Protecting Your Business from Freight Scams | Ep 27
On today's episode on Veritas Vantage, Supply Chain Leaders Brian Hastings and Justin Maines address pressing issues of theft and fraud within the logistics industry. They delve into effective carrier selection strategies, the importance of technology in preventing fraud, and how to educate shippers on security measures. Insights from the Transportation Intermediaries Association (TIA) conference are shared, highlighting alarming statistics and common scams. Practical advice on screening carriers, recognizing red flags, and the significance of thorough verification processes are discussed.
The Logistics & Leadership Podcast, powered by Veritas Logistics, redefines logistics and personal growth. Hosted by industry veterans and supply chain leaders Brian Hastings and Justin Maines, it shares their journey from humble beginnings to a $50 million company. Discover invaluable lessons in logistics, mental toughness, and embracing the entrepreneurial spirit. The show delves into personal and professional development, routine, and the power of betting on oneself. From inspiring stories to practical insights, this podcast is a must for aspiring entrepreneurs, logistics professionals, and anyone seeking to push limits and achieve success.
Timestamps:
(00:00) - Educate Your Shippers
(00:27) - Introduction to Carrier Selection and Technology
(00:46) - Insights from TIA Conference
(01:57) - The Alarming Reality of Fraud and Theft
(02:51) - Regulations and Challenges in Carrier Selection
(04:19) - Red Flags in Carrier Verification
(08:54) - Best Practices for Shippers and Brokers
(12:59) - Conclusion and Call to Action
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Transcript
Educate your shippers if they're not doing anything on their end.
Speaker B:Yeah.
Speaker A:Help them with those types of things.
Speaker A:Especially if, you know you're moving high theft commodities, you want to talk about adding value to your partners.
Speaker A:Help them with their screening process at their locations.
Speaker C:On the last episode we talked about theft, fraud and a lot of the issues in the industry.
Speaker C:Today we're going to talk about carry selection, how to prevent those types of issues from happening, and also leveraging technology.
Speaker A:I think this is one of the hottest topics in our industry and it doesn't seem to be going away anytime soon, especially with a number of organizations not taking that much action to combat these issues.
Speaker A:You were down at TIA last year.
Speaker C:Yeah.
Speaker A:You brought back some very eye opening statistics.
Speaker B:Yeah.
Speaker A:Share, you know, your experience, some of those statistics and, and how that impacts us.
Speaker B:Yeah.
Speaker C:So one of the things that we heard from a couple of the attorneys and legal counsel that were doing a quick.
Speaker A:And I'm sorry, tia.
Speaker A:What for anyone?
Speaker C:TIA is Transportation Intermediaries Association.
Speaker C:It's an organization based in Virginia, right outside of D.C.
Speaker C:it's something that we're involved in with the, the brokerage side.
Speaker C:It's for brokers only.
Speaker C:It's an organization that teaches best practices how to become a broker.
Speaker C:Different training courses, different education materials to have success as a broker.
Speaker A:And they have an annual, they have.
Speaker C:An annual, you know, it's called the Capital Ideas Conference.
Speaker C:Last year it was in Orlando.
Speaker C:They do it once a year.
Speaker C: , anywhere between, you know,: Speaker C:And a lot of people are looking for advice or how do I run my brokerage better or how do I handle theft or fraud better.
Speaker C:Right.
Speaker A:I think those are things heavily discussed.
Speaker C:I think that was every panel.
Speaker C:Right.
Speaker C:Everybody wanted to talk to an attorney about something, even like the sidebar conversations.
Speaker C:But yeah, they had a panel on theft and fraud.
Speaker C:And you know, they were talking to or one of the attorneys that were, that was up there, he was talking about he, you know, a discussion that he had with one of these scammers.
Speaker C:And what they did is he's talking to the scammer.
Speaker C:The attorney said, I'm going to shut down this mc.
Speaker C:You're not going to be able to run under this mc.
Speaker C:Well, the response back was that's fine, no problem.
Speaker C:I have 250 more mcs that I can run with.
