Winning The War Against Fraud
By Andrej Lavrenc - Independent commodity sourcing agent, and CEO of Raw Polymers Ltd.
Win The War Against Fraud
Buyers, sellers and brokers all share a common enemy: the scammer. With each passing year, scammers seem to become 
more ubiquitous, preying on the strong and the weak alike, and making off with billions of dollars of honest people’s money. This boom in fraudulent activity has occurred in direct proportion to the growth of the Internet. It is no secret that advances in communication technology have opened up the world for trading, and where the title of ‘broker’ was once highly esteemed and difficult to attain, now anyone with an Internet connection can call themselves a broker and start trading.
Hiding behind the anonymity of the Internet, registering sites for mere dollars at a time and creating convincing fronts for businesses which never existed, these scammers mean that the term ‘world wide web’ has never been more accurate. Like a literal web, unwary traders become tangled in seductive threads of lies and are bled dry by the more skillful predators.
As a modern broker, your success depends in large part on building a rock solid reputation for reliability and results. Repeat business is often the best business a broker can get, and it comes as a result of performing well for your clients who are paying you not just to find the right goods at the right price, but to protect their funds from scammers. When a broker is scammed, its not just the money risked on the trade that is lost, it is also a substantial amount of future earnings disappearing as clients lose faith and move on to more reliable brokers.
The good news is that even in today’s world of virtual trading, there are ways to keep things real. This booklet/site will teach brokers, sellers and buyers how to avoid scams and seal real deals which will ensure success and profitability for many years to come.
Who’s Who Of Fraud
The first step in avoiding fraud understanding it, which means also understanding who the players are. This section explores both sides of the fraud coin, offering insight into those that scam, and those who are scammed.
Who Are Fraud Victims?
Fraud victims are often portrayed as naive dull witted individuals who all but throw their money at any opportunity which comes along. This is a stereotype which scammers welcome, as nobody considers themselves a fool, which means that most people consider themselves immune to fraud from the outset. An arrogant trader who thinks he or she knows it all is one who is likely to be stung by experienced scammers who foster the arrogance, using it as a tool to keep the unwitting victim on the hook and in the dark.
It is very dangerous to look down on victims of fraud for a two reasons. The first reason is that the scammed victim could well be you one day if you are not careful, and two, whilst you are gloating and feeling superior, you are not learning from the other person’s mistakes, and are in fact, setting yourself up to fall into the same trap.
The reality is that every trader is a potential fraud victim, and it is the rare (and perhaps non existent trader) who has never been the victim of some fraud, be it minor or major. The old adage ‘pride comes before a fall’ is never more true than when it is applied to international trading.
Who Are The Fraudsters?
Being able to identify a fraudster is an invaluable skill, and one that will grow with time and experience. However even experienced traders can sometimes be taken in by a smooth talker with a slick pitch. An entire section has been devoted to the tricks of fraudsters, so that will not be dwelled upon too much here. Suffice to say, most scammers appear to be very personable people. It is their job to falsely gain the trust of unwitting victims, and many of them are very good at it indeed.
Scammers by Geography
Nigerian scammers have become well known even to non traders, and though I must caution that nationality is not evidence of fraud in itself, it is wise to thoroughly investigate trade leads and offers which emerge from Nigeria and other African nations. As China further develops into an economic superpower, similar scammers are emerging, as are many in Eastern European countries. There are certain commonalities in all these cases, the scammers come from countries which have seen severe economic repression, where making an ‘honest’ dollar is a far greater challenge than in other, more developed countries.
Organized Crime
Organized crime is quite commonly behind many scammers, which is a powerful reason to stay well clear of deals where you cannot identify all parties and sources. The consequences of becoming entangled which such groups and leaving oneself financially, or even physically vulnerable can be extreme. Traders should be aware that in some jurisdictions, organized crime may be integrated into the official bureaucracy and government offices, so additional care should be taken when dealing with business partners in unfamiliar jurisdictions. A trader should always research the unique climate of a new jurisdiction with regards to organized crime, amongst other things. Information on how to do this is provided in later sections of this guide.
