Offered headless corpse of their son ... Diane and John Foley, the parents of James Foley. Picture: AP / Jim Cole Source: AAP

A source who is a middleman contacted by ISIS to broker the deal told BuzzFeed that ISIS is trying to present it as an act of mercy for the family and a “humanity case,” it was reported.

James Foley was the first US hostage to be beheaded by an ISIS militant in a graphic video recording.

JAMES FOLEY BEHEADED

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Family offered his headless corprse for $1 million ... US journalist James Foley, pictured in Aleppo, Syria, who was beheaded by the Islamic State extremist group. Picture: AP / freejamesfoley.org, Nicole Tung Source: AAP

Since August, the terrorist group overtaking large swathes of Syria and Iraq, has beheaded two more Americans and a Briton in similar displays of barbarism.

The Islamic fundamentalist group, which has overrun large sections of Iraq and Syria, killing thousands of people in the process, had been financing its military by selling oil produced by the wells in the areas it has captured and by collecting ransom from the governments of its non-American hostages.

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About to be beheaded ... American journalist James Foley with the Islamic State extremist who is about to kill him in Syria. Source: Supplied

But with the price of crude oil now plummeting and the US and Britain standing firmly by their policy to not pay ransoms, ISIS — also known as the Islamic State — devised the plan to sell the corpse.

It is offering his family a DNA sample to prove that the body it is holding really is his.

“They ask for $1 million, and they will send DNA to Turkey, but they want the money first,” the source told Buzzfeed. “They will not give the DNA without the money.”

The source said that he is concerned the US will stop the deal even if the family wants it, because the government nixed a ransom demand before Foley’s death.