Freight fraud has become a significant concern in the last several years, with the logistics industry facing increasingly sophisticated schemes that result in substantial financial losses. Estimates suggest that freight fraud costs the U.S. trucking industry over $1 billion annually.
At Corporate Traffic Logistics, we have invested significantly in resources and technology to identify and mitigate risk for our customers. We talked with Brian Kowalski, CT’s Manager of Legal and Compliance, about the growing threat of fraud in the industry and how CT has invested heavily to safeguard customer freight.
What is freight fraud? Freight Fraud is a complicated term to fully define and we like to think of it like an octopus with many tentacles. It can be double brokering, cargo theft, editing shipment paperwork, bribery of shipper/receiver personnel, invoicing fraud, etc.
What are some of the advanced fraud techniques that have come about in the last few years. As technology gets more sophisticated, so do criminals and their tactics. Some of the new ones we’ve seen lately are:
Hackers gaining access to verified email/phone contacts and impersonating legitimate carriers identities to either steal cargo or double broker invoices
Hackers gaining access to a carrier’s FMCSA account through email phishing to change the carriers contact methods that are on file. This makes it look like the carrier has legitimately changed to a new email/phone/mailing address.
Thieves purchase a clean MC with a long history and clean record and begin using it to steal loads.
Explain our processes internally to identify risk in our carrier network. This is a multi-prong approach designed to combat the many “tentacles” mentioned above. First, we have a dedicated Carrier Compliance team that works directly with our operations team to review each carrier contract. This team brings years of experience in identifying any red flags. In addition, we have our own in-house developed software that we pair with third part vetting/compliance software to approach carrier vetting like a detective works a case. First, start with what you know, then vet everything from the contact information, certifications, insurance, safety scores, etc., until you’ve done your due diligence and are comfortable with your carrier selection. We place a large emphasis on “reading the room,” as in paying attention to the cues you receive in any interaction with an outside party.
Why can customers feel secure in our approach? First, no one is immune from fraud. However, we do feel confident that we have a process in place that not many 3PLs can replicate. It’s a substantial investment in time and resources but we feel it is worth it to give our customers that added security.
We have always had very high standards for our carrier network. Many of our carrier partners have been with CT for years and are a trusted and valuable component of our service team. However, as we continue to grow, it’s more important than ever to have a proactive and aggressive process for bringing on new partners to enhance our network.