Lone Wolves
Perhaps the most dangerous of all scammers, lone wolves are scammers who work alone or in small groups, disappearing completely once the fraud has been carried out successfully, then reappearing under a completely different guise weeks or months later. These scammers are exceptionally hard to catch because they are so independent with few ties, and also because they are often very good at what they do.
In general, scammers and fraudsters have no qualms about defrauding honest traders out of large sums of money. Many show sociopathic tendencies, knowing that what they are doing is wrong, but feeling no sense of guilt or remorse about it. To them, fraud is but a game, and like any game those better at it deserve to win. This can be disheartening for honest traders, but it is a reality in of the world of international business.
Tricks Of A Fraudster
Though fraud is ostensibly a commercial game, underlying all types of fraud are psychological games and tricks that lure the ‘mark’ into giving up their hard earned cash. Many brokers and traders think they are above such games, perhaps because they often use well known selling techniques in order to close deals themselves. A successful broker isn’t necessarily one who has the best trade leads, or even the best prices, it’s one who understands people and knows how to make them feel both excited about the deal that is being presented to then, and confident about committing large sums of their own money.
Scammers and fraudsters use the same techniques and tricks that honest salesmen, marketers, and yes, traders do in their day to day business. The only difference is that the scammer is far from honest. Fraudsters can make millions of dollars a year separating not fools, but overeager, greedy, and lazy people from their money.
Good fraudsters are charming, well mannered, personable people. It is not uncommon for victims of fraud to feel emotionally bereft after being scammed, because fraudsters inveigle their way the affections of the ones they are scamming and become a friend, perhaps even a confidant. The betrayal isn’t only fiscal, it is also personal.
Here are a few questions to ask yourself when dealing with a potential contact:
Do they often turn the conversation to personal matters?
Wanting to talk about you is not just the sign of a friendly person, it may also be the sign of someone trying to ‘profile’ you. The more a scammer knows about you, the easier it is for them to trick you. Scams are all about finding weak points and exploiting them. A single man’s weak points, or ‘buttons’ are quite different from those of a family man, or a married woman, and the scammer knows this and will often try to find out as much personal information about you as possible in order to create a tailored approach.
If you end up discussing how your children are getting along at preschool during the first phone conversation with a potential trading partner, be aware that you may be giving away vital information.. Though there are naturally friendly, chatty people out there, most brokers don’t have the time to talk about other people’s personal lives during work hours, and certainly not at the outset of a business relationship.
Remember, a scammer is trying to get to know you in order to form a rapport with you. They’ll be trying to identify your underlying belief systems, and discovering what makes you tick. Are you trying to support a growing family? Are you in the trading business for a quick buck? Are you an adrenaline junkie? Information that may seem innocent and irrelevant to you can provide a scammer with vital information.
By all means it is good business to develop a friendly relationship with one’s trading partners, but these sorts of relationships develop naturally over time, not in the first contact. Keep things professional, and not only will you be more efficient in your work, you will also be side stepping the potential scammer’s trap.
How do you feel when talking to this person?
Most people, and traders especially, are fairly good at judging people. In many senses, a broker lives and dies by his or her wits. Those who have been scammed often claim that they were suspicious at the outset, but allowed themselves to be lulled into a false sense of security. Don’t make that mistake. If you are suspicious at the outset, maintain your guard and make sure all procedures are followed to the letter, and your ‘homework’ is well done in terms of verifying contacts, goods, the vessel the goods are to be shipped on, every element of the deal. No matter how friendly you may feel towards a trading partner, it is always a mistake to take them at face value and omit to do the leg work which is required in every transaction.
Scammers often get away with fraudulent deals because the trader comes to trust them to the point where they don’t bother to do the essential groundwork which should be done when it comes to any deal. If you find yourself cutting corners, or neglecting to research the details of the trade, be warned that you could be the victim of a scam in very short order.
