Last month (July 24, 2024, to be specific), the LZBlog covered Double Brokering fraud and its effects on the trucking industry. In the time spent researching double brokering, though, there was a great deal of information uncovered about other fraudulent practices in the transportation and warehousing fields. Today, the LZBlog will be highlighting Phishing Fraud; a practice that has seen a great deal of growth in the criminal sector, with a group of researchers in a group called ECapital seeing a 400% jump in phishing fraud in Q4 of 2022, alone. With these figures, identifying what phishing fraud is and how trucking companies can combat it is extremely important to keeping businesses, their drivers, and warehouse workers safe and employed!
Too Many “Phish” in the Sea
Phishing fraud has become an exacting science to the fraudsters participating in such schemes, but what, specifically, is phishing fraud? In its most basic iteration, phishing fraud occurs when someone deceptively masquerades as a legitimate shipper or carrier in an attempt to secure payment for a load of merchandise they have no intention of carrying to its intended final destination. They either take the money to carry the load and run, or they simply take the goods and resell them to pocket the profits.
Those participating in phishing scams have the know-how and ability to take real businesses and their business information and set up copycat accounts. Once this is complete, the fraudsters will try and trick legitimate retailers into paying the fake shipping company to haul a load, but, when the payment is received, the company doing the phishing disappears. Sometimes, the fraudsters end up taking the goods with them as well, leaving the victimized company with less money, fewer sellable goods, and, occasionally on bigger heists, even the truck goes missing as well.
There are certain industries that are naturally more at risk for phishing fraud. For example, the goods sold in the electronics industry are always a high value target because they are almost always in demand. From laptops to cell phones to today’s “smart” thermostats and water flow regulators, the electronics industry has always been a prime target for scammers and fraudsters. With the small sizes of most electronic products and the complexity of the supply chain for electronics, it has been found that they are easy to steal and secret away, and their re-sale value is exceptionally high across the country. Armstrong Transport has found that “a common scam involves fraudsters posing as legitimate carriers, accepting high-value electronic shipments, and disappearing once the goods are loaded onto their trucks.”
Another industry that has plenty of issues with scammers is the CPG industry, or Consumer Packaged Goods. With their broad distribution networks, CPGs offer “multiple avenues for fraudulent activities at various points in the supply chain.” Because of the large number of CPGs moving in every direction across the country at all times of the day and night, many fraudsters have realized that they can work undetected if they move quickly, phishing from one company to another. By posing as legitimate retailers, scammers place large orders and then divert the goods to a different location, leaving the producer out of goods and payment.
“Well, I love her, but I love to” Phish…
Why is it so important to decrease the number of scammers hitting the transportation industry? In 2022 alone, the average value for a load of stolen cargo was over $200,000. For the year, those losses were estimated to be around $223 million over the entire transportation industry. Many experts understand that just one loss of that size is enough to sink a small trucking company. With a growing number of small carriers closing every day in these current market conditions, it is important for the industry take note of this now. By tracking the fraudsters and scammers as they grow more fearless and hit larger and larger companies, businesses are hoping to learn as much as possible about fighting phishing fraud and make a stand back to the scammers.
How are companies combatting phishing fraud? Many industry insiders have been asking for a collaboration with the Federal Motor Carrier Safety Administration, or the FMCSA, to take down fraudsters. Any company that finds they have been a victim of a phishing scam is urged to take whatever information they have and share it with the FMCSA’s Office of Registration in the hopes of recovering lost funds and to keep other companies from suffering the same losses.
However, even the FMCSA has been the victim of hacking and Director Ken Riddle stated that some legitimate information about trucking companies had fallen into the hands of scammers, making for phishing attempts that look even more legitimate than before. Riddle said that the FMCSA has now moved into multifactor authentication systems, and he urges other companies to do the same to cut down on the ability of hackers and scammers to get into real business information. For now, he says that the FMCSA is continuously combing through its over 800,000 current registrants and are hoping to find any fake accounts and close them as soon as possible.
Today, many experts are pressing companies to learn to recognize for themselves the red flags that scammers can sometimes leave out. With due diligence, educational programs, and forward thinking, many industry professionals hope they can stop a phishing scam from occurring in the first place.
- For carriers, it is important to check the email addresses of all incoming business emails. While EVERY employee should be made aware of these concerns, managers and supervisors should pay close attention to email addresses, phone numbers, or anything on a bill of lading that doesn’t match what they know to be true from the retailer or carrier. Mis-matched information is almost always a sure sign that a scam is taking place.
- Watch out for high pressure tactics or offers that seem too good to be true. Everyone is aware that the market is still recuperating from the ebbs and flows of the Covid-19 pandemic. However, if any carrier comes in with significantly lower market rates or can guarantee load capacity on their trucks, even in the busiest times of the year, they can be trying to phish a company in order to get the payment to carry the load or to get the load itself. On top of that, fraudsters know that if a company is given enough time, the scam may be uncovered. Therefore, scammers will push hard for a deal or an agreement to be completed quickly so the money can be made, and the fake company can disappear.
- Companies set up for phishing purposes tend to have irregular paperwork or practices. They also will have no reviews or any kind of online, or digital, footprint. These fake companies will usually put just enough effort into their scam to make their company appear real on the surface, but they do not have the time to create fake social media accounts, reviews, etc. Therefore, carriers should have employees check websites and email addresses to make sure that they are real and functional, and also have supervisors reach out to other companies and get reviews on anyone a business might want to work with. This will ensure, through checks and balances, that each company is on the up and up and is safe to work alongside.
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Meaghan Goldberg covers recruitment and digital marketing for Lionzone. A Patterson, GA native, after graduating from both Valdosta State University and Middle Tennessee State University, Meaghan joined Lionzone in 2018 as a digital recruitment strategist before becoming the social media manager.
Resources:
https://ecapital.com/blog/freight-scams-are-on-the-rise-protecting-your-fleet-from-trucking-fraud/
https://www.cloudtrucks.com/blog-post/freight-fraud-trends-scams-and-prevention
https://www.freightwaves.com/news/fmcsa-standing-up-registration-fraud-team
