Commodity scams: warning signs every buyer should know

• Advance-fee schemes: fees for registration, documents, tank storage or inspection before delivery.
• Phantom cargoes: diesel, jet fuel or gold offered on attractive terms without verifiable product.
• Instrument schemes: SBLCs, bank guarantees or SWIFT messages offered for purchase, lease or “monetisation”.
• Identity fraud: emails from domains imitating real refineries, banks or traders.

The FBI’s Internet Crime Complaint Center (IC3) warned in a public service announcement in March 2019 that fraud actors scam investors through fictitious standby letters of credit. It stated that SBLCs are not traded or bought and sold and are not themselves investment vehicles, and advised not to attempt to purchase or invest in an SBLC, because such investments do not exist.

Offers to “lease”, “monetise” or “discount” an SBLC for a fee follow exactly this pattern.

The IC3 announcement describes claims of “blocking of funds” or “proof of funds”, typically with the use of a SWIFT MT 799 or MT 760. Typical tricks are screenshots or PDFs presented as SWIFT messages, or demands that a buyer’s bank send an MT760 before the seller has proven anything.

Only banks exchange SWIFT messages. Whether a message was really sent can only be confirmed by your own bank.

1. An unsolicited offer arrives for EN 590 10 ppm or Jet A-1, often for very large monthly volumes.
2. The buyer is told to issue an ICPO and accept the “seller’s procedure” without changes.
3. Next comes a demand for an SBLC, MT760 or proof of funds, while the seller’s identity and refinery remain vague.
4. Then fees appear: for a dip test, a tank storage receipt (TSR), “injection” or document legalisation.
5. After payment, delays and new excuses follow, and the product never materialises.

Genuine sellers can be identified, accept independent inspection and work with bank-secured payment against documents.

EU sanctions prohibit the import of refined petroleum products from Russia and also restrict products refined from Russian crude oil in third countries. Buyers therefore need a documented origin, verifiable through refinery, terminal and inspection documents. This is general information, not legal advice; the applicable rules should be checked for each transaction.

The IC3 announcement lists being asked to pay an advanced fee prior to funding as one of the warning signs. In physical trade, legitimate costs such as inspection or freight are agreed in the sales contract and paid under its terms, not demanded upfront by an intermediary for unverified goods.

• Compare the sender’s domain letter by letter with the official website of the company.
• Be wary of free email addresses for large commercial offers.
• Call the company on a number from its official website or register entry, not from the offer.
• Treat contacts that refuse video calls, office visits or written company correspondence with caution.
• Watch for company names that change between documents.

The IC3 also names unnecessary secrecy and the signing of a non-disclosure agreement among its warning signs. Genuine counterparties understand that verification takes a few days. A deal that cannot survive a proper check is not a deal worth doing.

1. Check the company, its directors and address in the official commercial register.
2. Ask your own bank to verify any bank instrument or SWIFT message.
3. Confirm proof of product with the terminal, warehouse or inspection company through official channels.
4. Agree inspection by an independent company such as SGS, Bureau Veritas or Intertek.
5. Pay only against documents through a verifiable bank, never in advance to unverified parties.