Are you excited and anxious when it comes to this trader and their proposed deal?
One of the oldest sakes tricks in the book is creating a false sense of urgency. The victim of a scam is whipped up into a frenzy by the scammer’s talk of limited time offers, high demand commodities, special invitations, and other such verbal traps which make the victim believe that not only is this the best deal they will ever get, they must take it now, now, now!
As a trader, you already know the value of being cool and calculating when it comes to business. Hundreds of thousands, even millions of dollars are often at stake, which is far too much money on the line for the trader to be making decisions based on emotion. If a potential partner tries these cheap tricks on you, it may be time to walk away, even if the deal is not a scam, this is not the way reputable traders do business. The global market is not a second hand car yard, and you don’t want to be dealing with people who use that sort of approach.
Does the deal have you slavering at the mouth?
Perhaps the main tool in the scammer’s arsenal is the victim’s own sense of greed. Every year, thousands of people loose millions of dollars chasing after ‘dream deals’. Scammers offer products at less than half their market value, explaining away the suspicions of the trader by claiming that the goods available because of seasonal excess, or because the original buyer fell through. No matter what a ‘trader’ tells you, remember that it is called a market value for a reason – that’s what a commodity is worth on the open market. Nobody in their right mind would sell anything for substantially less than the current going rate, and this is especially true in the world of international commodity trading. A private seller may discount a car or house because they need a quick sale, a reputable broker with access to the open market does not need to discount their product by large percentages, ever.
Advising against purchasing goods which are being sold for a fraction of their value seems so obvious as to be entirely redundant, but a large number of traders are suckered into scams this way because their greed takes over, and they trust the scammer because unlike them, he has done his homework and knows exactly what buttons to press, and they put their money, or perhaps worse, their client’s money on the line, and lose the lot. This can be a career ending mistake. Don’t make it.
Tools Of The Fraudster
In addition to the elements listed in the ‘Tricks of the Fraudster’ section, here are some additional tools that scammers often use.
Useless Documentation
It is surprising how much nonsense documentation is out there in the world of trading. Oftentimes these useless documents are the result of the desire of fraudulent or simply desperate traders to ’seal the deal’. The buyer thinks they are bound by documentation that actually has no legal standing or use whatsoever. Sometimes useless documentation arises when traders with experience in one commodity try to trade a new commodity without learning the protocols associated with that particular commodity. Be aware that every industry has their own standards, and every country has different rules which govern trading in their jurisdiction. Buyers, sellers, and brokers all need to educate themselves on the proper legal procedures for their industry and location.
Offshore Havens
Offshore havens are paradises for scammers, but also legitimate locations of business for those who wish to protect their assets. Offshore havens attract scammers due to the privacy they guarantee, and also through legal protections which are extended to offshore businesses operating in the haven. In many such jurisdictions, bank accounts are not able to be viewed or touched by third parties, even when the owner is being prosecuted for fraud.
The Broker as a Tool of Fraud
As a broker, one runs the risk of being put in the unenviable position of being simply used to commit fraud. Scam ’suppliers’ make offers which brokers then take to their clients without doing the necessary leg work to verify them. The upshot is an upset, defrauded client, and a broker facing legal action. Whilst it may be unfair to prosecute based on fraudulent intent, certainly brokers who allow their clients to be scammed are guilty of negligence.
Though the Internet is the source of many legitimate trade leads, it is also the source of dead ends and scams. Sometimes offers are posted on boards years after they have expired, in other cases, legitimate leads are tweaked to suit scam artists. All too often, eager traders pick up on these leads and present them to their clients as potential deals. The client, trusting the trader, makes a financial commitment, and subsequently loses their investment in very short order.
As a trader, it is your responsibility to be certain of the legitimacy of an offer before you present it to your client. Though verifying trade leads can sometimes be arduous, and the temptation to get the offer on the table before someone else does can be great, it is exactly these feelings that have allowed scammers to flourish in the new trading world.