Speaker D:Right.
Speaker C:Which is alarming.
Speaker D:Right.
Speaker C:I mean, I think to me that's, that's scary.
Speaker C:Especially when you have a, somebody who's so active in the, in the fraud and theft game that, you know, has this many more MCs that they can actively go and try to get, you know, a fraudulent shipment.
Speaker A:Why?
Speaker A:Where, how are they getting all these MCs?
Speaker C:Yeah, so there's, there's a little regulation about getting an mc, right?
Speaker C:Literally you have to go online, you have to apply with the FMCSA.
Speaker C:I think it's 350 bucks to get your authority.
Speaker C:They do, you know, a check on your address and the type of company that you are since then.
Speaker C:I will give them credit.
Speaker C:They have, you know, tightened up the reins a little bit from last year at this time, but before they were just profit processing these things like crazy.
Speaker C:And you would get a lot of these scammers that would be able to, you know, provide information.
Speaker C:They put up the 350 for an application and now they're authorized to haul freight anywhere in the US So it's.
Speaker A:Basically like putting entrepreneur in your Instagram pretty much.
Speaker C:Yeah, yeah, yeah.
Speaker C:You can do whatever you want.
Speaker C:Right?
Speaker C:So as long as you pay 350.
Speaker C:Yeah, that's for.
Speaker A:Yeah.
Speaker A:So safe to say there's little regulation around this.
Speaker A:Zero pre screening.
Speaker A:Just open the floodgates, let the scammers in.
Speaker C:Yeah, I mean, yeah, I think they're, they're taking measures now, right?
Speaker C:There was 20, 23 was a bad year as far as theft and fraud and they're taking more measures now than, than they used to.
Speaker C:But yeah, it used to be a free for all.
Speaker C:Anybody, anybody could apply.
Speaker C:You could repurpose an MC without a ton of documentation.
Speaker C:Right.
Speaker C:And that's where the, the challenge comes in as you get people from overseas or operating in different countries that, you know, fraudulently take the identity of a owner operator from Houston, Texas.
Speaker C:Now they're, they're, they say that they're this person.
Speaker C:It's, it's, you know, it used to be a game of, you know, is this carrier decent or do they do a good job with the service level?
Speaker C:Nowadays when we talk about carrier selection, it's literally are you who you say you are?
Speaker C:Right.
Speaker C:And that's a big question.
Speaker D:Right.
Speaker C:Like it's when we're setting up new carriers and um, you know, I think we'll get into this a little bit later, but I think there always needs to be a precedent on that.
Speaker C:Like using repeat carriers is going to help you out as a company.
Speaker C:Going back to are you who you say you are?
Speaker C:Making sure, you know, from a carrier selection perspective, I'm going to back Up a second.
Speaker C:When I have a shipment for the client that's currently paying our bills today, what kind of carrier am I using?
Speaker D:Right.
Speaker C:And making sure that I'm not using somebody that is associated with fraud or has any history of unethical practices.
Speaker D:Right.
Speaker C:I think there's a couple different technology providers out there.
Speaker C:I know there was a couple technology providers that have come up in the last couple years that have been huge for the advancement of our industry as far as carrier selection.
Speaker A:Yeah, I know highway, you know, go highway.
Speaker A:We partner with them.
Speaker A:And I think even from the shipper side of things, you want to feel good about who you're working with and their process.
Speaker A:When it comes to screening carriers, you know, the thing that pisses me off more than anything is that you have, you have these, you know, scumbags out there who are wreaking havoc in the logistics industry.
Speaker B:Yeah.
Speaker A:You know, you have hardworking individuals, owner operators who, who drive cross country and they don't get paid by one of these scammers.
Speaker B:Yeah.
Speaker A:You have brokers who get sunk because they cut a corner or took a risk, and you have a scammer that steals $100,000 worth shipment from one of their clients and now they, the broker is in a tight spot and they lose business from a client who they've worked with for five years.
Speaker C:Yeah, it's a bad deal.
Speaker C:Yeah, yeah.
