Freight Fraud: Trends, Lessons and Resolutions

Freight Rate Central

In an era where technology reigns supreme, the freight transportation industry, like many others, has witnessed a transformative shift. From automated operations to digitalized processes, the modern freight landscape is a far cry from its traditional roots. But with this evolution comes challenges—some age-old, others novel, yet all demanding attention.

The issue of freight fraud in the transportation sector has, unfortunately, been exacerbated in recent years. The blend of technology with old-school tactics has birthed a new breed of fraudsters, ones more cunning and adaptive than ever. They capitalize on the vulnerabilities of a digital age, leveraging the very tools intended for progress to their illicit advantage. From creating deceptive carrier profiles to redirecting entire shipments, their audacity knows no bounds.

Yet, it isn’t a tale of just gloom and doom. These incidents, painful as they might be, offer us invaluable lessons. They’re reminders of the importance of due diligence, the value of continuous learning, and the need for industry-wide collaboration. Every mishap, every misstep serves as a stepping stone toward building a more resilient and secure freight transportation environment.
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This article ventures deep into this realm, unraveling the latest freight fraud trends that plague the sector, reflecting on our personal experiences, and more importantly, charting out a roadmap to defend against such threats. By combining insights, lessons, and resolutions, we aim to foster an environment of knowledge-sharing, equipping businesses to not only recognize these threats but also effectively counteract them.

To the uninitiated, the world of freight may seem straightforward—moving goods from point A to B. But as industry insiders, we recognize the complexities that underpin each transaction, each movement. It’s a world where trust plays a pivotal role, and ensuring that this trust isn’t breached is paramount.

Join us as we embark on this journey, dissecting the shadows that threaten the industry, and shining a light on the path forward. It’s not just about safeguarding our businesses; it’s about upholding the integrity of an industry that remains the backbone of global commerce.

Staying Informed: The First Line of Defense

In the ever-evolving realm of the freight transportation industry, staying static is not an option. As the industry grows, so do the challenges that shadow its progress. In such a dynamic environment, the knowledge of yesterday may not suffice for the threats of tomorrow. This makes staying informed not just a luxury, but a necessity.

Fraudulent trends morph and adapt at a rapid pace. What might be considered a groundbreaking scam today could become common knowledge in a few months. Fraudsters are inventive; they capitalize on the gaps in our knowledge, exploiting the blind spots in our defenses. Their adaptability is their strength, but it can also be their downfall—if we, as an industry, prioritize continuous learning and vigilance.

Being informed isn’t just about being aware of the latest scams or threats. It’s about understanding the broader patterns, the underlying motives, and the technology that facilitates these fraudulent activities. By understanding the ‘why’ and the ‘how’, we equip ourselves with a deeper insight, allowing us to predict and preempt potential risks.

Moreover, vigilance is not a solo endeavor. It thrives on collaboration. Sharing information, pooling resources, and collective strategizing can amplify our defenses manifold. When one of us falls victim to a scam, the shared knowledge ensures that a hundred others thwart similar attempts. In this interconnected world, our collective vigilance becomes a formidable barrier against fraud.

As we delve deeper into the current trends and incidents that have rattled our industry, remember this: every piece of information, every shared experience, and every lesson learned is a tool in our arsenal. The more we know, the better we defend. In this battle against freight transportation fraud, knowledge is not just power; it’s our strongest shield.

7 Current Freight Fraud Trends & Schemes Impacting the Industry:

Fake Carrier Profiles and Bait-and-Switch Schemes

One alarming trend is the creation of fake carrier profiles on legitimate load boards. Fraudsters mimic genuine carriers, using slight variations in names or DOT numbers to confuse shippers.

Real-life instance: A shipper in Texas contracted what they believed to be a well-reviewed carrier for a shipment to Florida. However, once the goods were picked up, contact was lost, and the shipment never arrived. Later investigation revealed that the carrier’s profile was a counterfeit, closely resembling a genuine company.

Payment Redirect Frauds

In this scenario, fraudsters intervene in the payment process. They might pose as a known vendor or carrier and request that payments be redirected to a new account, often citing plausible reasons like “updating their banking details”.

Real-life instance: A logistics company in Ohio received an email from one of their regular carriers requesting payment to a new bank account, as they were purportedly changing banks. Unfortunately, the logistics company didn’t verify the change independently and transferred funds to the fraudster’s account.

Ghost Trucks

These are trucks that appear to function like any other carrier but vanish once they have your cargo. Often, these ‘ghosts’ have counterfeit paperwork, sometimes even displaying fake decals on their trucks mimicking reputable carriers.

Real-life instance: A produce dealer in California hired a carrier to transport fresh fruits to New York. The agreed transit time was five days, but the truck never reached its destination. Upon further investigation, the truck’s provided license and DOT numbers matched with a genuine carrier who had no record of such a job. The ghost truck had mimicked the real carrier’s credentials to deceive the dealer.

Advance Fee Frauds

This involves fraudsters posing as genuine brokers or shippers who lure carriers with the promise of high-paying jobs. After an agreement is reached, they ask carriers to pay advanced fees for fictional reasons, like ‘security deposits’ or ‘insurance premiums’, promising reimbursements that never occur.

Real-life instance: A small fleet operator in Georgia was offered a lucrative contract to transport electronics cross-country. After paying an ‘administrative fee’ to secure the job, the broker vanished without a trace, leaving the operator at a loss.

