The Rise of Fake Commodity Flows And Internet Brokers

A Familiar Beginning

It usually begins the same way. An email, a Telegram message, or a LinkedIn introduction. The sender claims access to diesel, jet fuel, gold, copper cathodes, or fertilizer allocations. Within hours a procedure document appears. It looks sophisticated. It references refineries, inspection companies, tank farms, and bank instruments.

But when basic verification is requested, the conversation changes. Direct contact with the seller becomes impossible. Corporate documents cannot be shared. Logistics questions are avoided. The entire transaction depends on documents rather than cargo.

Real trade works in reverse. The shipment exists first. Documentation follows the shipment. Payment instruments support a verified commercial transaction. The structure is explained in our guide to documentary letters of credit , which shows how banks pay against transport and title documents rather than promises.

The Internet Broker Model

The modern commodity broker often carries no operational responsibility. There is no shipping risk, no inventory, and no financing exposure. Instead, the broker forwards procedures between unknown parties. Each participant believes another participant controls the cargo.

The result is a transaction chain where nobody has title to goods. Yet everyone expects payment.

The Documents Used

Fake flows typically rely on copied paperwork. Standby letters of credit are requested before contracts exist. Inspection reports appear before cargo is loaded. Tank storage receipts circulate without verifiable terminal confirmation.

Inspection agencies referenced in these documents, such as those providing trade and commodity verification services , only issue reports after physically inspecting goods. If a report exists before a shipment schedule exists, the transaction is almost certainly fictional.

Similarly, a genuine bank guarantee requires underwriting. Our overview of standby letters of credit explains why banks issue guarantees only after credit approval and collateral support.

Why Lenders Reject These Deals

Financial institutions do not reject commodity transactions arbitrarily. They reject them because the core requirements of finance are absent. Title cannot be proven. Cash flows cannot be controlled. Counterparties cannot be verified.

Trade finance lenders rely on verifiable documentation, contractual relationships, and payment mechanisms. A transaction built entirely on forwarded procedures cannot be underwritten.

Real transactions are evaluated using underwriting methods similar to those described in our trade finance underwriting framework.

This Article Is Awareness, Not Gatekeeping

This article is intended to raise awareness rather than discourage participation. Commodity trading is a legitimate global industry with real opportunities. However, it requires knowledge of shipping, banking, insurance, and contract law.

Those seriously interested should begin with education before attempting transactions. Understanding payment instruments is essential. A starting point is our educational material on how letters of credit work.

Industry knowledge is also available through recognized bodies. The International Chamber of Commerce Incoterms framework defines delivery obligations in real contracts, while maritime operations are covered through BIMCO shipping training programs.

Once participants understand these mechanisms, real opportunities become accessible through structured channels such as the trade finance lender network , where transactions are assessed based on documentation and logistics rather than marketing claims.

The Real Impact

Fake flows harm legitimate businesses. Exporters become cautious of new buyers. Banks impose stricter compliance procedures. Smaller importers struggle to access funding. The market becomes less efficient for the participants who actually need it.

Commodity trading still functions through the same fundamentals it always has: identifiable counterparties, verified shipments, and bank-controlled payment structures. Paper alone does not move goods.