A letter of credit is talked about as a secure way of making payment for items. Many Apple offers that seem legitimate say they will accept a letter of credit as payment. But are these safe?
From the FBI website:
[i]"Payment on a letter of credit generally requires that the paying bank receive documentation certifying that the goods ordered have been shipped and are en route to their intended destination."[/i]
From The Wholesale Forums:
[i]Compared with West Union or T/T, L/C payment is much safer. But, there is no 100% secure payment. Consult with your local bank; you will be surprised to learn some professional scammers use L/C ripped people off. It is rare though. [/i]
Notice they said nothing about if you received what you ordered or that the goods were inspected prior to releasing payment.
A letter of credit or LC is an obligation taken on by a bank to ensure payment if certain criteria are met during the sale. Once these criteria are met the bank releases the funds to the seller. First the buyer chooses the issuing bank that will issue the LC. You usually have to purchase the letter of credit and then send it to the seller before the end of the transaction. The beneficiary of a letter of credit does not have to be the actual seller and it can be another person or group like a broker. So be careful who the LC is payable to. Does your LC pay the actual supplier or someone else?
If you have a revocable LC the issuing bank can cancel or alter the LC at ANY TIME BEFORE PAYMENT. Even if the goods have been shipped to the buyer this LC can be changed.
An ILOC or irrevocable letter of credit is a letter of credit that CANNOT BE CANCELLED. It guarantees that a payment from the buyer to the seller WILL BE RECEIVED at a particular time for a specified amount. This ILOC cannot be changed WITHOUT THE CONSENT OF THE SELLER or all parties involved if more than one beneficiary. It is similar to sending someone money via wire.
A LC payable at sight means that payment will be made to the seller once they present the correct documents to the bank. They will have their money regardless of what you receive.
It is to your benefit to at least have these points mentioned in your LC:
1. Delivery date of goods.
2. Product specifications.
3. When the bank will receive specific documents.
4. Anything else the buyer can think of that will ease the transaction.
Agree on these with your seller BEFORE YOU OPEN A LC.
What risks do you have as a buyer when using a LC?
1. Bank errors.
2. Not receiving goods.
3. Not receiving entire number of goods.
4. Damaged goods possibly caused by shipping company.
5. Poor quality goods.
The only guaranty in this industry is to ACTUALLY KNOW WHO YOU ARE DEALING WITH. If you have never met them and you plan on doing $50,000 (or more) worth of business with them then you may be in for a bad surprise. I have attached a document for download on specific ways sellers will steal from you via a letter of credit.
webwizdublin wrote:Hi Glen just reading your post, thanks for great info.Patrick in IrelandThank you. I apprieciate it Patrick.No problem, this is what I do is help others trade safely. Have you seen my YouTube? http://www.youtube.com/user/MidwestGSM?feature=mhee
I just got this offer from a MidwestGSM member. Please use due diligence.
i have 8 iphone 4 16gb brand new in the box, there not sealed but the plastic is still on the phone and not unlocked but i am willing to take a good price on them.
This is not an offer from a verified supplier so do your homework before you purchase. If you know any details on this business let me know.
In stock , ready for inspection in UK:
500 pcs Iphone 4, 16 GB, Black, UK Specs, SIM Free, new
400 pcs Samsung i9100 , original , EU specs, new
367 EUR /pcs
Ph: +40 268542886
Mobile: +40 736 926 530
E-mail : cwcbrokerage@-----> ge-mail.com
Video on how to tell if you purchased a refurbished phone that the seller told you was NEW.
You will never be ripped off if you stick with MidwestGSM and myself.