The barriers to becoming a trader have fallen with the proliferation of the Internet and related technologies, and people who at one time would have been unable to conduct a career as a trader are suddenly able to wheel and deal with the best of them. The pond has become a great ocean teaming with small fry which predatory scammers feed upon and grow rich and fat whilst clients become disillusioned and promising trading careers are ruined.
The Number One Form Of Fraud
The major form of fraud taking place in international trading today is documentation fraud. It is quite common in many industries that the goods are never sighted by trader or buyer until after the transaction is complete, monies paid, and goods shipped. Though this may seem odd to the uninitiated, it is a successful method of conducting trading because the seller does not receive payment until after the goods are shipped. In an ideal world, this means that the seller must prepare the goods for shipment, have them inspected by independent inspectors, and then ship them before they collect payment, which they do so presenting the documentation from the inspections and shipping company. The financial instrument which allows this to occur is called a letter of credit.
A letter of credit is a document issued by the buyer’s bank which assigns the value of the letter to the beneficiary (the seller) upon presentation of documentation which confirms that the goods have been shipped to the buyer. However, if documentation is falsified by the so called seller, and the bank makes payment on the letter of credit, then the buyer can easily be out both the cash and the goods through no fault of their own. The reason for this is explained more thoroughly in the next section, ‘Letter of Credit Fraud’.
Remember that banks deal in documents, not goods. This means that a scammer who appears to have the right documentation can often make off with the proceeds of a Bank Guarantee or Letter of Credit before the poor victim even knows what happened.
Letter of Credit Fraud
Letters of credit provide great capacity for fraud because they are used in transactions where goods are not sighted directly by the buyer, and are often paid for after shipment, not upon receipt, thus trading globally provides great capacity for profit, but also great capacity for deception.
Letters of credit have proved to be one of the safer financial instruments, and have a long history indeed, however they are vulnerable to fraud due to the fact that they are entirely dependent on documentation. If documentation presented along with a letter of credit appears valid, then a bank will pay the amount stipulated on the letter of credit. If the transaction is later revealed to be fraudulent, the bank takes no responsibility for the buyer’s loss. In fact clauses in the Letter of Credit itself specifically absolve the bank of any responsibility for paying out
These clauses are outlined in the UCP 600, a document issued by the ICC (International Chamber of Commerce) which covers the Uniform Customs and Practice for letters of credit. This document is made up of several Articles which comprise the guidelines under which letters of credit are issued, used, verified and otherwise handled. Article 34 is a specific disclaimer which absolves banks of any responsibility in the event of document fraud.
UCP 600 Article 34: Disclaimer on Effectiveness of Documents
A bank assumes no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any document, or for the general or particular conditions stipulated in a document or superimposed thereon; nor does it assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods, services or other performance represented by any document, or for the good faith or acts or omissions, solvency, performance or standing of the consignor, the carrier, the forwarder, the consignee or the insurer of the goods or any other person.
Buyers should therefore be wary when it comes to issuing letters of credit, being aware that whilst there is a certain level of protection inbuilt into the letter of credit, an unscrupulous scam artist with well forged documentation can quite easily claim the full value of the letter of credit, leaving the buyer with no goods, and no legal recourse.
In many cases those perpetrating fraud into the millions are never caught. The money is sent to offshore sheltered accounts, and the scam sellers disappear underground. For this reason it is imperative that traders seeking to deal with sellers verify the authenticity and background of the seller. Scammers normally do not spend years building solid reputations simply to destroy them with one dirty deal, which means that a buyer can protect him or herself simply by researching a seller’s background, or a broker’s background if one is going through a trade intermediary. If there is little to no background, steer clear, at best this means that the trader or seller is inexperienced, at worst, they are a scammer.
