Cargo Fraud: How to Fight Back

By Govind Bhatti, Founder & CEO of Haulmate

Whether it falls under the heading of theft or fraud, cargo crime keeps climbing, demanding increased vigilance along the supply chain and greater involvement by stakeholders, who should advocate for stronger anti-fraud regulations.

That’s the take of the Transportation Intermediaries Association, the voice of professional freight brokers engaged in domestic and international commerce to shippers, carriers, government officials, and other organizations.

The most prevalent form of fraud-- cargo theft-- has seen a dramatic rise, with sophisticated schemes such as strategic cargo theft increasing. According to the TIA Fraud Framework, there was a 600% increase in cargo theft between November 2022 and March 2023.

“When people think of fraud in the supply chain, they only see what is happening to a business, they are not seeing the trickle-down effect to consumers and economy,” said Anne Reinke, president & CEO of TIA. “Fraud is a multimillion-dollar problem that needs to be addressed today.”

To provide insights on this vexing and complex challenge and how to fight back by building a more resilient and secure supply chain, TIA has released a State of Fraud in the Industry Report that “reveals the extent of the threat, the financial impact on businesses, and the critical steps the industry must take” to protect itself from fraud in its many forms.

Built on a survey of 200 TIA members, the report highlights the most common types of freight fraud, its overall financial impact on businesses, and recommended ways to fight back against fraud.

Not surprisingly, TIA found that truckload freight is by far the primary target of fraud, with 98% of respondents naming it as the most vulnerable mode. Eight distinct types of fraud were underscored: spoofing, unlawful brokerage scams, fictitious pickups, phishing, identity theft, email/virus attacks, inbound fraudulent phone calls and text messages. TIA noted that “this diversity in fraud experiences underscores the complexity of the challenges faced by the industry.”

Big bucks

The report pegged the staggering impact of freight fraud on businesses. Respondents reported that the average gross cost of fraud was over $402,340, with an approximate per-load cost of $40,760. Those kinds of numbers are high enough to drive up costs for the entire supply chain and that impacts consumers.

Markets currently the hardest hit by fraud include some likely suspects for the highest incidence of theft— California, Texas, Illinois, Georgia, and Florida—as these states are home to key logistics and transport hubs that attract lots of cargo criminals. TIA members reported that the most stolen goods are electronics, solar panels, and household goods, targeted due to their high value and ease of resale.

Nearly 1 in 5 respondents indicated that they spend an entire day each quarter on fraud prevention— 16% reported spending more than 4 hours a day and 34% more than 2 hours a day. TIA pointed out that even those who spend less than 2 hours a day on fraud prevention make up a sizable portion at 30%, underscoring that the considerable time invested in monitoring, verifying, and responding to fraudulent activities cuts into overall productivity and increases operational costs.

Hardening against fraud

The TIA report also presents best practices to combat fraud:

1.    Build a multi-layered approach to prevention, including thorough vetting of carriers; using tech tools like GPS tracking and enhanced verification processes; and corroborating closely with shippers.

2.    Invest in continuous training and education so that all employees are versed in the latest fraud tactics and prevention strategies.

3.    Present a unified effort by all stakeholders in the logistics industry. Shippers, carriers, and brokers must work together to share information and develop best practices for fraud prevention. TIA stated that it provides a platform for members to report incidents, share insights, and learn from each other’s experiences.

4.    Lobby for stronger measures. Legislative and regulatory enforcement measures and oversight are essential to reducing fraud in the industry. Regulatory agencies must focus on resolving pending complaints, implementing penalties for violations, and closing loopholes that allow criminals to exploit the system, stated TIA.

5.    Invest in tech. As fraud tactics evolve, so must the technology used to combat them. Continue to invest in innovative tools that enhance the ability to detect and prevent fraud. This includes deploying advanced verification processes, real-time tracking systems, and artificial intelligence to identify and flag suspicious activity.

For its part, Haulmate trains its staffers to be aware of physical and digital security protocols for each load and to question unusual activity sighted online or along the route. Each Haulmate team member is trained to: 

• Verify identity before sharing information on pickups and deliveries.

• Carefully check and verify email domains.

• Research online to make sure a company exists, including carriers with new authority.

• Check credit scores on factoring websites.

• Check BOLs to ensure the address matches the company information on file.

Stay ahead of cargo criminals by staying on top of where the threats are coming from and armoring your operation against freight fraud in all its forms. If you would like to enhance your operation to avoid cargo theft and fraud, reach out to Haulmate. We’re here, like you, 24/7.