7 Ways to Mitigate Freight Fraud

Freight fraud schemes like double-brokering and cargo theft cost the shipping industry anywhere from $500 million-$700 million annually, FreightWaves reports. During the first half of 2024 alone, there was a 49% surge in cargo thefts compared to the same period in 2023. Citing a recent Cloudflare’s survey, the publication also says there’s been a 400% rise in double-brokering complaints since 2022.

The fraud itself is becoming more intricate and intrusive. Phishing scams, identity theft, payment fraud, fictitious pickups, shipment diversion and load pilferage are among some of the newest crimes being committed. “When double brokering became a child’s game almost, now we have strategic fraud making it even more puzzling to get to the bottom of,” says Samantha Haynes, Director of Customer Success at Revenova.

The good news is that there are some tactics that companies, carriers, and brokerages can use to mitigate freight fraud, and it starts with an awareness of what “could” happen. Here’s a roundup of tips that you can use to save money, avoid delays and keep your freight safe from the bad actors:

• Use good vigilance in communications. The digital age has left the door wide open for pretty much anyone to infiltrate your organization via email or other communication methods. “Always verify the source of emails,” Armstrong Transport Group advises, “and especially those prompting action involving sensitive information.”

• Make secure credential management a priority. “Implement multifactor authentication and educate users on the importance of not reusing passwords across multiple sites,” Armstrong Transport Group advises. You can use password manager applications to generate and securely store strong, unique passwords for each account. Regular security audits and vulnerability assessments will also help you identify and address potential weaknesses in credential management practices, ensuring ongoing protection against evolving threats.

• Put your TMS on the case. In Talking Logistics, Uber Freight’s Chris McLoughlin advises companies to find their own security vulnerabilities and fill those gaps before the bad actors find them and exploit them. He also tells organizations to use technology to their advantage. “Keep a bird’s-eye view on these hot-ticket loads with a transportation management system (TMS),” he adds, “which provides real-time shipment status and location.”

• Develop a plan of action and define everyone’s roles in it. When an event occurs, McLoughlin says its internal stakeholders, brokers, and asset providers must understand the minutiae of the plan to act quickly and save time. For example, is your legal team aligned with handing over product information or video of a driver to law enforcement? What role will you play versus what roles will your freight brokers and asset providers play in an event? “Once you’ve drafted a plan, run regular exercises to identify gaps in your response,” he writes, “update it with always-changing contact information, and allow your partners time to refine their response before a theft occurs.”

• Learn to detect (and avoid) double-brokering scams. Companies lose a lot of money every year to this scam, whereby brokers “subcontract” loads to another broker without the shipper’s knowledge. This creates a chain of intermediaries, with each broker taking a cut of the profits and inflating the overall transportation expense. GrantThorton says companies can avoid this costly trap by doing thorough research and background checks on potential brokers before working with them. “This includes verifying their licenses and insurance, checking their reputation in the industry, and reviewing their past performance,” the company adds.

• Always use secure payment methods. You can use escrow services for payment transactions. The funds are held by a third party and released only when the terms of the contract are fulfilled, ensuring both parties’ security. And always conduct credit checks on new clients or partners to assess their financial stability and reliability. “This can help mitigate the risk of non-payment,” Atech Logistics & Distribution Finally, all freight bills should undergo an audit to check the integrity and accuracy of records at least once a year. Revenova TMS provides robust freight bill auditing capabilities that can help reduce costs, improve cash flow and enhance visibility into freight spending patterns. 

• Get everyone on the same page. Finally, everyone who is involved with the movement of your freight should share your security commitment, including all external transportation and logistics partners. “It might be pretty straightforward to align your internal team on your standards, but if you’re one of the 75% of shippers who outsource at least some of your supply chain, you will need to have important conversations with some third parties,” RXO points out, noting that this can be especially important if you are transporting freight out of a third-party facility. “Make sure everyone who will be involved in loading the freight onsite has been briefed about your expectations for communication and verification.”

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