A clear sign that a proposed transaction may be fraudulent is when a commodity is offered far below market value. Whilst it might be tempting to try and pick up a cheap deal often advertised as stock which has gone unsold after another buyer pulled out, or which was found to be surplus after a bumper crop, one must keep one’s head. Scammers often trap buyers by their greed, enticing them into deals that are quite simply too good to be true, and making off with their money whilst the buyer gets nothing.
This makes for a rather intimidating trading climate for some buyers. Realizing that they have little to no protection in the event of fraud, one might wonder how it is that more fraudulent activities are not reported. Indeed, the playing field seems skewed towards fraudsters, and banks, whilst happy to keep one’s money, are disinclined to safeguard funds when a letter of credit is presented.
However, doing a little research is an excellent way to protect oneself. Fraudulent documentation can be detected by doing a little research. Does the carrier exist? Can the reports be independently verified? Accepting things at face value without checking the veracity of claims is a surefire way to eventually become the victim of a scam, which brings us to our next section, preventing fraud.
Financial Instruments And Financial Instrument Fraud
The most secure form of financial instrument is a Letter of Credit, though even these are not entirely scam proof. A letter of credit allows a buyer to make a financial commitment to a deal and not expose themselves to financial loss without the seller first dispatching the goods. Letters of credit have been used for centuries, and are in many ways the backbone of international trade.
Bank Guarantees
Bank guarantees are riskier than letters of credit as they do not require documentation in order to be honored. A bank guarantee is simply a document which guarantees the beneficiary payment of a certain sum in the event of their client defaulting on a transaction. Banks are happy to issue bank guarantees as long as their client has sufficient funds in place, and once issued to a beneficiary, a bank guarantee can sometimes be used to fraudulently obtain funds.
Bank guarantee fraud also takes place in the reverse instance. In some cases, scammers issue fake bank guarantees as performance bonds, financial guarantees against loss on the part of the buyer. A fake bank guarantee is a serious matter indeed, and in many cases it is the innocent bearer of the bank guarantee who is prosecuted when it is found to be fake, not the scammer, who is long gone.
There are also instances in which bank guarantees are sometimes ’sold’ at a discount. This is a scam intended to trap the unwary trader who may not have the funds in place to arrange for their own bank to issue a bank guarantee. Along comes a brilliant offer, a bank guarantee selling for less than its stated value. This is a scam. Bank guarantees are not documents which can be sold or leased, they are issued from a bank on behalf of its client. The bank guarantee itself cannot be transferred to another party, though the proceeds may be assigned to another party. Simply put, the beneficiary of a bank guarantee can request that the proceeds of the bank guarantee be paid to another party, but they cannot assign the bank guarantee to another party who then draws on it.
For this reason, leased bank guarantees are also a scam. In both cases the unwary trader pays a substantial sum of money which represents a fraction of the alleged worth of the bank guarantee. The scam artist then makes off with the funds and the trader is left with nothing.
Long story short: Bank guarantees are not tradable items. Do not attempt to buy or lease a bank guarantee, you will be scammed.
When accepting a bank guarantee, one should exercise great care and caution. The first order of business must be to ensure that the bank guarantee is issued by one of the top 25 world banks. Small operations in tax havens often operate small banks, which are near impossible to hold to account if things go wrong. This also applies to small national banks, which, depending on their location, may be restricted in their ability to trade on a global scale. This is particularly an issue for USA based traders, as the patriot act forbids major US banks from dealing with many smaller offshore banking institutions. A bank guarantee issued from an unknown bank may be effectively worthless even if it is real.
Signs of Investment Fraud
Investment fraud is one of the most common forms of fraud because it is a nebulous area to begin with. Successful investing requires a shrewd understanding of markets, a knowledge and understanding of the field in which you are investing, the financial climate surrounding the industry, and other relevant factors pertaining to a particular investment. It is quite common for fraudsters to attempt to solicit investments from the unwary, claiming incredible returns in very short time frames.
