Freight Fraud Trends, Scams, and Prevention Tips

One of the many challenges in the transportation and logistics industry is freight fraud, which can pose a serious threat to businesses. Scammers are getting more sophisticated, leading to significant financial losses, disrupted operations, and damage to companies’ reputations. In North America alone, cargo theft increased by 33% in the second quarter of 2024, showing how serious the problem is.

These strategic cargo theft scams can take many forms, from fake pickups and double-booking to stealing identities or even entire cargo loads. The financial repercussions are huge, with businesses losing millions each year. 

But the harm does not stop at financial losses. Supply chain disruptions, delivery delays, and a decline in customer confidence can harm a business. Keep reading as we explain common freight theft schemes and give practical advice on how to protect your cargo.

Common Freight Fraud Trends and Scams

Freight fraud takes many forms, and scammers constantly adapt their tactics to exploit vulnerabilities within the supply chain. Below are some of the most common scams to be on the lookout for:

Payment Fraud 

Payment fraud is a prevalent threat in the freight industry, where scammers employ deceptive tactics to trick businesses into sending money to fraudulent accounts. These freight fraud scams often involve:

• Fake Invoices: Fraudsters create invoices that look like they are from legitimate vendors or service providers, but the payment details are altered to direct funds to the scammer’s account.
• False Payment Requests: Scammers may impersonate a trusted party, such as a shipper or broker, and request payment for services never rendered or for goods never shipped.
• Advance Fee Fraud: In this scheme, fraudsters demand substantial cash payment for services or goods, promising delivery or completion later. However, once the payment is made, the scammer disappears without fulfilling their obligations.

Double Brokering Schemes 

Double brokering is another common freight broker fraud scheme that can cause significant financial losses and operational headaches for carriers and shippers alike. In this scenario, a fraudster acts as an intermediary, or “double broker,” between the shipper and the carrier. They book a shipment with a carrier at a certain price and then re-broker the same shipment to another carrier at a higher rate, pocketing the difference.

This freight fraud practice not only inflates transportation costs but also creates confusion and potential disputes within the supply chain. The carrier may arrive at the pickup location to find that another carrier has picked up the load or that the commercial shipment details or payment terms are incorrect.

Double brokering scams often rely on a lack of transparency and communication between the shipper and the actual carrier. The fraudster uses this gap to insert themselves into the transaction and manipulate the information to their benefit.

Identity Theft 

Identity theft poses a serious threat within the freight industry, enabling fraudsters to gain unauthorized access to shipments and potentially orchestrate other cargo thefts. In this scheme, criminals or organized crime rings steal the identities of legitimate carriers or shippers, using this stolen information to deceive brokers, take control of cargo, and manipulate transactions for their gain.

This type of freight fraud often involves sophisticated tactics, such as hacking into company systems, phishing for login credentials, or tricking employees into divulging sensitive information. Once fraudsters have access to a legitimate carrier or shipper’s identity, they can create convincing documentation and even arrange for pickups and deliveries, all while posing as a trustworthy entity.

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Cargo Theft 

Cargo theft represents a direct and significant threat to commercial businesses involved in shipping and logistics. It involves the unlawful taking of goods while in transit or storage, resulting in financial losses, operational disruptions, and potential damage to a company’s reputation.

Common cargo theft methods:

• Theft from Trucks and Trailers: Stealing cargo directly from parked or unattended trucks and trailers is one of the most direct examples of strategic cargo theft. Thieves may break into trailers, hijack entire trucks, or employ tactics like fictitious pick ups to deceive drivers and gain access to shipments.  
• Distribution Center and Warehouse Theft: Warehouses and distribution centers, where large quantities of goods are stored, are also vulnerable to theft. Warehouse theft criminals may break in, exploit employee vulnerabilities, or even pose as legitimate delivery drivers to gain access and steal cargo.   
• Theft during Transit: Cargo can be stolen while in transit, particularly during long-haul shipments or when transported through unsecured areas, like harbors. Harbor freight theft may target specific high-value goods or opportunistically steal any accessible cargo.

Phishing Attempts 

Phishing is a deceptive cyberattack where criminals pose as trustworthy entities to trick individuals into revealing sensitive information. In the freight industry, this often involves emails that appear to come from familiar companies like carriers, shippers, or banks. 

These emails might urgently request updates to account details, prompt password resets, or contain seemingly harmless attachments that, once opened, install malicious software. The goal of this freight fraud scam is to gain access to confidential data, potentially leading to financial loss, theft of identity, or operational disruption.

Image Source: Canva

Tips to Prevent Cargo Theft and Freight Fraud 

Freight fraud is one of many order fulfillment challenges, and unfortunately, it can have devastating consequences. However, there are proactive cargo theft prevention measures you can take to safeguard your business.

• Thorough Vetting and Verification: Look for trustworthy and reliable business partners for your shipping and logistics needs. Conduct thorough due diligence. Verify their contact information, check references, and use reputable load boards or freight marketplaces. Don’t hesitate to ask for proof of insurance and operating authority.
• Secure Communication and Documentation: Establish secure channels for sharing sensitive information and avoid transmitting confidential data through unsecured email or messaging platforms. Implement robust cybersecurity measures to protect your systems from unauthorized access.
• Red Flags and Warning Signs: Be alert for any unusual requests or behavior, such as upfront payment demands, unusually high rates, or pressure to act quickly. Trust your instincts and investigate any suspicious activity.
• Technology and Security Solutions: Leverage technology to enhance your security posture. Consider using load tracking and verification systems, freight fraud detection software, and cybersecurity tools to monitor your operations and identify potential threats.
• Employee Training and Awareness: Educate your employees about the risks of freight fraud and the tactics used by scammers. Conduct regular training sessions to keep them informed and encourage them to report suspicious activity.

Protect Your Shipments with Brew Movers 

Freight fraud poses a significant risk to businesses, but you don’t have to navigate these challenges alone. Brew Movers is committed to providing secure and reliable logistics solutions, ensuring your valuable cargo reaches its destination safely.

With our extensive experience in the industry, we understand the unique vulnerabilities and complexities of shipping craft beverages, ingredients, and equipment. Our rigorous vetting procedures, transparent communication, and proactive risk management strategies minimize the risk of straight cargo theft, providing peace of mind. 

Contact Brew Movers today for a personalized consultation and discover how we can safeguard your logistics!