You’ll Never Stop Freight Fraud

It’s regrettable but true that no shipper will ever stop freight fraud any more than anyone anywhere will ever stop crime once and for all. But there is a lot shippers can do. In fact, today shippers can do more than ever to identify and thwart fraud attempts, recover stolen freight, and even get ahead of potential crimes and trending schemes.

A one-and-done strategy won’t prevent freight fraud

Cargo theft is nothing new but strategic cargo theft involving the manipulation of data, documents and identities virtually in order to steal freight is growing at an astounding pace—1455% over the past two years according to Loss Prevention Magazine.

The shift highlights an important point about freight fraud. Thieves adapt. They naturally choose the heist of least resistance and they shift tactics once the gig is up on overplayed tactics. This explains the rapid growth of digital schemes. It’s harder to catch thieves operating in the anonymity of the web. Common digital practices used by shippers and carriers today provide new opportunities to steal from the unsuspecting.

Straight theft like break-ins, hijackings, and impersonation operations are still dominant, according to Loss Prevention, but the threats from strategic freight fraud are aggressively invasive. Shippers need to focus beyond straight theft and address a much bigger picture today. 

With strategic freight fraud, the list of methods is constantly expanding.

The new threat from digital thieves

Some experts believe that the profusion of virtual freight fraud is a product of shippers’ and carriers’ own creation with its origins in the pandemic. The capacity shortage and manic drive for speed led to a relaxation of norms and openness to faster, easier digital freight practices. Many personal shipping practices were replaced with load board bookings with new and unknown carriers. Paper has been replaced by pixels. There’s been tremendous turnover among carriers since the pandemic, too

The industry has gotten used to the digital practices and virtual business transactions, but the new ways brought new vulnerabilities shippers are only starting to understand.

Today, thieves can be halfway around the world stealing freight. All they need is a laptop to post or bid on loads, masquerade as a shipper or receiver or double-broker loads. The ability to operate far away from the scene of the crime and American law enforcement is what makes these methods so alluring to criminals—and vexing to the industry.

Worse yet, they’re not always loners, experts say many are tied to organized retail crime. They’re sophisticated about what they steal, too. The top cargo types targeted per Freightwaves include consumer electronics, auto parts, and food and beverages.

High value isn’t always the top motivator, easy-to-fence food and beverages are often targeted. Thieves are smart about how they learn about shipments via information gleaned from load boards or company employees in the know, whether they’re in on the scheme or innocently reveal information they shouldn’t be divulging.

Common freight fraud schemes today

Deceptive pickups

Fraudsters use information obtained through identity theft or use a fake, purchased or inactive MC number to pose as legitimate carriers or drivers. Falsified paperwork, stolen IDs and the perception of legitimacy enable thieves to take possession of freight. Carrier verification and awareness of irregularities and inconsistencies in information are the best defense here.

Double-brokering schemes

Freight fraud related to double brokering is the most common scheme, according to Freightwaves. These heists usually start with thieves fraudulently gaining control of a shipment by posing as a carrier and re-brokering that load to another legitimate carrier. Then the unsuspecting legitimate carrier picks up and delivers the load to a location of the thieves’ choosing. Vetting carriers can expose fake carriers. Carriers can do their part by confirming consignors and consignees prior to loads.

Bill of lading manipulation

Thieves who have stolen the identity of a carrier will pick up a shipment, take it someplace where they can steal a portion of the load and then recreate the bill of lading (BOL) to reflect the short amount. Once the load is delivered to the final destination the receiver doesn’t notice the stolen freight because the count matches the BOL. The ability to spot route deviations is key to uncovering these schemes as well as a host of straight theft techniques. GPS tracking and other telematics like door sensors are essential technologies that alert shippers to theft in real-time.

Hostage loads

Using stolen identities of innocent carriers or a falsified MC number, thieves will go onto load boards to secure loads. Once they take possession of a shipment, they will move the freight to a secret location and contact the shipper to demand a ransom for the return of the load. Even if the ransom is paid, there is no guarantee the freight will be returned. If it is, it may be compromised as in the case of food cargoes. Taking steps to verify all carriers—and re-verify them continuously—is the best way to weed out fraudsters as well as carriers who have bad records. 

Fighting freight fraud is a technology game

Today’s freight bandits may be clever, adaptable and persistent, but the transportation industry has technology tools that are ever-evolving to meet today’s and tomorrow’s challenges.

Every shipper, carrier and freight broker must start with the basics. Employing robust cybersecurity software and practices is crucial. Many of the methods used in strategic cargo theft are the same used in almost every other industry to steal information and deceive companies. Spoofed domains, spear phishing emails and malware that enables data access are all used. Data protection and companywide cyber security training are basic necessities.

Highway software instantly checks essential FMCSA information as well as a host of evolving data points to identify bonafide carriers and flag bad actors. Telltale signs of likely fraudsters that the Highway system will catch include MC and DOC number discrepancies, inconsistent fleet information, suspicious contact information changes, or transient VoIP phone numbers.

Just keeping suspicious carriers out of the consideration set is a big bulwark against fraud. WSI has integrated Highway into a proprietary TMS in a move designed to ensure all carriers in our network meet criteria for legitimacy, safety, capability, and experience.

Leading-edge freight fraud prevention technology must extend to time in transit as well. A fully integrated fraud prevention program is designed to monitor cargo continuously. Telematics are automated communications received from tractor, trailer and cargo throughout a shipment’s journey. GPS tracking is the main focus, but not every carrier or trucker will automatically opt-in to be tracked. Shippers should only work with ones who do. Tracking enables alerts to route deviations and can aid in recovery of stolen loads.

The human element in fraud prevention

As good as today’s technology is today, successfully protecting freight from fraud hinges on the vigilance of people.

Employees trained to only use verified carriers, uphold ID policies during pickups, and spot irregularities on documents can do much to protect their companies from freight fraud.

Employees are more likely to go take extra steps to question irregularities within a freight fraud fighting culture. Companies like WSI invest in programs and training to keep their company practices and employees up to date on the latest schemes and countermeasures.

Today it’s the only way to stay ahead of the new forms of fraud and foster higher awareness.

Forget about isolationist strategies

With the growing threat of freight fraud, there’s an instinct for shippers to remove themselves from the wider freight market by taking the transportation program inhouse or only working with one or a few trusted carriers.

But limiting your stable of carriers limits your access to capacity and competitive rates. In this freight market, you need carrier diversity to ensure you have capacity when you need it, and that you have reliable carriers in place for every lane in your network. Importantly, every one of those carriers has to be verified; especially the carriers you find on the spot market to handle your gap needs.

The best option for shippers is to have access to a wide and varied verified network of carriers. And to get that, you either have to become a freight fraud expert or work with one.

Partner with freight fraud experts

One way or another every shipper today needs the protection of advanced carrier verification and load tracking. Otherwise they risk making themselves easy prey for fraudsters.

If you don’t want to make the investment in the technology, processes, and training to fight fraud, a 3PL freight broker can be an invaluable asset.

WSI is fully engaged in the fight. Learn how our verified carrier network and industry-leading processes protect your freight while providing outstanding capacity for your needs. Reach out to our team.