The three main signs of fraudulent investment are:
Impossibly high returns.
If an investment is presented as an opportunity to triple your money inside a year or similar such glib claims, it is likely to be fraudulent. Fraudsters always appeal to the mark’s sense of greed, and will do their best to impress upon them how lucky they are to be offered such a special opportunity.
No risk.
Fraudsters will almost always claim that an investment is a ’sure thing’ with very low risk. In reality, the higher the possible returns, the higher the risk. High returns with low risk is a pipe dream.
Limited Time Offer.
Because the fraudster wants your money, and wants it now, they will not want you to go away and research the offer, nor will they want you to think about it. If this ‘excellent investment opportunity’ requires you to invest in short order (quite often then and there), then the savvy investor walks away.
What the fraudster is trying to do is first appeal to your greed, then reassure you that it is perfectly safe, then when you are hyped up and excited about the deal, get you to commit right away. The fraudster takes your money and is gone before you even realize that you’ve been had.
Keys To Fraud Prevention
You might be forgiven for feeling a little dismal about the world of international trading. Opportunities are rife for scammers, and legal recourse for those who are scammed is scarce. Too often scammers are never caught, or if they are, they simply serve their time and go on their merry way, living on the profits of their fraudulent transactions which are often sheltered in so called ‘tax havens’, which provide sanctuary not only from taxation, but also from legal proceedings. In many jurisdictions an entity can open a bank account or a trust which can then not be touched, even if the money is proven stolen in another jurisdiction. Because the cure is sometimes impossible to obtain, prevention is the key to avoiding fraud. Fortunately, legitimate brokers and traders have a wide range of weapons in their arsenal which can be used in the fight against fraud, they just have to make sure that they actually use them.
Know Your Market
In all things, knowledge is power. This is especially true when it comes to commodity trading. A successful trader needs to know much more than how to obtain an letter of credit and contact sellers and buyers, he or she needs to know the industry they are working with inside and out. If you are trading Brazilian sugar, for instance, you need to know and understand the Brazilian sugar industry. You need to be able to answer questions like:
What is Brazil’s production capacity?
Who are the major producers?
When is the peak season?
What are current market rates for Brazilian sugar?
Many get caught out in sugar scams because they are lured by promises of impossibly large shipments for ridiculously low prices. Many times the trader being scammed does not know that the shipment they are being promised is pure fantasy, because they do not understand the market.
For instance, take the following example. A scammer offers 20 million tons of Brazilian ICUMSA 45 sparkling white sugar.
Suzie Trader leaps at the deal, not knowing that shipments of millions of tons of ICUMSA 45 sugar are virtually impossible to obtain for a new buyer. In reality, Brazil produces relatively little ICUMSA 45, and the bulk of it is sold ahead of time to traders who purchase it on the futures markets. Small amounts of Brazilian ICUMSA 45 can occasionally be obtained if there is a surplus after harvest, but new entrants to the market will not be able to secure large shipments in their first foray into the market.
In spite of this being fairly common knowledge which can be obtained with just a little research, many people are scammed out of millions of dollars after attempting to buy several million tons of ‘discounted’ ICUMSA 45 Brazilian sugar.
Know The Price
All commodities have a price, and whilst small fluctuations occur, and discounts can be gained by purchasing in bulk, reputable traders still sell commodities at market rates. If the market rate for sugar is currently 10 cents a kilogram, offers selling sugar for 3 cents should be immediately discarded. Those who try and take advantage of such deals are usually the first ones to be taken advantage of themselves.
Scammers sometimes try to explain away the lowered price by claiming that another sale fell through, or that the material they are selling is ‘excess’. Don’t be fooled by such claims. Every commodity has a market value for a reason - there is a demand for it. If a supplier genuinely has a commodity in their possession which is worth a certain amount there is no way that they are going to contact an hitherto unknown trader and try to sell it to them at a reduced price. Think about it, if you had a car to sell, even if it was a spare car, would you sell a $50,000 machine for $500? No.
