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Logistics Scams Overview
- Fake Freight Forwarders: Fraudsters pose as legitimate freight forwarders, offering attractive rates and services. They collect payments upfront but fail to deliver the promised services, leaving shippers stranded without their goods. Many of them are based outside the U.S.
- Fraudulent or Illegal Brokering: This involves a fraudulent broker accepting a shipment from a shipper and then re-brokering it to another carrier without the shipper’s knowledge. (This can be done in levels, with the shipment being brokered again and again.) The scammer collects payment from the shipper and disappears, leaving the second carrier unpaid. One way this happens is by stealing the identifies of existing legitimate brokerages. For example, you might get an email that looks like it’s from Customodal.com, but it’s actually from an imposter url like “@customodalWI.com”.
- Cargo Theft: Organized crime groups target specific high-value shipments. They use various tactics, such as identity theft to gain access to shipping information, intercepting shipments, or physically stealing cargo from trucks and warehouses. There was a recent situation in the news where the broker was negotiating for a ransom amount to get the freight back and the thief was selling the product through an online store while negotiating for its return!
- Fraudulent Carriers: Fraudulent carriers may provide false documentation and insurance certificates to gain trust. They then either fail to deliver the cargo or steal it outright. Additionally, they will accept a load then turn into an illegal broker and broker the freight to some other unsuspecting carrier who never gets paid. This type of fraud is particularly challenging because it often involves sophisticated forgeries.
- Phishing and Cyber Attacks: Cybercriminals use phishing emails and other tactics to gain access to sensitive information such as shipping schedules, payment details, and personal data. They may then use this information to steal cargo or perpetrate financial fraud.
- Fuel Surcharge Scams: Some logistics companies inflate fuel surcharges or add unexpected fees to invoices. This can be difficult to detect unless closely monitored and cross-checked with actual fuel prices and agreed terms.
- Ghost Vendors: Scammers create fictitious companies or vendors, submitting invoices for services or goods that were never provided. If these invoices are not scrutinized, they can be paid out, resulting in financial loss. Similarly, there may be collection letters received by clients that look like they are from name brand carriers like Fedex or Estes referencing a past due invoice number and amount….but not the actual invoice copy. There is always a conveniently place address to mail your payment to. But its a scam! They made the letter to look real, there is no invoice, and a certain % of companies will pay it rather than research it because they keep the amounts small…..$95-$175 range.
- Counterfeit Goods: In the supply chain, counterfeit products can be mixed with legitimate ones, especially when dealing with high-value goods. These counterfeit goods can cause significant reputational damage and financial loss when discovered.Sources: (StrataFlows)(Home | Plante Moran)(National Today)
How Customodal Can Help You Navigate These Scams:
Partnership with a logistics provider like Customodal means there is trust and a real relationship. The customer and Customodal work together on each shipment before it leaves the pickup to verify the carrier making the pickup is the carrier expected and that all is in order.
This kind of old-fashioned, high interaction eliminates the cracks the criminal operate in better than any other strategy.
It also involves:
- Due Diligence and Verification: Customodal has stringent due diligence processes to verify the legitimacy of freight forwarders, carriers, and vendors, reducing the risk of dealing with fraudulent entities.
- Advanced Monitoring Systems: We utilize advanced technology to monitor shipments in real-time can help detect anomalies and prevent cargo theft and other scams.
- Employee Training: Customodal provides comprehensive training for our team to recognize and report phishing attempts, fraudulent documentation, and other suspicious activities.
- Regular Audits: We conduct regular audits of transactions, invoices, and operations to help detect and prevent fuel surcharge scams and ghost vendors.
- Cybersecurity Measures: We implement cybersecurity measures to protect sensitive information from phishing and other cyber-attacks.
Common Logistics Scams and How Customodal Can Help Navigate Them
The logistics industry is vulnerable to a variety of sophisticated scams, which can cause significant financial and operational damage. Understanding these scams and knowing how to counter them is crucial for any business involved in logistics. Here are some prevalent scams and how Customodal can help navigate these challenges:
1. Fake Freight Forwarders and Drayage Brokers
Overview: The majority of fake freight forwarders and drayage brokers operate outside the United States, with Ukraine being a notable hub despite ongoing conflict. These fraudsters pose as legitimate companies, collecting payments upfront without delivering the promised services.
Prevention:
- Due Diligence: Customodal can verify the authenticity of freight forwarders and brokers through rigorous due diligence processes, including background checks and validation of credentials.
- Advanced Technology: Using technology to track and verify transactions can help detect fraudulent activities early.
2. Fraudulent or Illegal Brokering
Overview: This scam involves multiple layers of fraudulent brokers handling a single load, sometimes up to four layers deep. These brokers often steal the identities of real brokerages, altering contact information with regulatory bodies to redirect communications.
Prevention:
- Layered Verification: Customodal ensures that each layer of brokerage is verified and legitimate. Regular updates and cross-checks with regulatory bodies can prevent identity theft.
- Communication Security: Customodal uses secure communication channels to prevent unauthorized changes to contact details.
3. Cargo Theft
Overview: Cargo theft is a significant issue, with sophisticated rings targeting high-value shipments. An example includes a $150 million cargo theft ring in California. Thieves sometimes negotiate ransoms while simultaneously selling stolen goods online.
Prevention:
- Real-Time Tracking: Customodal employs real-time tracking of shipments to monitor their location and status continuously.
- Emergency Response: Quick response protocols in case of theft can minimize losses and recover stolen goods more efficiently.
4. Fraudulent Carriers
Overview: Fraudulent carriers accept loads and then illegally broker them to unsuspecting carriers, who often remain unpaid.
Prevention:
- Carrier Verification: Customodal verifies the credentials and track records of carriers before engaging them.
- Contract Enforcement: Strong contracts and legal agreements help ensure accountability and deter fraudulent activities.
5. Ghost Vendors
Overview: Scammers create fake vendors and send collection letters that look like they come from reputable carriers like FedEx or Estes, demanding payment for non-existent invoices.
Prevention:
- Invoice Verification: Customodal verifies all invoices against actual services provided before making any payments.
- Fraud Detection Systems: Implementing systems to detect and flag suspicious invoices can prevent payments to ghost vendors.
Combatting Fraud with Trusted Partnerships
Overview: Building a trusted partnership with a logistics provider like Customodal can significantly reduce the risk of fraud. Close collaboration ensures that each shipment is verified and that all procedures are followed meticulously.
Benefits:
- Trust and Relationship: Customodal fosters a close, interactive relationship with customers, ensuring transparency and accountability.
- Pre-Shipment Verification: Customodal works with customers to verify carriers and shipment details before pickup, closing gaps that criminals could exploit.
By adopting these strategies, Customodal not only helps prevent logistics scams but also enhances the overall security and reliability of your supply chain operations.
➜ Customodal is your go-to guide in the freight industry! We’re the experts in efficiencies and savings and can help you navigate the complexities of your operations. Discover all the amazing benefits we offer – get started today!
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