Double-Brokering and Co-Brokering Scams

In this scheme, a broker, without the shipper’s knowledge, re-brokers a load to another broker. The secondary broker then hires a carrier. This not only complicates the logistics chain but can also lead to non-payment issues for the actual carrier.

Real-life instance: A carrier in Michigan delivered a shipment and, after waiting for 30 days, contacted the broker for payment. It was then discovered that their contract was with a secondary broker, and the primary broker had no knowledge of them, leading to payment disputes.

Identity Theft and Account Hijacking

Modern digital platforms have exposed the freight industry to cyber threats. Fraudsters sometimes gain unauthorized access to accounts of genuine companies, making bookings, and changing banking or contact details.

Real-life instance: A well-established shipper in Oregon found that numerous bookings were made under their name across various platforms. On scrutiny, it turned out their credentials had been compromised and were being used to make illegitimate bookings.

Cargo Theft through Insider Information

Insiders, either from the shipping, warehousing, or even IT departments, might leak vital information regarding cargo, enabling thefts that appear like routine pickups.

Real-life instance: A warehouse in New Jersey experienced a series of thefts where the criminals knew exactly what to take and when. An insider was later found to be leaking inventory data to a group specializing in cargo thefts.

Have A Break, Have a KitKat: The Tale of 2 Stolen Truckloads of KitKats

In the bustling world of freight transportation, trust is paramount. Every day, countless transactions take place, goods shuttling from point A to B, all hinging on a promise of delivery. But for our company, one deal would test that trust to its very limits.

It started like any other. Two loads of Kit Kat bars, a classic treat beloved by many, were ready for transport. Our platform, designed to streamline and optimize shipping, swiftly received a booking. Eager to ensure the candy reached its destination in Carlstadt, NJ, we posted these loads on a certain industry specific and renowned load posting board.

The response was swift. An email from Tristan, representing HCH Trucking, popped into our inbox. As per our rigorous carrier on-boarding standards and procedures, we conducted a thorough vetting process on HCH Trucking as they weree a new vendor for us. Tristan furnished the necessary documents: a current and active operating authority, valid and active insurance with a minimum of $100,000 in cargo liability protection, and a signed carrier packet between HCH and our company. With everything seeming in order, the deal was sealed, and we tendered our loads to HCH Trucking Inc.

The Kit Kat bars were promptly picked up with no delays, and no issues. Our target for delivery was the following Monday and we were on track, but the sweetness of those KitKat loads would soon turn bitter.

A week later, a chilling message arrived. Tristan revealed his true colors, and actually confessed to being a scam artist. He taunted us, claiming the loads were stashed in two different cold storage facilities. The chase was on.

Desperate to recover the stolen cargo, we reached out to one of the facilities. The news was a blow; not only was our merchandise held hostage, but a staggering fee of $8000 was demanded for its release. The clock was ticking; the bars had been stored for over a week. So many questions lingered such as why the KitKat bars were safely tansproted to, and delivered to cold storage facilities. Why was such care taken with loads stolen by a group of thieves. The shipments weren’t stolen at this point as we knew the locations of where both loads of KitKat candy bars were, so how are these criminals making any money on this heist exactly?

We had no time to rationalize, or take these lingering questions to their logical conclusion. We now know where the freight is, and the freight has to deliver! Determined to right this situation, we struck a deal with the first Cold Storage Facility, Anytime Crossdock – Ontario, Ca, and, once again, posted the load on up the board. This is when MKV Transport answered the call! With hope renewed, we onboarded them, and following the same rigorous vetting procedures we tendered the load to MKV, set up payment with Anytime Crossdock so they would release the freight to MKV, and the driver was en-route to Carlsdadt. We had a most peculiar bump in the road, but all is good because we have the customer freight and its headed to its destination. Even though at this point we are roughly $10,000 in the hole due to the extra expenses that accrued to rescue the freight and pay this cold storage facility to release the freight to us. But history, cruelly, repeated itself. The driver collected the Kit Kats and, just like before, vanished without a trace never to be heard from again. The questions that went unanswered initially started to come to life.

Absolutely devastated, we turned to law enforcement, reporting the double deception before proceeding to work with the cold storage facility – Inland Empire Cold Storage, Jurupa Valley, CA, holding onto the 2nd load of KitKats. Meanwhile, our customer, probably wary of the complications, opted for a chargeback, terminating our services.

We decided to share our story to show that this can happen to anyone, and is happening every day across the country. Businesses are shutting down all over America due to situations such as this. Through this painful lesson, we aimed to highlight the pressing need for increased vigilance, collaboration, and innovation to combat such deceptions.

The Kit Kat caper was more than just a stolen shipment; it was a wake-up call. It underscored the necessity to remain ever vigilant in an industry rife with potential pitfalls, constantly evolving to stay one step ahead of those who seek to deceive.

In the face of that daunting setback, we didn’t see an end, but a new beginning. It birthed an unparalleled commitment, groundbreaking innovations with cutting-edge technologies, ignited policies and procedures, and an enduring spirit that roared, ‘Our spirit is unquenchable, and our journey has only just begun!’

So, now lets talk about how we are going to fight this.

Freight Rate Central: Proactive Policy Measures We Have Implemented to Stop Freight Fraud Dead in it Tracks

Enhanced Vetting

The foundation of trust within the freight industry lies in robust vetting procedures. When we onboard new carriers or vendors, a cursory glance isn’t enough. The burden lies on us to delve deep, and we have done just