The unfortunate reality is that as people and organizations become more vulnerable, scammers become more active. Since the beginning of the health crisis, there’s been a considerable increase in fraud targeting some of the most-needed industries. This is certainly true for the trucking industry as the lingering effects of the coronavirus pandemic places additional strain on operational and financial management.
This rise in activity has brought both old and new scams onto the radar. The best defense is for trucking companies to take preventative measures and to identify possible threats early. The first step is to be aware of common trucking scams. This article is intended to raise awareness and more importantly, offer tips for preventing fraud.
5 Common Trucking Fraud Scams
- The Load Scam. This is one of the more popular scams, preying on brokerages with freight posted on load boards. The scammer, often using the name of a legitimate carrier, books a load with the broker and then requests a fuel advance to cover over-the-road expenses. Professional fraudsters may even verify the request with a falsified bill of lading to claim the load has been picked up. Once the scammer receives the cash advance, they disappear off the radar leaving the broker out of pocket and still needing to find a legitimate carrier to haul the load.A more aggressive variant of this trucking scam is when the fraudulent carrier actually picks up the load then holds it for ransom demanding an electronic funds transfer as payment.
- The Driver in Need Scam. This is a common truck stop scam in which the fraudster poses as a driver, usually with a carrier having a large driver pool. Using details they likely gained in conversation with a driver or simply by loitering around a truck stop and overhearing information, the fraudster calls dispatch claiming to be a company driver. They then request a cash advance for fuel or a repair.
- False Freight Claims.This trucking scam can occur when the driver is not allowed on the dock during loading and the trailer doors are sealed for security. This is ironic as the sealed doors are part of the fraud. The driver has been denied the opportunity to supervise the loading, to count or inspect the freight, yet is required to sign for piece count. The fraud is not discovered until delivery when the actual freight falls short of the piece count.
- The DOT Scam.There are two variants of this scam. The first is when the fraudster poses as a representative of the Department of Transport or an on-site police officer during a DOT inspection. They contact the trucking company, demanding immediate payment for a fictitious violation. The second version of the DOT scam is when the scammers sends a letter to the trucking company requesting payment to file their DOT renewal. The letter threatens fines if the trucking company fails to pay. Truckers need reminding that the biennial filing of USDOT numbers may be done free on the FMCSA website.
- The Phony Repair Shop Scam. In this creative scam, the fraudster poses as a repair shop performing service on your truck or trailer. The scammer provides a vehicle number, license plate number and the driver’s name as they demand immediate payment before releasing the equipment. This scheme can even be accompanied by a phony invoice emailed to the victim. In a similar trucking scam, the fraudster demands immediate payment for a tow that never occurred.
The above list of fraudulent schemes is far short of the complete list of trucking scams being perpetrated on unsuspecting freight carriers and brokers. The full list is as long as the imagination allows. For example, double brokering is a tricky bit of business with lots that can go wrong. Truck crash fraud is an elaborate scheme resulting in injury claims that could prove highly costly to the trucking company. However, most cases of trucking fraud schemes are common and preventable. Avoiding these fraudulent schemes requires awareness and preventative measures.
Preventative Measures for Avoiding Trucking Scams
To prevent your company from falling victim to fraudulent tactics, eCapital offers the following guidelines:
Validate the Driver
Identity theft is at the heart of many trucking scams. Drivers should always be aware of their surroundings, especially at truck stops and fueling stations – avoid casually revealing company information to third parties.
Dispatchers and company officials with the ability to issue funds should request further validation prior to hitting the “send” button to transfer funds. Most importantly, always speak to the driver whose vehicle is involved before issuing direct funds. It is never advisable to simply send funds to a third party without due diligence. Never accept a phone “handover” from the service provider to the driver as satisfactory evidence of identity. Hang up and call the driver back using the number you have on file to validate authenticity as a company driver.
Validate the Service Provider
Demands for immediate payment for any unscheduled service is a red flag not to be ignored. Before issuing electronic funds, do your due diligence – there are few situations that are so urgent that you won’t have time to properly verify the party requesting payment.
- Ensure the service provider has not simply lifted information from the side of the truck. Requesting the operator’s full name, employee number and date of birth is an easy way to confirm the legitimate identity of the driver and the driver’s equipment being serviced.
- Validate the incoming phone number and caller information against your company’s database, their company website or from a public listing.
- Ensure the area code for the incoming call coordinates with the truck’s GPS location or the driver’s scheduled trip route.
Transfer Funds to the Driver, not the Service Provider
Direct payment to a third party of unknown background is a high-risk practice. The best procedure is to direct funds to the driver and have him pay the service provider independently. Make sure the driver is instructed to obtain a receipt with a valid address and phone number. The invoice is to include the provider’s letterhead and details of services rendered. Validate the business name, address and phone number online or through a directory.
Why You Should Use Fuel Cards in Your Trucking Business:
- Eliminates the need for drivers to carry large amounts of cash.
- Fuel discounts at retail fueling and terminal locations across North America mean more money goes to your bottom line.
- Allows authorized personnel to add funds as required while on the road, much like a personal ATM/debit card; safely and securely.
- Provides a secure and simple way for drivers to pay for fuel, repairs, scales, hotel rooms, receive cash and other necessities.
- Set product, volume and dollar limits, and monitor expenses, allowing you to control costs.
- Safe and secure with security information required prior to all transactions. If lost or stolen, the card can be immediately discontinued.
- 24/7 online access gives you a real-time view of your fleet’s activities.
- Provides detailed information about spending activities and driver progress; automatically transmitted back to the home office.
- Helps you calculate fuel taxes easily based on transaction data.
Awareness and Precaution Are the Best Defense
Use of fuel cards is a definite advantage in the pursuit of cash management security in the fight against trucking fraud. However, there is no better defense than awareness and precaution. Take the time to educate your drivers, dispatchers and office employees about the risks of fraud and incentivize them to take caution to avoid trucking scams.
If your company falls victim to trucking fraud, immediately contact the proper authorities. Notify the FMCSA about the scam and call your bank if you’ve made an advance payment.
Another avenue to consider is to partner with a reputable freight factoring company. Used primarily to improve cash flow, the best factoring companies for trucking are experts in cash management with an array of helpful tools to make your life easier as a business owner. eCapital provides trucking companies with an industry-leading fuel card program, credit check tools and credit risk advice to assist trucking companies with cash management. Our tools, information databases and work practices provide another layer of protection to help avoid trucking scams.
To learn more about how we can help your trucking company grow and prosper, visit eCapital.com