During Zhao's search for the Avatar, the merchant was told by the admiral to show Aang an ancient Air Nomad pendant as a way of luring him into the Fire Nation's clutches. In return, Zhao promised the man as many ancient Air Nomad relics as he desired.
Before long, he came across Team Avatar as they were browsing a village's collection of supplies for their journey. The merchant showed Aang the Air Nomad pendant, and the Avatar eagerly asked where he had found the purportedly ancient relic; as part of his ruse, the merchant claimed that the necklace was not "ancient", saying that a man from the mountains traded it for medicinal herbs just two days ago.
Later, the merchant went to hide in a mountain cave, dressed himself in Air Nomad clothing, and waited for Aang to arrive. When he came, the man turned toward the airbender and revealed himself to be the merchant. Aang was then ambushed and captured by Fire Nation soldiers. Zhao appeared and revealed that he had sent the man after Aang, all the while gloating about his success in the clever capture. As payment for luring Aang into his trap, Zhao allowed the merchant to take all the relics he could carry. However, Aang managed to free himself and knock down his pursuers, including the merchant, by using the Air Nomad relics scattered around the room as weapons.