Speaker A:And that's the frustrating part is now we have to pour more resources into combating these types of behaviors.
Speaker A:But when it, you know, when you look at it, if I'm running a small business, a small brokerage or any brokerage, really, what are some things I can pay attention to?
Speaker C:Yeah.
Speaker A:You know, what are the huge glaring flags?
Speaker A:And then we can get a little bit more granular with it.
Speaker A:But like, what are the glaring flags that you're looking for when you're screening a carrier?
Speaker C:Yeah.
Speaker C:So the first thing I want to make sure, you know, just like I said a few minutes ago, you are who you say you are.
Speaker D:Right.
Speaker A:And how do you verify that?
Speaker C:Well, I think a couple of things.
Speaker C:So if they're calling in or emailing in from the right area code, their email or their email has a domain name like their company.
Speaker D:Right.
Speaker C:Or if it's associated with their company and what they filled out on the FMCs, like@gmail.com.
Speaker C:well, those.
Speaker C:That's a red flag.
Speaker D:Right.
Speaker C:So like at Gmail, which is all too common in our industry.
Speaker D:Right.
Speaker C:Like, we have lots of carriers that have a Gmail account and they use it as their company, you know, it might be abc trucking companymail.com well, they're ABC trucking company, but you know, the Gmail scares me, right?
Speaker C:And you know, there are a couple different items where if we have a driver, we'll just call him driver from Houston, Texas, and he's picking up a load in Seattle, Washington and he's taking it to Chicago, Illinois.
Speaker C:That's a red flag to me.
Speaker C:Like what?
Speaker C:Usually you see drivers pick up a load, they take it back home, they pick up a load at their home and they take it somewhere else, right?
Speaker C:So like anybody that's kind of like out of the loop or not really driving in an area or a common lane for them, to me that's a red flag.
Speaker C:I also think, you know, lack of communication from a carrier, right.
Speaker C:If you try to call them, they don't answer.
Speaker C:You try to email, it takes them 30 minutes to respond.
Speaker C:In our industry, that's a long time, right?
Speaker C:So.
Speaker C:And I also feel like this might be our subconscious talking to us, but anytime that we talk to somebody over the phone and we just feel, and we just know that something doesn't feel right.
Speaker D:Right.
Speaker C:Even like you said, like, what are some common themes?
Speaker C:And I think you mentioned this on the last show, but if you're offering a rate of 3,000 bucks and they take it right away, like red flag, they negotiate, right?
Speaker A:They're about to steal your loan.
Speaker C:I mean, I've been doing this for a very long time and probably on like less than 1% of carriers take that first rate, right?
Speaker C:So they're always trying to negotiate whether that's $200 more or 100 bucks more.
Speaker C:So those are things that we can all do to try to help combat it.
Speaker C:One thing I think that we all can help our shippers out with, our shippers need to do a better job on the verification process as well.
Speaker C:You see some of these, man, unfortunately, I had a load stolen a couple years ago and we looked at the check in sheet at a shipper, prominent shipper in the US and literally all you had to write down was the carrier name, the driver name, and then what your pickup number was, three columns.
Speaker C:And I'm like, that's all you had to do to get a shipment, right?
Speaker C:I mean, like to me, we have a client of ours today in Chicago.
Speaker C:They do a phenomenal job.
Speaker C:And is it a little overboard maybe, but they do driver picture, they do a driver's license check, they do a driver trailer check.
Speaker C:They go out there and snap a picture of the Actual truck.
Speaker D:Right.
Speaker C:So it's like the five step process but you know, they're trying to combat fraud because their loads are high value.
Speaker A:And I think from, you know, the broker, you know, if I could give some advice, you know the red flags, what is your operations operational checklist, what are you paying attention to?
Speaker A:But also educate your shippers if they're not doing anything on their end.
Speaker B:Yeah.
Speaker A:Help them with those types of things.
Speaker A:Especially if you know you're moving high theft commodities.
Speaker A:You want to talk about adding value to your partners, you know, help them with their screening process at their locations.
