International freight transport insurer TT Club views criminal fraud as a major and developing threat in all of its forms throughout the global supply chain. In particular, carrier fraud is a common occurrence. The insurer demands and encourages renewed vigilance, as reported by TT Club.
The almost sole reliance on online tools for conducting business transactions makes it possible for a wide range of fraudulent activities to find opportunities within the convoluted international supply chain. These can take many different forms, from CEO impersonation and existing mandates used in payment fraud to fake invoicing used in procurement fraud.
84% of TT claims involving fraud or deception in 2022 were caused by carrier fraud, in which criminals pose as hauliers and other subcontractors, including drivers with forged documentation. TT is eager to detect these risks and provides guidance to the sector on how to not only spot potential fraud but also reduce and prevent losses due to it.
“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,” says Mike Yarwood, Managing Director, Loss Prevention at TT.
“Incidents of fraud that target international supply chains across the globe are not perpetrated by opportunistic criminals working in isolation but in the majority of cases 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, as the experience of recent disruption to the freight transport system has proved. Our awareness and readiness to protect our businesses must be stepped-up.”
Since 15% of its cargo theft claims involve fraud or deception, TT has developed extensive resources* to help operators protect themselves from fraudulent actions. Examples, in particular, include intentionally submitting fake invoices that appear to be from a reputable supplier but were actually created by a fraudster using the online payment system, as well as repeated or inflated invoices. In other instances that fall under the heading of mandate fraud, a fraudster who pretended to be an organisation that the operator usually paid by hacking into the victim’s email traffic and impersonating a real supplier changes bank transfer details for payment of a legitimate invoice.
However, TT discovered that last year, carrier fraud predominated its allegations of this nature. There have been cases of phoney carriers impersonating legitimate carriers by intercepting shipping instructions from forwarders or shippers and fabricating cargo pick-up or delivery paperwork to steal shipments.
One frequent strategy is for fraudsters to use a freight exchange website to assume the identity of forwarders and give a driver fraudulent instructions. They facilitate the movement of products by matching an authorised haulier with a shipper. The fraudster then coordinates the collection and gives the driver instructions as a “middleman” between these two trustworthy businesses. Once the trucker has picked up the package, the con artist gives new delivery directions to a different address, where the shipment 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.” He advises.
These are but a few examples of the different methods used by those looking to scam supply chain organisations. In order to minimise financial losses and further disruption to already fragile supply chains, TT is committed to maintaining an information flow that will assist the sector in combating such tactics and highlight both its scope and cunning character.
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Source: TT Club