- Home
- Bankruptcy and Bankruptcy Code
- Business Entities
- Departmental Operations
- Credit Practices
- Collection Practices
- Financial Analysis
- Financing Methods
- International Credit
- Customs Regulations
- Exporting and Importing
- Financing International Sales
- International Banking
- Letters of Credit
- Amendment to a Letter of Credit
- Assignment of Proceeds of a Letter of Credit
- Commercial vs Standby Letter of Credit
- Engagement Clauses in Letters of Credit
- Installment Letters of Credit
- Letters of Credit
- Discrepancies in Letters of Credit
- Revolving Letters of Credit
- Standby Letter of Credit, Irrevocable Standby Letter of Credit
- Letter of Credit Fraud
- Letter of Credit Risks to the Seller
- The Three Cs of International Credit
- Denied Parties; Export Administration Regulations
- Letter of Credit Discrepancies
- Ex-Im Bank
- Export Credit vs International Credit
- Letter of Credit Instructions
- Credit Insurance; and the Foreign Credit Insurance Association
- The Foreign Corrupt Practices Act
- The Growth of International Credit
- Credit Insurance; Trade Credit Insurance; Credit Risk Insurance; International Credit Insurance
- Export Credit Risk; International Commercial Risk, Export Trade Credit Risk
- Forfeiting; International Financing
- International Credit Policy; Open Account vs. Letter of Credit
- Foreign Financial Statement Analysis; IASB; International Accounting Standards Board
- Marine Cargo Insurance; Cargo Insurance; Ocean Marine Insurance
- International Payment Terms; Methods of Payment for International Sales
- Political Risk Insurance; Export Credit Insurance
- Silent Confirmation
- Sovereign Risk; Political Risk; Country Risk
- Uniform Customs and Practice for Documentary Credits; UCP 600
- Gathering Information about Foreign Credit Applicants
- International Open Account Terms
- Common Reasons for International Customer Payment Default
- Analyzing Foreign Financial Statements
- Laws and Regulations
- Payment Methods
- Performance Measures
- Security Instruments
- Career Management, and Job Change
- Credit Website Tools
- Upcoming Educational Events
- Credit and Collections Tools and Tips
- Tips on Creating Better Emails
- Generating Effective Credit Correspondence
- Exporting
- Accounting
Letter of Credit Fraud
There are several types of fraud possible relating to Letters of Credit. The buyer would be concerned about the beneficiary of a Letter of Credit submitting fraudulent documentation to the issuing bank. If the documents presented conform to the L/C requirements, the issuing bank may honor the presentation and remit payment to the seller under the L/C.
The seller as the beneficiary of a Letter of Credit is also subject to the risk of fraud. For example, if the seller receives a counterfeit Letter of Credit and ships against it, they will not receive payment for the goods shipped from the bank that proportedly issued the L/C. To address this risk, sellers should require that all L/Cs be either Advised or Confirmed. One of the benefits of Advised or Confirmed L/Cs is that the authenticity of the L/C itself is verified before the L/C will be Advised or Confirmed.
© 2011 by Michael C. Dennis. All Rights Reserved. Mr. Dennis is a consultant. He can be reached by email at mcdennis13@yahoo.com