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What Are the Different Types of International Trade Fraud?

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  • Written By: Alex Newth
  • Edited By: Angela B.
  • Last Modified Date: 16 September 2016
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International trade fraud is responsible for the theft of large amounts of money from businesses and individuals, but the scammers responsible for such fraud tend to find new targets on a regular basis, because many people do not know the common fraud types. Phishing, which involves someone mass emailing many different addresses and asking for sensitive information, is one of the most common types of international trade fraud. A letter of credit scam involves someone creating a letter of credit for substandard or non-existent goods and then pocketing the money. Escrow frauds involve international scammers using realistic looking escrow websites to steal money from the user. Many scammers also send counterfeit money orders and checks to legitimate businesses.

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A phishing scam usually occurs in one of two ways with international trade fraud. The most common involves someone telling the recipient that he or she is entitled to a large sum of money. This money is supposedly either from a relative or from a bank that does not want to see the money go to the government, and the hook is that the recipient can collect the money if he or she sends sensitive information. The second method is for the email to appear as if it is from a legitimate international bank or business that the recipient frequents, and to ask users to update their personal information. In both cases, the scammers are trying to get the user’s Social Security number, credit card number, bank name and password or other sensitive information.

An escrow international trade fraud occurs when someone buys a product from someone. To transfer the money, the scammer will suggest using an escrow service. The problem is that the scammer will have created a website that only looks like an escrow service. Instead of a legitimate money transfer, in which the scammer would get money after sending a product, the scammer in this case gets the money instantly and the user gets nothing.

Letters of credit, bank letters promising payment for an item, are involved in legitimate international trade, but scammers also know how to use these for international trade fraud. The scammer promises to ship an item, and the victim gives him or her the letter of credit. At this point, the scammer finds an institution willing to pay off the letter of credit without documents showing that the products have been shipped, or the scammer ships an empty box to get the necessary shipping documents. This means the scammer gets the promised money, while the victim loses money and gets nothing valuable in return.

With fake money orders and checks, a scammer sends the document to a seller. The check or money order is for an amount more than the value of the item, and the scammer asks the seller to wire over the extra amount. After the wire is complete, the scammer has the extra money, while the victim has to pay the full amount of the check when the bank finds out it is fake.

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Discuss this Article

fBoyle
Post 3

International trade fraud doesn't just involve stealing money or goods. It's also considered fraud if someone trades something illegal like weapons and claims that he is trading something else. So no one is stealing goods or money here, but it's still fraud.

serenesurface
Post 2

@ddljohn-- Unfortunately, internet fraud has become very common.

Are you reporting those phishing emails to the Internet Fraud Complaint Center? It's run by the FBI and they will look into these scams to catch those people and to warn other Americans about the scams. You should report the emails if you haven't yet.

ddljohn
Post 1

I get phishing emails all the time. Usually, I recognize them right away because I know that I have no connection with that bank or organization. There have been a few times where I was uncertain, but I did not respond to those either. Instead, I called up the bank or website and asked them if they have sent me an email like that. The answer is almost always the same, that they never send emails to verify sensitive information.

Some companies take precautions about phishing and warn customers about these emails. One company actually described in detail how I can be sure that the email is from them and not someone else.

It's a good idea to never email sensitive information, regardless of who is asking for it.

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