (pause-and-check) item—even though you’re not legally required to run EIN, credit, or background checks

1. Trademark land-mines you can’t see

   • Most “brand-name” items offered by offshore suppliers are unauthorized.
   • Selling even one unit can trigger a trademark-infringement claim (strict-liability; intent is irrelevant).
   • Penalties start at $1,000–$2,000 per counterfeit and scale to $2 million per mark if willful .

2. Photocopy marketing = copyright strike

   • Suppliers usually hand you stolen product photos, videos, reviews.
   • Using them on the client’s site is copyright infringement even if the physical goods were legitimate .

3. Payment-processor instant death

   • Stripe, PayPal, Shopify Payments, Square auto-scan listings.
   • One rights-holder complaint → account frozen, 120-day hold, permanent ban .
   • Your own merchant account can be put on the MATCH list (industry black-list) making it almost impossible to accept cards again.

4. “But the supplier said it’s real…” ≠ defense

   • U.S. courts apply “willful blindness”: if price is 70 % below MSRP and no written authorization exists, you’re presumed to know it’s fake .
   • Your client will sue you for the frozen cash-flow and lost inventory.

5. Product-liability boomerang

   • Branded electronics, cosmetics, toys, baby gear all carry mandatory U.S. safety certifications (FCC, FDA, CPSIA).
   • Counterfeits skip testing. If a battery explodes, both seller (client) and developer (you) can be named in a strict-liability tort suit—even though you never touched the item .

6. Customs & border seizures

   • A single inbound shipment flagged by CBP can trigger:
     – 90-day detention while they test.
     – $5,000–$10,000 fine for paperwork errors.
     – Public seizure notice that shows up on Google forever .

7. Brand-owner “boom-boom” letters

   • Disney, Nike, LEGO, etc. outsource policing to IP-hawk law firms.
   • First email: “Cease-and-desist + hand over your supplier + pay $15 k or we litigate.”
   • Most small stores settle immediately; legal fees start at $50 k if you fight .

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30-second due-diligence checklist (no EIN/credit check needed)

Step	Free Tool	Green	Yellow	Red
1. Price sanity	Google Shopping	≤ 20 % off MSRP	20–40 % off	> 40 % off
2. Auth paperwork	Ask supplier	Signed distributor agreement	“We’re working on it”	None / excuses
3. Photos	Google Lens	Original shots	Stock images	Stolen promo pics
4. Reviews	AliExpress, Alibaba	4.8+, 2 yr history	Mixed, <1 yr	No history / negatives
5. Brand site	Official retailer list	Listed	Not listed	Explicitly not authorized

If any box is Red, escalate to legal or walk away.

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Bottom line

You don’t have to run formal background checks, but “I didn’t know” is not a legal shield in IP law.
Dropshipping branded goods is yellow because the risk of counterfeit, liability, and processor shutdown is high—and the cost of being wrong is catastrophic for both your client and your own reputation .