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Stealing the deal

TORONTO, Ont. – Cargo fraud is a $5-billion a year problem in Canada, ($25 billion a year in the US), and is on the rise. For one thing, it’s extremely profitable, and perpetrators have not only a low risk of being caught, but...


TORONTO, Ont. – Cargo fraud is a $5-billion a year problem in Canada, ($25 billion a year in the US), and is on the rise. For one thing, it’s extremely profitable, and perpetrators have not only a low risk of being caught, but punishments are not severe enough to be a deterrent.

Rick Geller, vice-president of risk services with Northbridge, offered some recent statistics and best practices against cargo fraud at a January Toronto Trucking Association meeting.

It’s not unusual, Geller reported, to receive three to four weekly alerts on the “new wrinkles and players” involved in cargo fraud.

“It’s theft by deception, because organized crime takes advantage of the ambiguities in the supply chain process. It also leverages the systemic weaknesses associated with load brokering,” said Geller.

While electronics and pharmaceutical shipments are always hot targets, newer targets include non-perishable food and drink, dairy products, produce and meats, cleaning products, cosmetics, shoes, paper products and diapers.

Through trickery, cargo criminals will obtain legitimate documents and then create a fraudulent storefront of sorts.

“They will create the illusion of being a legitimate carrier,” said Geller.

Thieves will target loads that are being brokered out through load boards or brokers. They will then pose as a legitimate carrier by acquiring and altering documents from legitimate carriers or using these documents to create fictitious companies or subsidiaries, and then pick up the load.

Essentially, they “steal the deal,” said Geller.

“They will contact the carrier and tell them they saw the load on a load board. They will be the nicest people imaginable and they will work hard to convince you that they are a viable partner who can get your load moving. They generally offer rates that are just a bit better than the going rates,” he said.

Performing a cursory scrutiny, at the very least, is the ticket to protection for carriers.

He listed several steps carriers and their employees can take to protect themselves from cargo fraud and theft.

First and foremost, report all incidents, as this data can help show a pattern.

“It’s crucial we get the data. You should also encourage your insurers to report,” said Geller.

You can check a physical address on the Internet, through Google Maps or Street View.

Check with Canada 411 on the Web for a listed phone number.

Providing access to your certificate of insurance online is a danger, said Geller.

“We need to remember that because they are a house of cards, the documents they give you cannot withstand scrutiny. They will never have a physical location or landline telephone,” he explained.

There are also Web sites you can go to that will tell you whether a phone number is coming from a landline or cell. One of the tricks cargo thieves use is voice over Internet protocol, which makes the phone number show up as a landline.

Currently, sites such as www.melissadata.com/lookups/phonelocation.asp and http://search.tollfreenumbers.com/lookups.asp will tell you the service provider of the number.

“Frequently I see an overseas service provider,” said Geller.

You can also join an organization such as FreightWatch International (www.freightwatchintl.com) to keep informed about the latest trends and to network with other carriers.

“The trick is to try and stay current on some of the practices. We’ve seen absolutely everything,” he said.

Validate all documents and information. Watch for “fuzzy” logos that may have been copied from the Internet, for letter fonts and sizes that may not match.

Confirm the carrier’s identity with the load broker. What information do they have and what pre-qualification checks do they do?

Contact the insurer and/or broker to confirm the information they have on the certificate of insurance.

“Approach it this way: say you’re holding a certificate of insurance and this is the information it contains. This way, they are able to confirm it for you,” said Geller.

You can also confirm information on the carrier’s profile on the Customs Self-Assessment Web site. If you’re doing business with someone, advised Geller, “I’d be wanting to look eyeball to eyeball wherever possible.”

Creating your own broker profile of pre-qualified, vetted carriers, and the loads it is safe to give them, is another way of saving you time and lowering your risk of exposure to theft.

Steps you can take within your own organization also help to protect you, as employee fidelity can be a major issue in cargo theft.

Know who you are providing your company information to. Shred your documents, and have a document handling process in place. Properly dispose of the hard drives in your photocopiers and report any suspicious activity to the police.
If an offer is just too good to be true, many times, you can rest assured that it is.

Glen Clement, a detective with the Peel Regional Police Service in the commercial auto crime bureau, said that at last record there had been a 30% increase in attempted cargo frauds in the region, but the problem is such thefts occur across many jurisdictions, with reported frauds and cargo thefts handled by different departments.

Often, there is also a drug component to the crime.

“Cargo theft has a direct relationship to other crimes, like drugs and gangs. So this has increased the complexities around addressing the crimes,” said Clement.

Cargo theft is still classified as a property crime, not an organized crime, which also affects the way it is handled.
Police forces with cargo crime units are frequently overextended, as their duties – as is the case with Peel Region – also extend to covering chop shops and boat/trailer thefts.

Investigative techniques are largely intelligence-driven, said Clement, and Peel Region has a growing file with many trucking companies now providing suspects to a provincial database.

“We have to work together. The public are the police, and the police are the public,” he said.

Many cargo theft contents have been recovered because companies used GPS systems, noted Clement. Some of the thieves will use illegal GPS jammers, and Peel detects against these. Also, many cargo thieves will target a Thursday or Friday shipment, to delay a possible detection.

“The problem with satellite tracking is that there is frequently a time delay if thefts occur after hours and the tracking isn’t activated until the theft has already been realized,” said Clement.

Another issue around GPS systems brought up by Toronto Trucking Association attendees was that the units could be better camouflaged, for example to look like electrical boxes, document holders or lights, so that thieves could not find them and remove them.

Your usual deterrents such as kingpin locks and security systems do provide protection, (when the security system is turned on) but in terms of prevention a good background check on employees is paramount, added Clement.

“We keep going back to this. The recurring theme of companies that haven’t been victimized is that they do checks on employees, they spend money on security, and they use known partners,” he said.


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