September 27, 2023

Be Wary Of These Common Freight Forwarding Scams

Freight forwarding scams come in all shapes and sizes, but their intention remains the same: making a quick buck at the expense of transportation professionals.
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Freight forwarding scams come in all shapes and sizes, but their intention remains the same: making a quick buck at the expense of transportation professionals. 

Unfortunately, these scams have become increasingly common in recent years as technological advancements have given scammers new avenues to explore. The rapid growth of the freight forwarding industry has also made those within it targets. 

The key to avoiding these scams is being familiar with them—the element of surprise is central to the plans of many would-be scammers. In this blog, we’ll outline several that you should be aware of to keep your freight safe and your credibility intact. 

What is a Freight Forwarding Scam?

A freight forwarding scam is a fraudulent scheme in which individuals or entities pose as legitimate freight forwarding companies or agents to deceive individuals or businesses seeking shipping or logistics services. 

Fraudulent freight forwarders typically promise attractive shipping rates, efficient services, and reliable delivery, but ultimately engage in deceptive practices that result in financial loss for their victims. Unfortunately, it’s the legitimate freight forwarders whose reputations and business suffer as a result of this deception.

Freight forwarding scams can have serious consequences, including financial losses, delays in shipments, damage to business relationships, and potential legal issues.

Fraud-Based Scams

These types of scams are based around fraudulent identities and deception, which is illegal but quite effective if you are unaware of it. 

Identity Theft

Scammers going this route will pose as a reliable freight forwarder, luring those in need of their services with amazing rates. They may go so far as to create a website that looks legitimate and use it to extract payment information from unsuspecting customers before disappearing and becoming impossible to reach.

Identity Theft Scam - REV Capital

How To Avoid This Scam

Remember: if it seems too good to be true, it probably is. 

Taking the time to research a company before you decide to entrust it with your freight is absolutely essential. Here are some of the signs that can tip you off to a company that is not exactly what it seems:

  • Their “website” does not end in a .ca, .com, or .net
  • Their emails to you are filled with grammatical errors
  • Their phone number does not connect you to a real person

While not possible in all cases, taking the time to read reviews online or connect with someone else in your network who has worked with this service is a great idea. There are good people in the trucking industry—take the time to find them!

A Bill of Lading Ransom

A bill of lading is a legal document issued by a carrier (such as a shipping company) that serves as a receipt of goods, a contract of carriage, and a title of ownership and is required for cargo to be claimed. In this type of situation, scammers will lure people in with incredible prices only to hold this bill of lading for ransom—and no bill of lading means no cargo. 

How To Avoid This Scam

Make sure you know the normal cost of your shipment before contacting any freight forwarding company—it’s easier to know when you’re being ripped off when you have a frame of reference of what things should cost. 

Nowadays, many new importers lack some diligence when it comes to the current costs of their shipments, so they easily get sucked into low or discounted offers on the internet. Check out a company's official website and look for any client reviews and testimonials before choosing to get into business with them, too. 

Double-Brokering Scams

Fraud-based scams are common and very dangerous. However, double-brokering is the biggest threat in the freight forwarding industry right now.

What is Double-Brokering?

Double-brokering is when a shipment is booked by a shipper or broker, then that carrier brokers the shipment to a third party without contacting the original broker. Essentially, they’re taking on a job then dumping it onto someone else. Shippers lose control over their shipments while being exposed to liability and insurance risks.

Double Brokering- REV Capital

How To Avoid This Scam

Avoiding double brokering requires a combination of vigilance, due diligence, and clear communication. 

First and foremost, thorough research and verification are essential. Conduct a thorough background check on new partners, shippers, or brokers before engaging. A legitimate freight forwarder will have a proven track record, as well as licenses and credentials that can be verified by checking for them online. 

It is also important to maintain direct communication with all parties involved in the transportation arrangement, including carriers and brokers. Avoid relying solely on intermediaries or third parties to reduce the likelihood of unauthorized actions (like your cargo being offloaded) or frustratingly late payments

Always be sure to use written contracts and agreements that outline the roles, responsibilities, and payment terms of each party involved. These legal documents provide a clear framework for the transaction and offer protection against fraudulent activities. 

Make direct contact with the carrier to confirm their participation and ensure they are aware of the transaction. Follow the steps we outlined above when scouting out websites and communications, and try to read up on them online when possible, too. 

Protect Your Business With a Partnership You Can Trust

One of the best ways to protect yourself and your business from freight forwarding scams is to partner with a team that understands the unique challenges of the transportation industry.

From reputation management and accounts receivable financing to educating our clients about these common freight forwarding scams—the experts at REV Capital are here to help.

We’ve worked with thousands of transportation companies, building up a database of reputable connections in the shipping industry to help businesses like yours avoid these risks. If you need advice, help managing your invoices, or more tips to avoid falling victim to cargo theft, we’re the first people you should call. 

Get in touch with us today to learn more! 

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