Freight fraud is a severe problem that can have lasting, devastating consequences. It can take on many different forms and is constantly evolving. Ranging from complex and tricky to just plain theft, freight fraud boils down to lying or stealing to make a profit. This guide defines freight fraud, provides examples, and explains how to avoid it.
What is freight fraud?
Freight fraud is a scheme that uses false or misleading information to take ownership of goods or money intended for another entity.
3 Types of Freight Fraud
Freight fraud is not always easy to recognize or define, but knowing what to look for is essential for staying safe. Here are the three most common types of freight fraud:
Identity Theft
Identity theft involves impersonating someone or creating a fake identity to steal money or goods. An identity thief may steal online login information to take over email and financial accounts, transfer money into their own accounts, and coordinate transactions that allow them to steal goods. A thief may also create a fake email account to pose as a broker or carrier, receive money, take possession of the freight, and then disappear.
Double Brokering
Double brokering is a complex scheme that typically goes undetected until it’s too late. In a double brokering scheme, a carrier accepts a load from a broker and then pretends to be a broker to arrange for another carrier to haul the load without clearing that with the shipper or broker. Under these circumstances, the cargo is transported without proper authority or insurance and will likely not arrive at its destination. When this happens, the shipper’s agreement is void, so all parties are exposed to financial risks, liability, reputation damage, and potential loss of FMCSA authority.
Cargo Theft
Even with advances in technology and complex ways to commit freight fraud, cargo still gets simply stolen. For example, a thief with a tractor can hook up to a trailer at a truck stop and drive away with it. Thieves look for opportunities to steal the cargo when the driver is distracted, like using the restroom or going into a store.
5 Freight Fraud Protection Tips
To avoid these types of freight fraud and more, follow these tips.
Track Freight in Real Time
When you send your freight off with a carrier, you no longer have to cross your fingers and pray it makes it to the destination. Thanks to technological advances, you can track your freight in real-time. Place electronic logging devices (ELDs) or GPS-equipped tags in the load and follow it on the journey. You will be the first to know if something seems out of the ordinary.
Avoid High-Risk Areas
Some areas expose drivers to the risk of cargo theft more than others. It is crucial to plan routes ahead of time to avoid areas vulnerable to cargo theft. Talk with the carrier to make sure they know where to keep driving and where it is safe to stop.
Thoroughly Vet Carriers
One of the best ways to avoid freight fraud is to ensure the carrier is who they say they are. To thoroughly vet a carrier:
- Verify their motor carrier authority and DOT number.
- Get a copy of their insurance coverage and verify it is valid.
- Check their licensure and make sure they are licensed to carry the freight.
- Confirm the phone number and verify accuracy before booking a load.
- Make sure their email address matches what’s on their registered authority.
- Call around to check on their reputation.
- Review their credit history, tenure, inspection records, and CSA scores.
Build Solid Relationships
Having a strong, trustworthy network of experienced and honest partners will save you a ton of stress and lower your risk of freight fraud. Take the time to get to know the people you work with and keep trustworthy people close. With the right people in your network, you can help each other look for suspicious activity.
Work with a Trusted Logistics Partner
A quality logistics partner will help you take all the necessary steps to prevent fraud and provide logistics services with integrity. First Star Logistics is a unique asset-based global brokerage company with over 60 years of experience. We take great pride in meeting the needs of our customers, carriers, brokers, and agents. For our customers, we understand that efficiency, safety, and reliability are crucial. We use fast, cutting-edge technology to ensure a satisfactory experience with our specialized shipping services. We support our carriers with the technology, management, resources, and support they need to ensure safe, on-time delivery for FTL and LTL shipments. We provide our agents and brokers with a dedicated management team and proprietary software that empowers our employees to succeed. To work with First Star Logistics, contact us today!
