Preventing International Trade Fraud: Cases and Strategies

In international trade, fraud occurs from time to time, including not only common fraud methods such as contract traps and soft terms of letters of credit, but also various types of fraud in cross-border e-commerce. This article will combine multiple cases to explore different types of fraud phenomena and their preventive measures.

Contract Traps and Prevention

Contract traps are one of the most common forms of fraud in international trade. Fraudsters often take advantage of imperfect contract terms or deliberately create imperfect terms to commit fraud. The specific manifestation is the use of quality clauses, claim clauses, guarantee clauses, liquidated damages clauses and other clauses to commit fraud. In addition, changing contract terms is also a common method, such as changing the main contract terms, transportation terms, payment terms and inspection terms. To avoid such risks, be careful when signing a contract to ensure that every clause is clear and reasonable.

“Pie in the sky” fraud

This type of fraud usually manifests itself in quotations that are much lower than the market price and the hope of using T/T rather than L/C payment method. You should remain vigilant when encountering such situations, especially in the current global economic climate where opportunities for high profits are rare.

Domestic scam cases

In addition to international fraud, there are also many domestic scams. Some criminals attract agents through free samples, price lists, etc., and ultimately obtain profits through various means. What’s more, in the name of “international project investment”, they require a project feasibility report and charge high fees.

Professional fraud

There are various methods of profiteer fraud, such as deliberately setting soft terms in letters of credit. For example, the letter of credit stipulates that the applicant must inspect and approve shipment before shipment, which allows the applicant to refuse to issue an inspection permit when market conditions are unfavorable. Another common method is to make a fuss about “delivering goods without a bill of lading”, such as using a non-property certificate instead of a bill of lading.

Cross-border payment fraud risk

There are various fraud risks in the cross-border payment process, including but not limited to fraud in deposits, prepayments, payments, etc. For letter of credit payment and settlement, both parties and the issuing bank may face different risks. In order to reduce risks, credit risk management should be strengthened, credit investigations should be paid attention to, and a high degree of vigilance should be maintained.

Types of cross-border e-commerce fraud

Fraud in cross-border e-commerce is mainly divided into two types: two-party fraud and three-party fraud. Bilateral fraud usually involves one party defrauding the other party of property by fabricating facts or concealing the truth for the purpose of illegal possession. Three-party fraud is when criminals steal transaction information, impersonate one of the parties, and use time differences and two-way deception to defraud the interests of both parties.

Avoid trade complaints and fraud

To avoid complaints and fraud in trade, you first need to be vigilant and identify potential scammers. Second, avoid over-promising, deceiving buyers, or ignoring buyer demands when signing a contract. After delivery, you need to pay close attention to the logistics situation and assist customers in receiving the goods in a timely manner.

To sum up, there are various forms of fraud in international trade, and preventive measures also need to be diversified. Whether it is the understanding of contract terms or the risk management of payment and settlement of letters of credit, foreign trade personnel require solid professional knowledge and rich experience.