Quest News™

August 31, 2015

Cargo Theft by Identity Theft


In today’s world of high tech crimes, identity theft is an all too common occurrence. Cargo theft by identity theft is steadily growing in the logistics industry. CargoNet, a cargo theft prevention and recovery network, reported that nearly 90 million dollars in cargo was stolen in 2014. Thieves are finding new ways every day to infiltrate companies. Identity theft, fraud or fictitious pick-up is a crime that often goes unreported in national data systems, although, more companies like CargoNet are capturing data to inform law enforcement and assist logistics companies in loss prevention.

Fraud or fictitious pick-up is a form of cargo theft that involves criminals posing as legitimate truck drivers to steal cargo directly from shippers. These criminals will create fake transportation companies, emails and phone numbers. Diligence in vetting carriers will often expose these fraudulent criminals but sometimes, the criminal is a step ahead and working from a different angle – from within. If you’re a freight broker, how do you spot these criminals? In one particular case, a freight broker who was diligent in his vetting process still became a victim.

The shipper, a manufacturing company, contacted a freight broker to arrange a shipment of copper from Georgia to Ohio. The freight broker contacted several carriers who had shipped copper before but was unsuccessful in finding a match so posted the load to a freight board. One dispatcher responded and requested to be setup as a new carrier with the shipper. The dispatcher appeared to be working for a known logistics company. A carrier packet was then sent to the shipper and approved by the shipper. All documentation appeared legitimate. The next day, the dispatcher called the broker to request the pickup number and gave his truck driver’s ETA at the shipper’s warehouse. The broker followed up by calling the warehouse to confirm if the driver had arrived and was told the load had been picked up and would be delivered the following day.

The morning of the supposed delivery date, the broker called the dispatcher to check on ETA. No one answered the phone and a voicemail said that the message in-box was full. Later that day, the dispatcher called the broker to confirm that the delivery had arrived and emptied – delivery complete. All seemed normal until the shipper called asking when the load was arriving. It never showed up at the consignee’s warehouse in Ohio.

The broker tried all means to contact the dispatcher but the phone number and emails provided to him didn’t exist. He then proceeded to contact other employees at the carrier’s company and found that no record of the load existed. The dispatcher he had been working with was a confirmed employee but was informed that his contact information didn’t belong to their company. They advised the broker it was a case of carrier’s identity theft as it had happened to them recently.

The perpetrator was able to not only steal the dispatcher’s identity but also able to provide legitimate documentation for insurance and authority. He also had access to their freight board subscription and was able to view details of the load. This incident of identity theft is one way cargo is being stolen today. What can you take away from this cargo theft incident? Should you reassess your carrier qualification standards? Most importantly, especially in shipping high value commodities, having the right insurance coverage with the right limits is necessary. Falling victim to identity theft can happen to any company, have the right loss prevention standards in place and also coverage for when it does happen to you.

Want to learn more about how the above claim would be covered in our Combined Transit Liability Program? Click here for more information on our Extension for Dishonest Acts of Third Parties.

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