Google Is Your Friend
The Internet provides a vast resource for traders. Simply Googling the details of a potential trade can unearth useful and relevant information, and save a trader a great deal of wasted time and potential fiscal loss.
Then there are multiple forums where traders congregate and share tips and information. These places are veritable mines of information, and while none of it should be taken entirely at face value, it will point you in the right direction. These are excellent places to make new contacts and to deepen your understanding and knowledge of trading. Time spent learning more about your field is never wasted time, as even small snippets of information picked up in the course of conversation can prove to be invaluable later on.
Common Sense Is Your Ally
Tales of scams are sometimes as ridiculous as they are sad. In some cases, traders are lured to foreign countries under the pretense of ’seeing the goods’ themselves. Of course, they are also encouraged to bring with them cash to exchange for the goods. Those who take scammers up on these types of offers can quite often end up dead, killed for the cash they trustingly brought with them.
In today’s world, no trade should require you to carry large amounts of cash on your person at any time. The only possible reasons for anyone to do this are illegal ones. Cash is a means of avoiding the prying eyes of the law, and those who wish to avoid the eyes of the law are not the ones you want to be dealing with.
Don’t Be Afraid To Offend Your ‘Friend’
If a potential buyer or seller becomes offended because you background check them, their firm, and their credentials, it is wiser not to deal with them. The scammer will always try to develop a personal relationship with you in order to make you trust them. Your attempts to check them out independently will therefore be tantamount to betrayal of your new ‘friendship’. Remember that this is business, and that your money, your reputation and indeed your life could be at stake.
Those who take themselves seriously as traders do develop friendships and business relationships, but they do not allow them to supersede common sense. A reputable trading partner will not only not mind you investigating and verifying them, they may well encourage it, or provide references. Once again, these references should not be taken at face value, but should be investigated as well. Do the referees actually exist? Did the trades they claim to have undertaken with this person actually take place?
Being a successful trader is not unlike being a detective, and though it may be time consuming to delve into the backgrounds of new trading partners, it is infinitely more time consuming to be scammed.
Get Global
Becoming familiar with the country with which you are trading is also wise. Understanding business practices in the jurisdiction with which you are trading will help you evaluate whether your partner is acting in good faith, or if they are setting you up for a scam. There are variances from country to country.
Being familiar with the practices and laws of your trading partner’s country will also allow you to investigate them more thoroughly. The best way to learn about a country you wish to do business in is to contact your embassy in that country. Embassies are goldmines of ‘on the ground’ information, and they are usually pleased to assist citizens in their dealings with the foreign state.
As has been mentioned in previous sections, in some countries scams aren’t just run by small time scammers, they are run by large organized crime groups who can sometimes own entire banks. In these cases, a little research is not enough, because the corruption runs right up into governmental and commercial ranks. This does not mean that you have no recourse however, it simply means that your knowledge base needs to be wider than the one your potential trading partner provides you with. Contacting your embassy in the country can provide valuable help in avoiding these types of scams, as these crime syndicates are quite often well known.
What’s Their Feedback Like?
Who are you dealing with? Who else have they dealt with? Scammers often pull up stakes once they have defrauded one victim and move on, this means that they often do not have much, if any ‘back story’. If the person you are dealing with claims to be very experienced and well established in his or her field but nobody has ever heard of them before, a large red flag is raised.
A little like Ebay, good traders have lots of positive feedback, an independently verifiable reputation, and a public history. It is always more of a risk dealing with a ‘new’ trader than one who has already proven their reliability and expertise in other areas.
Commodity Trading Manual
Until now very few books dealt with International trading, importing and exporting. Books on international trading or commodity markets are generally geared towards large corporate purchasing or export managers. Up untill now Intermediaries such as Export Trading Companies and Brokers had to individually learn a complex system of application involving the highest levels of International finance. Those without experienced mentors in the industry were utterly lost.