Freight Scams Are On The Rise: Protecting Your Fleet From Trucking Fraud

eCapital Corp

Last Modified : Jan 16, 2024

Fact-checked by: Bruce Sayer

The trucking industry is grappling with rising levels of fraud, worsened by advancements in technology and a rocky freight market.

Advancement in technology creates both benefits and risks – it has driven industry innovation, but it has also created a pathway to increased fraud. As fleets continue to struggle through a down cycle, the trucking industry is more vulnerable than ever. In the last quarter of 2022, some sources report a 400% increase in fraud complaints across the freight marketplace.

And fraud isn’t limited to just owner-operators and small trucking companies. Incidents of double brokering, load scams, and many other creative fraud scams are now impacting even the largest carrier operations. Industry leaders say truckers and freight brokers are being duped in bigger numbers by bogus operators impersonating the sector’s middlemen.

Read on to learn which types of fraud are posing high risks to fleet managers and large trucking company owners across the country, and see how the industry is combatting these challenges.

Why are fleets seeing a rise in fraud?

The frequency of fraud in larger fleets has gained momentum in recent years as the industry focuses on load acquisition and the business of trucking continues to advance online. Tech-savvy scammers impersonating middlemen use various tactics to steal loads and embezzle payments from online transactions. This is exacerbated by the fact that heated competition for shipments has taken the focus away from risk management and cut short the time spent performing background checks on new business contacts.

As a result, it now appears that fleet managers need double vision, with one eye on load acquisition and the other eye on risk management!

How scammers are capitalizing on freight conditions

Many assume that criminal activity increases as economic conditions worsen. Research has shown that this assumption is inaccurate – there is no proven correlation between the two. However, crime opportunity theory shows that offenders who want to commit a crime seek an opportunity or a practical target. In tough times, the number of susceptible targets increase. Today’s trucking environment provides plenty of both: fleet managers need more business, and evolving technology provides more inroads for technologically-advanced criminals.

Let’s take a closer look at the most common freight scams criminals are using to capitalize on inattention, and gaps in caution, in an opportunity-rich environment:

Double brokering has historically impacted the spot market more than large fleets and high-profile shipping lanes. However, as technology advances, criminals are developing increasingly convincing ways to pose as legitimate middlemen in large deals. In a double brokering situation, illegitimate carriers and brokers often accept a load for a set fee with no intention of hauling the payload. Instead, they pass the freight onto another trucking company for transport at a lower rate and pocket the difference. The most malicious form of double brokering is when the illegitimate party accepts payment, pockets the fee, and disappears without paying the carrier. Don’t let your trucking company get trapped by double brokering. Understand the threat and its consequences and follow steps to mitigate risk before you manage a load, cargo theft is taking a chunk out of fleet profits as some thieves physically steal cargo from where it sits while others develop sophisticated methods to trick shippers, brokers, and carriers to acquire loads intended for legitimate carriers. During the first quarter of 2023, cyber scams and identity theft (also referred to as “strategic theft) rose 600% over the previous year’s same period. The top targets for cargo theft – food and beverages and automobiles for instance – seem to mirror industries most impacted by supply chain shortages and rising costs. According to CargoNet, a freight fraud prevention and recovery company, the total value of cargo stolen last year exceeds $220 Million.

Fuel card fraud can target any driver who purchases fuel on the road – in other words, your entire fleet. Using the same tactics as those who steal credit card data, card skimmers cost businesses and consumers more than $1 Billion annually. Common methods of acquiring your driver’s pin codes include acquiring card data from online hacks or pulling card details from the mail. Fuel card skimmers may also install temporary “card skimmers” right at the pump, which scan a fuel card and steal its information.

Use a fuel card program to save significant costs, but ensure the program provides a robust online account management portal to maximize control and security.

The driver-in-need scam targets fleets with large driver pools. The scammer uses stolen identities or information they have acquired to pose as an actual driver. The fraudster will call the dispatcher to request a money transfer code for a fuel or repair advance and then disappear with the funds.

How is the trucking industry responding to fraud?

Industry insiders are sounding the alarm. The Transportation Intermediaries Association (TIA) established a “TIA Fraud Task Force” in June, through which freight executives will strategize anti-fraud measures and collaborate with the Federal Motor Carrier Safety Administration (FMCSA), the federal agency responsible for managing complaints about fraudulent companies.

Trucking associations nationwide have also called on the FMCSA to tighten anti-fraud measures.

Conclusion

Freight fraud costs the trucking industry billions in fake shipments, siphoned card fees and stolen cargo. The average value of stolen cargo in 2022 was $214,104 – enough to sink vulnerable trucking companies in this period of low freight rates and profit margins. As the trucking industry moves more data to electronic systems, thieves will have more opportunities to steal cargo and intercept or coerce money transfers if freight owners and logistics providers are not careful.

It’s an issue made worse by difficult market conditions. As industry operatives focus on load acquisition in a highly competitive environment, attention is drawn away from risk management. Thieves are taking advantage of this opportunity-rich environment to increase fraudulent activity with much success. 2022 reported losses, estimated at over $223 million in stolen freight, is inaccurate as insurance providers and police forces are saying that trucking crime is underreported.

Fleet managers, and indeed the entire industry, can help prevent theft and fraud by increasing awareness, guarding information, and verifying the identities of new customers through their contact information on file with the FMCSA. A renewed effort to increase awareness and prevent fraud should be a central tenet of any fleet’s operating procedures as the industry moves towards recovery and the freight market rebalances.

eCapital Corp

eCapital Corp. is committed to supporting small and middle-market companies in the United States, Canada, and the UK by accelerating their access to capital through financial solutions like invoice factoring, factoring lines of credit, asset-based lending and equipment refinancing. Headquartered in Miami, Florida, eCapital is an innovative leader in providing flexible, customized cash flow to businesses. For more information about eCapital, visit eCapital.com.