Beware of Shipping Fraud: Tips on How to Protect Your Business

October 4, 2023
Cassandra Gaines

We are currently living in an intricate world of logistics, where the shipping and transportation industry is more critical than ever. However, with its growth, new types of shipping fraud have emerged, posing a threat to businesses involved in the logistics sector.  

Our mission at Carrier Assure is to explore a concerning trend – the rise of fake shippers and carriers, and the invaluable role of brokers in protecting your business from these scams. Let’s Start!

Different Forms of Shipping Fraud

Shipping fraud can cost businesses in the logistics industry millions of dollars every year. Here's a breakdown of some common types of freight fraud targeting shippers and carriers:

  • Fictitious Pickups: In this scam, unauthorized individuals impersonate legitimate carriers and pick up cargo shipments. The stolen shipment then disappears, leaving the shipper with a significant financial loss.
  • Double Brokering: This fraudulent practice occurs when a middleman, posing as a legitimate freight broker, arranges a shipment but fails to disclose that they are working with another broker. The scammer collects fees from both parties without providing any actual service.
  • Business Email Compromise (BEC) Scams: These targeted email attacks aim to impersonate a legitimate company executive or vendor and trick the recipient into authorizing fraudulent payments related to shipping or logistics services.
  • Fraudulent Insurance Claims: This involves filing false claims for damaged or lost goods that were never actually damaged or lost.
  • Hostage Freight: In this fraud scheme, a carrier refuses to deliver a shipment until the shipper fulfills a disputed financial obligation. The shipper's goods are essentially held hostage until the issue is resolved, leading to delays and potentially damaged goods.

Understanding the Fraudsters: How They Work

The first step in safeguarding your business is understanding who the fraudsters are. These criminals come in two primary forms:

  • Fake Shippers: They may contact you, posing as legitimate customers, with shipments that need transportation. But beware; they're anything but real. They often impersonate reputable companies, like "Cassandra Shipping."
  • Fake Carriers: These fraudsters pretend to be carriers, offering to transport the loads you've booked from the fake shippers. They can appear legitimate, making it even harder to detect the scam.

How to Protect Your Business From Shipping Frauds

There are multiple steps you can follow to protect your business from fraudsters. These are our best practices:

  1.  Vet the Shipper:
  • Use search engines and professional platforms like Google and LinkedIn to verify the legitimacy of the shipper.
  • Scrutinize email domains and phone numbers to ensure they match the official contact information.
  • Consider using credit reports from sources like DNB or Experian to assess the creditworthiness of the company before extending credit terms.
  1. Beware of Overcommitting:
  • Be cautious about the number of shipments you agree to transport for a new client, especially if they are demanding a high volume. Fake shippers often promise large numbers to lure in victims.
  1. Verify Carrier Credentials:
  • Check carrier information against reputable sources like the FMCSA (Federal Motor Carrier Safety Administration) website or Carrier Assure.
  • Confirm phone numbers and email addresses against the information provided on these official websites.
  1. Use FMCSA Resources:
  • Visit the FMCSA's website and access the MCS 150, which displays the last update date. This can help you further verify the authenticity of the carrier.

By implementing these preventative measures and fostering a proactive, vigilant mindset throughout your organization, you can significantly reduce your risk of falling victim to fraud. Remember, it's always better to be safe than sorry.

  1. Use Carrier Assure To Predict How A Carrier Will Perform

Consider using Carrier Assure, the first performance scoring software that anticipates how the carrier will transport the goods. It analyzes hundreds of thousands of data points to produce an easy-to-understand score predicting how the carrier will perform. 

With our platform, you don't need to waste time digging through data on a dense website. We receive all of the data directly from the FMCSA, and our algorithms use data science to provide you with resourceful information to help you make wiser decisions. 

Protecting your business from fraud is paramount. The rise of fake shippers and carriers is a real threat that can cost your company not only money but also its reputation. By following the tips provided in this blog post, you can significantly reduce the risks associated with these fraudulent practices and ensure a more secure and prosperous future for your business.

Remember, vigilance and due diligence are your greatest assets when it comes to shipping and carrier fraud prevention!

If you're interested in learning more about fraud in the shipping industry, we'd like to invite you to check out the insights of our upcoming Carrier Vetting Bootcamp, named "More Freight, More Problems’’. 

Although the bootcamp itself might be fully booked, we're dedicated to sharing exclusive highlights right here on our blog.

Find out what you can expect from the bootcamp and stay updated on the latest industry trends and solutions. Don't miss this opportunity to improve your carrier vetting strategies and avoid shipping fraud!