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The following are some examples of international
trade fraud and advice on how to avoid it.
Example 1 - obtaining samples fraudulently
When an unknown buyer requests samples while
hinting at a large order, it is always wise to
request at least a nominal payment for the samples.
If the buyer refuses to pay the mailing costs,
let alone the sample charge, you are advised to
beware.
Example 2 - false promises leave the exporter
with unsaleable stock
Swindlers often try to convince a supplier that
they are about to place a large order on an L/C
basis. They encourage a manufacturer to go into
early production on their specifications, claiming
that is a test and promising early payment. However,
once production is complete the buyer goes back
on his word, and the manufacturer is left with
unsaleable stock. To avoid this type of situation,
when commencing business with unknown buyers,
it is safer not to agree to early production,
no matter how enticing the offer may be.
Example 3 - demanding discounts by invoking spurious
conditions in documentation
In order to create artificial conditions for
refusing to accept goods or for reducing prices,
some buyers deliberately include vague terms in
the L/C and later claim an intentionally "UNPAID"
clause. A variation is to place orders on L/C
& D/A, but to withhold payment for the D/A
part of the contract.
Example 4 - sending illegal job hunters disguised
as buyers
Some company may send job seekers disguised as
buyers. If you have any doubts, consider the age
and position of the person. Very young or low
ranking buyers should arouse suspicion. When groups
of buyers are encountered, the credibility of
the company should be thoroughly checked.
Example 5 - refusing payment for the second part
of a shipment
After gaining the trust of an exporter in the
first part of a deal by making immediate payment
by T/T, the fraudster then refuses to pay for
the second part of the shipment. When working
on a T/T basis, once the shipment has been made,
if the importer refuses to make the payment, there
is no way for exporter to obtain the money. Therefore,
if you think you're dealing with an unreliable
partner, the T/T method should be used on a pro
forma basis only.
Example 6 - uncollectable payment due to a financially
unstable opening bank
When accepting an L/C from an unknown bank in
an underdeveloped country, be sure to check the
credibility of the bank. If there are any doubts
about its financial condition, it is advisable
to request confirmation of the L/C from a reliable
bank.
Example 7 - refusing payment for goods received
on credit by establishing a new company
Some importers deliberately shut down their existing
companies and set up new ones in order to avoid
payment, leaving exporters unable to collect money.
If your partner suddenly changes his or her company's
name and places a big order on credit, it is wise
to check the company's legal status on the export
contract and shipping documents.
Example 8 - commission fraud in exchange for a
bigger order
Luring an exporter with the promise of a big
order, dragging out the negotiations to keep him
hooked, and then demanding a fee for brokering
the deal at the last minute is another common
type of fraud.
Example 9 - securing goods at discounted prices
by delaying the payment
All transactions on credit should be avoided,
no matter how small the amount. Even though an
importer may not initially intend fraud, if the
payment is delayed, the exporter may end up having
to negotiate a discount in order to get paid,
even though there is nothing wrong with the product.
Example 10 - 419 Scam Mail (Nigerian Scam Mail)
419 scam mail originated in Nigeria but now emanates from other countries,
especially in Africa. The mail begs for help and offers a handsome return-typically
over a million dollars-for the simple favor of using your bank account to transfer some money.
Don't even think about responding-this is a scam of the worst sort.
Learn about other types of Internet fraud at http://www.scambusters.com
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