Documentary frauds in foreign trading occur primarily for those commodities that are in high demand. The fraudulent seller would suggest a selling price that is attractively lower, while relying on persuasive documents.
Documentary
fraud relates to many scenarios such as forging, alteration or general misuse
of
the letter of credit and/or the documents that accompany the letter of
credit i.e. bill of lading, commercial invoice, insurance certificate, certificate of origin, inspection certificate, etc.
The common types of
documentary fraud are-
1. Falsified documents, the cargo being non-existent,
2. Cargo is of inferior quality or quantity,
3. Same cargo is sold to two or more parties,
4. Double bills of
lading
issued for the same cargo.