The Best Tips for Preventing Freight Fraud in the Trucking Industry

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Operating a trucking firm and pleasing customers can be a stressful affair. Between looking for more business, learning how to prevent fraud, and ensuring you deliver each shipment on time and remain profitable, there is little time for distractions.

Trucking fraud costs legitimate businesses over $80 billion every year. Not only do they suffer financial losses, but they also miss out on opportunities to do more business in the future. 

No one should have to encounter freight fraud, fake shipping companies, or identity theft. Here is a comprehensive look at some common trucking scams to help you learn how to prevent fraud from hurting your firm.

Keep an Eye Out for These 5 Freight Fraud Scams

1. Chargebacks 

A chargeback happens when a customer disputes a transaction on their statement through their bank. When a merchant ignores or cannot validate the legitimacy of the disputed transaction, the bank will end up withdrawing the value of the entire transaction from the merchant’s account to give back to the customer. Not only that, but the bank will also charge the merchant an additional fee for their troubles. 

Chargebacks hit certain sections of the trucking industry hard, leading to merchants losing $5.8 billion in 2016 alone as a highlight of the issue. They can potentially hit between 5% and 15% of a firm’s invoices — which translates to around 2% to 10% of lost revenue for a trucking company. Common chargebacks include defective ticketing and late deliveries, among others.

To avoid chargeback scenarios, it’s best not to take card payments when it’s hard to authenticate the customer’s identity and billing address. Receiving such information over the phone, for example, is one scenario you should avoid, despite the temptation not to lose the business. 

If a customer transaction hits the $1,000 mark and you must use the phone, you need to get voice authorization. Additionally, ensure you get a signed consent form from the customer once you conduct a walkthrough. 

Business data analytics can help you avoid chargeback issues by identifying potential customer fraud attempts. To reduce such instances, you can pinpoint chargebacks that happen due to a mismatch on the ‘address verification service’ (AVS) and the ‘card verification value’ (CVV) numbers. 

2. Fuel Pump Fraud

One of the most common types of identity fraud for trucking companies occurs when drivers fill their tanks with gas. Scammers can add magnetic strips to payment terminals to steal payment card information. Some malicious actors even place fake keypads on top of the existing ones to capture your PIN as you enter it. 

When drivers are fueling up, they should inspect the keypad or card reader for signs that something is out of place. Always compare the payment device with the next one over and spot any variations that might be of concern. Does the payment device look suspicious? Try physically moving it. If it stays solidly in place, you have nothing to worry about.

Furthermore, whenever paying with cards, you should only use those with an EMV chip. These cards help keep your transaction more secure by keeping the authorization data on the card without transmitting it. Plus, a fraudster can’t use a magnetic strip to capture your payment information during transmission. 

One of the best ways to prevent fuel pump fraud is by adopting trackable fuel cards for your fleet so that you can watch activity on the card and spot suspicious activity as soon as it happens. 

3. Fraudulent Charges

In general, payments are one area that business frauds look to infiltrate. To combat these efforts, your trucking business must proactively handle payments across the board.

Whenever embarking on a trip, ensure that you only take the card you need to facilitate payments for that specific trip. If you bring a fuel card, carry it separately from the fleet card to reduce the chances of someone infiltrating your payments when you lose your wallet. 

Whenever you’re using your fuel card, don’t take your eye off it. Ensure you have it in view the whole time and take it back before doing something else. Along the same line, never give your fuel card number to anyone over the phone or by writing it down. Commit it to memory to avoid some unscrupulous person coming across it.

One of the ways that you can spot hidden fraudulent charges is by scrutinizing your fuel card reports. Make it a habit to go through them in detail and immediately contact your card issuer when you notice unfamiliar transactions. If you retain your expense receipts, it will be easier to compare them against the card statements. 

Also, if you’re handed a blank receipt, never sign it. Draw a line across any empty space over the totals.

4. Fake Load Booking

Fraudsters can collude with a driver to steal a load. In such a scenario, the malicious actor will steal your trucking company’s identity and place it on the side of the illegitimate truck they are using. Scammers will use a removable door placard, which is one way to spot a potentially illicit truck.

Since the fake truck and driver look legitimate, an unsuspecting customer might entrust them with their load. The customer’s shipment will then get stolen as the fake driver and truck vanish into thin air. 

To avoid this scam, ensure you sensitize the market to confirm they’re dealing with your firm at the start of each transaction. You can provide a toll-free number for them to do so. 

5. Double Brokering

Double brokering is even more complex than your typical identity fraud. Double brokering occurs when a shipper or broker books a carrier for a shipment, but the carrier brokers to a third party – without the original broker’s knowledge. This opens up opportunities for insurance and liability problems, leaving shippers with less control. 

To avoid double brokering, conducting extensive research is critical before signing a contract with a new freight forwarding company or shipper. Does a deal seem too good to be true? It probably is! We know you want to save as much money as possible, but it isn’t worth it to fall into a scam that will cost you more in the long run. 

How Credit Checks Can Save You From Freight Fraud

Credit checks should always be done before you work with a broker or shipper. It’s one of the top ways to spot a fraudulent company and avoid getting scammed. When you run a credit check, it can help assess the company’s financial stability, minimize your fraud risk, identify potential future issues, and more. 

As a rule of thumb, you can follow these guidelines to determine if a company is risky to work with or not:

  • 0 – 69 Credit Rating: High Risk
  • 70 – 86 Credit Rating: Medium Risk
  • 87 – 100 Credit Rating: Low Risk

Invest in the Best Way To Prevent Freight Fraud

The trucking industry can be highly profitable, which, unfortunately, attracts fraudsters seeking to target your earnings. To safeguard your business, it’s crucial to understand the different scams that exist and take proactive steps to prevent them from impacting your profits. It’s time to set yourself up for success with HaulPay

HaulPay by ComFreight is a digital payment and factoring platform designed specifically for the transportation industry. It provides a quick and easy way for carriers and shippers to manage their expenses and invoices online, streamlining the entire payment process.

HaulPay also offers factoring services, which allow carriers to receive payment for their invoices immediately rather than waiting for the customer to pay. This can help carriers improve their cash flow and reduce the risk of non-payment. HaulPay aims to simplify the payment process and improve the trucking industry’s financial management of carriers and shippers.

Are you interested in learning more about ComFreight? We’re here to help! Contact our team today.

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