A report from the Transportation Intermediaries Association says the freight industry is “under siege from increasingly sophisticated and organized fraud schemes” and must evolve to fight the growing problem.
The professional organization for 3PLs said in its 12-page report that 3PLs have experienced a “dramatic” rise in fraud, prompting an increased need for countermeasures. The TIA collected 200 responses from members from February to August to analyze key trends in fraud.
Fraud has become more sophisticated, leading to calls for action on a federal level, including for a task force to curtail the crime.
The most common form of fraud is cargo theft, which saw a 600% increase between November 2022 and March 2023, the report said. The National Insurance Crime Bureau reports that cargo theft amounts to $15 billion to $30 billion each year.
Financial schemes are growing, including unlawful brokerage and fraudulent invoicing. Other types of fraud include identity theft, in which people impersonate legitimate companies to commit fraud; internal theft, in which employees participate in the scheme; and data theft from cyberattacks.
The average gross cost of fraud reported by respondents was about $402,000. Some companies reported over $1 million in losses, the report said. The average amount lost to fraud per load is over $40,000.
The report highlighted stories from those in the logistics industry impacted by fraud.
Rob Hoffman, CEO of Dedicated Carriers, received ransom demands when someone stole one of his loads and threatened to steal more unless he paid $40,000. Hackers gained access to CBT Inc.’s load board account last year from a phishing scam and posted fraudulent listings under CBT’s name.
Other things identified in the report:
- California, Texas, Illinois, Georgia and Florida reported the most incidents. Forty-eight percent of fraud incidents originated in California alone.
- The most commonly stolen items are electronics, solar panels and household goods.
- Truckload freight is the primary target of fraud.
Companies are investing heavily in solutions to fight fraud, the report said. Efforts include technology investments.
In addition to spending money to stop theft, companies are spending significant time tackling the problem. This affects productivity, the report said. About 20% of respondents told the TIA they spend one day per quarter on fraud prevention.
The most-targeted commodities have a high and easy resale value, meaning companies should implement extra security measures for these goods, the report said.
The report outlined these strategies to fight fraud:
- Collaborate with shippers, brokers and carriers.
- Advocate for regulatory oversight.
- Invest in enhanced technology.
Dukethegod
It was all fun and games until cyber criminals from Armenia realized they can steal freight and no one does a damn thing about it. Stealing 100k freight selling it for a dime on the dollar. 90% of brokers are scared to work with carriers they’ve never worked with before.
JD Hanz
Wow so you mean that having to give our licenses for people to photocopy for annyone to anccess and writing our license numbers on a sheet every driver has access to isn’t safe?!
Josh B
It’s unfortunate and frustrating. I think brokerages need a new strategy. Our company has been told by some companies, sorry we cannot work with you because you’re based out of CA? That’s ridiculous. Some we have hauled 10-50 loads with, we’re now being told sorry you don’t have any current DOT inspections this past year how do we know you’re a legit carrier?! Umm hello, I’ve hauled 10-20 loads for you successfully, well those are our new rules! It’s ridiculous!!
Kelly
California making the rest of the US pay for its poor government policies, lack of theft prvention, enforcement and publicly promoting cargo theft through movies. Not to mention the trucking industry is completely full of corruption, criminals for professional crime networks and corporate fraud with people like Darren Hawkins/old YRC management as well. Prior to this increased crime, most docks had higher skilled union Longshoreman, truck drivers and union security staff.
The criminals are teamed up with people like Hawkins/former YRC management, intentionally bankrupting the trucking companies through PPP loans, theft (corporate and physical
cargo) with intentional gross mismanagement hiring criminals and illegals as professional truck drivers, dispatchers, accountants, and management. Then there’s the lowest paid criminals, unskilled and illegal dock workers working in supposedly secure areas. what the hell do people think is going to happen?