After reviewing hundreds of offers by fake sellers, we have made an interesting discovery: in 90% of the cases you can already tell that the offer is a scam just based on the SOP. These scammers obviously copy their SOPs of each other, and as mentioned in our previous post, the principle Monkey see, monkey do works here as well.
So, in this post we collected you five of these common tell-tale signs of scams that are common in the SOPs of fraudsters. If you encounter any of these, beware and use extra caution when proceeding with the seller.
LOI is not addressed to the company you are dealing with (the seller).
You might have seen LOI templates where the addressee is something like 3M Global, Cranberry private seller, or Cardinal distributor, but never a real, identifiable company like “John Doe Ltd” for example. This is a big no-go in most cases, because your LOI (and other documents) will be used by greedy brokers to harass 3M’s, Cranberry’s or Cardinals genuine distributors, and if you are not careful you can get blacklisted by them, without you even knowing (we have encountered an instance where such an LOI was sent to different 3M Distributors by five different broker groups, and the company ended up blacklisted).
BCL or POF
If you see that an SOP contains requirements like POF or BCL, you will have a bad time. I guarantee it. I cannot stress this enough: never send any BCL or POF to anyone, ever. These documents are extremely sensitive in nature because they contain your financial information, and they will be either used for scams like credit fraud, or simply sold on the darkweb. Do not even consider engaging a seller that requires these, especially if he requires it upfront. Real sellers usually ask for an MT199/MT799 if they have doubts about your financial capabilities.
ICPO as a first step
An Irrevocable Purchase Order (ICPO) required as first step is also a common sign of scammers. In normal business you usually need an FCO (Full Corporate Offer) to issue an ICPO to the seller, not to mention that you should receive a Proforma Invoice as well, before sending anything that is irrevocable. So why are scammers so adamant in obtaining your ICPO? Because they will go fishing with it; they will send it to other brokers and “sellers” in hope that there is someone out there who can actually supply you the products. Fun fact: in 99% of the cases they will not find anybody. (Keep also in mind that there are some real deals requiring ICPOs; these are usually swift moving OTG deals where an ICPO is needed to “lock” the goods from being sold to someone else. However, if this is the case, always verify the existence of the product before sending an ICPO!)
The bad succession
As mentioned earlier, there is a succession how different stages come after each other. Let me show you how this would work in a genuine deal.
This is a standard SOP for trading companies. As you can see, it has a certain logic, how different stages affect each other : a PO is based on the FCO, a proforma invoice is issues, the transfer of the funds is made possible by the invoice etc. Most brokers however fail to recognize this order, and post SOPs where an FCO is issued after an ICPO, or do not even contain vital elements like a proforma invoice.
MT199/799 issued to the attorney / mandate
No, no, and no. Do not issue an MT199/799 to anyone except for the seller. Not to the attorney, not to the mandate, not to 3M Global. An MT199/799 should only be issued between companies that are in legal contact with each other, so in other words, between buyer and seller, not to any third party. These contain just as many sensitive information as the POF or BCL.
+1: A2A calls, and when they are needed
A2A calls are also shady in most cases; interestingly, not even one of the vetted sellers we work with has these on their SOP. According to my opinion, these are usually needed only if payment terms are escrow, because that has to be set up by lawyers, but to do an A2A call when payment is done via Letter of Credit seems like money thrown out of the window, since the funds are released by the bank and not by attorneys.
These rules and practices seem easy on first glance, however it usually takes time until you can use them like a pro. It doesn’t matter if you are a buyer, or an intermediary, by simply keeping these six ground rules in mind, you can avoid scams before even sending a message to anyone just by a glance on the SOP. However, be on guard, because (in our experience) most scams succeed because we all fall victim to our own wishful thinking. So, be on guard if engaging new sellers or brokers, and if you have doubts, feel free to contact us.