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Fraud poses biggest threat to cargo, says TT Club

[ January 12, 2023   //   ]

Fraud is the biggest threat to cargo, says insurer the TT Club.

The Club says that the almost exclusive use of online facilities to process business transactions allows a myriad of fraudulent pursuits including payment fraud that involves existing mandates and impersonation of executives to procurement fraud featuring false invoicing.

Carrier fraud, in which criminals imitate hauliers and other sub-contractors, including drivers with falsified documents, accounted for 84% of TT fraud or deception claims in 2022.

TT Club managing director of loss prevention, Mike Yarwood, explained: “No one – from freight forwarders, shippers, and carriers to container owners and logistics, ports, warehouse and depot operators – should underestimate how lucrative an industry fraud is. Using sophisticated, low-risk tactics, fraudsters can easily steal large amounts of money or consignments of cargo.”

He said that most frauds are not opportunistic crimes but the work of sophisticated organised crime gangs. They have well-honed methodologies that are adaptable in the face of detection devices and changes in operating procedures.

Examples include submitting false invoices purportedly from an established supplier but actually generated by a fraudster infiltrating the online payment system and duplicated or inflated invoices.

Fraudsters can also manipulate bank transfer details by pretending to be an organisation paid regularly by the operator, hacking into the victim’s email traffic and imitating a genuine supplier alter bank transfer details for payment of a legitimate invoice. 

Fake carriers can intercept haulage instructions from forwarders or shippers and posing as the authentic carrier or falsify cargo pick-up or delivery documentation to steal loads.

One common tactic is for fraudsters to pose as a forwarder on freight exchanges and provide false instructions to drivers, matching a legitimate haulier to a shipper. The fraudster then acts as a ‘middle man’ between these two companies, arranging the collection and directing the driver. Once the trucker has collected the goods, the fraudster provides new instructions to deliver to an alternative address where the cargo is stolen.

“A key aspect of this scenario is that the driver and the shipper are not in direct contact with one another,” explains Yarwood. “To avoid incidents such as this and other frauds it is crucial to make employees aware of the possibilities, to take extra care to verify documentation and instructions directly with customers and/or trusted partners, especially in pressure situations where carrier options might be in short supply or when there are particular time constraints.”

* TT Talk | Be alert to ‘carrier fraud’ (ttclub.com)

   TT Talk | Procurement fraud (ttclub.com)

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