Speaker A:But you know, you mentioned a few things when it comes to screening.
Speaker A:I want to add a couple.
Speaker A:Yeah.
Speaker A:Gaps in authority.
Speaker B:Yeah.
Speaker A:So a lot of times.
Speaker C:What do you mean by gaps in authority?
Speaker A:You know, if they've been operating for two years, you see a six month gap and then you see they're operating again.
Speaker A:Okay, was that MC in authority purchased?
Speaker C:Sure.
Speaker A:You know, if you look at the carrier profile, we have a number of databases that we won't get into today.
Speaker B:Yeah.
Speaker A:But if you look at their profile and they're operating for X amount of years in Seattle, Washington, six month gap in history, active again.
Speaker A:But they're operating out of Houston, Texas now.
Speaker A:And the phone like okay, someone bought this mc, they've been active for a month probably to steer clear there.
Speaker A:So gaps in history, IP address, where are they operating from?
Speaker A:You can run their IP address online, see that you know, they're in Istanbul or wherever and they're not active in the United States.
Speaker C:Sure.
Speaker A:Virtual addresses, is their physical address an actual address or the address that they provide an actual address or is a virtual address they paid $90 a month for?
Speaker C:Well, no, I'm glad you brought that up because I think like when you talk about the virtual address, a lot of what we've seen and how to combat that is if any, if you go to.
Speaker C:And it's not.
Speaker C:It's kind of like getting a P.O.
Speaker C:box without it saying P.O.
Speaker C:box.
Speaker D:Right.
Speaker C:So they'll go in a UPS store and UPS is what they'll have is you go in, you want to buy one of their, or rent one of their boxes for 90 bucks a month like you're talking about.
Speaker C:It'll say like 1, 2, 3 Main street but their box number is going to be the suite number.
Speaker C:Right.
Speaker C:So it's, you know, 1, 2, 3 Main Street, Suite 201.
Speaker C:That all that means is that they are, you know, box number 201 for some like physicality of their address.
Speaker C:So I mean, that's, that's.
Speaker C:I'm glad you brought that up because not only is it, you know, people steer clear.
Speaker C:Oh, we're not doing anything with PO Boxes, but be on the lookout for any type of UPS store as a physical address or.
Speaker C:Hell, I love the IP address scenario because anybody that's in Turkey or in, you know, Kazakhstan or whatever, like, what are you doing there?
Speaker D:Right.
Speaker C:Like, you need to ask more questions and confront those people because they're, they're probably about ready to steal your shipment.
Speaker A:Yeah.
Speaker A:And I've nothing, full disclosure, I have nothing against Istanbul.
Speaker C:No, I, Yeah, I don't.
Speaker A:But no, we, we do a lot of things that, that help protect us, our clients and our carriers.
Speaker A:There's a lot more work that needs to be done to, to fix some of these issues in the industry.
Speaker A:Yeah, but knowing your process, knowing your, you know, your, your checklist and what red flags to look for, that is the best way you can prevent these types of situations.
Speaker A:But they continue to evolve, so we have to evolve as well.
Speaker C:Agreed.
Speaker C:You know, just kind of a note for brokers out there, a note for logistics companies in this market, right.
Speaker C:Where, you know, carriers, trucking companies are easy to come by.
Speaker C:If it's a tricky scenario and you have some questions or you have some red flags, like, I would take the side of caution.
Speaker D:Right.
Speaker C:Where, you know what?
Speaker C:I'm not going to get myself into this scenario and potentially lose 60, 80, $100,000 worth of freight, you know, for, for a potential, you know, client.
Speaker A:We want to hear more about your all's processes.
Speaker A:Let's put together the bulletproof carrier screening protocol.
Speaker A:If you know someone or work for a company that you believe has an awesome, thorough process, drop that in the comments.
Speaker A:We'd love to hear from you.
Speaker A:If you're coming out of the gates firing away with a sales pitch when you don't know shit about them, they're going to hang up on you because you don't know anything about them.
Speaker A:So how are you knowing what to sell to?
