SEE-THROUGH THE FRAUDSTERS – FAKE CARRIERS ARE TARGETING SUPPLY CHAINS IN EVERY TAPA REGION
So, should the rise in the number of crimes involving fake carriers and fraudulent pick-ups recorded by TAPA’s Incident Information Service (IIS) really be a concern? 305 incidents in 11 months – mostly in just one country – with a loss of just over €12 million is, in the overall scheme of things, almost to be expected given the sheer volume of trucks operating every day all over the world. Correct?
If, however, you’re one of the victims of these types of incidents, you will almost certainly be taking the issue a whole lot more seriously. Individual losses can be substantial and one big truckload going missing can easily jeopardise an entire customer relationship and potentially millions of euros of much-needed sales revenue.
Losses reported to TAPA’s IIS involving fraud in 2019 include single thefts of:
· €700,000 of perfume
· €553,679 of cigarettes
· €481,068 of pharmaceuticals
· €245,658 of footwear
· €240,362 of designer shoes
· €211,708 of confectionary
· €180,990 of clothing and footwear
· €152,591 of computers and laptops
· €150,100 of industrial computers
· €144,342 of meat
· €142,023 of fireworks
· €141,998 of butter
· €127,095 of cheese
· €123,234 of phones
· €115,000 of copper
· €115,000 of household appliances and electronics products
· €107,236 of household appliances
Much of the emotion behind these types of cargo crime stems from the fact that most are the result of simple negligence. We tend to refer to it as a ‘lack of due diligence’ but, in reality, what we mean is that someone just couldn’t be trusted to carry out a series of very basic and straightforward checks on the driver and transport company stood at their warehouse reception, who they’re about to let drive away with hundreds of thousands of euros of goods.
The true number of these crimes are almost certainly far greater than the statistics reported to TAPA, and are likely to be the preferred M.O. of criminals operating in countries all over the world.
IIS data for 2019 currently shows that of the 305 crimes involving fraud, reported to the end of November, 93% were recorded in Russia – but the Association has also been notified of cases in the US and Canada, India, the UAE, Austria, Belarus, Bulgaria, France, Germany, Italy, the Netherlands and Poland.
One of the leading authorities on the subject of fake carriers is international loss adjustor, Wim Dekeyser, who has been gathering and sharing intelligence of the perpetrators of such crimes in the form of the company’s ‘warning system’ and regular intelligence updates. This includes a list of nearly 500 names of transport companies associated with fraudulent pick-ups. 36 new company names have been added in 2019 so far.
The list is drawn from Wim’s own sources, including insurers, logistics operators and electronic freight platforms.
One of his biggest concerns is the lack of due diligence implemented by some freight exchanges. In the last 18 months, he says it has become “more and more clear that the freight platforms do not screen thoroughly or at all. Frauds are being committed very rapidly after an account has been granted.” Most of the offenders, Wim adds, still originate in Eastern Europe.
In one of the cases this year, where Wim and his colleagues were able to successfully recover some of the goods stolen, the fake carrier involved committed its first crime within two days of opening an online freight exchange account. With the stolen goods then quickly shipped across borders, subsequent investigations are increasingly complex. He estimates that only 10-20% of goods from these types of crimes are ever recovered.
Most alarmingly of all, he suggests the proceeds of such crimes are also helping to fund the wider activities of organised crime groups.
With hundreds of thousands of loads being booked via online freight exchanges, nearly all will be completed correctly and professionally by perfectly legitimate, entrepreneurial transport providers. However, within such a dynamic business environment involving so many service providers, the door is clearly open for fake operators to exploit a market usually based on who offers the lowest price to carry a shipment of cargo from A to B, he says.
Wim is not alone in wanting freight exchanges to carry out more thorough checks before allowing new accounts to be opened, but he is not encouraged by what he has seen in recent times. “Since a case was upheld by the French Supreme Court last year which made a freight platform completely liable for a cargo loss on the basis of insufficient screening, the main action we have seen being taken by platforms is to try and limit their liability even more in their contractual trading conditions.
“What we need to see is freight platforms changing their behaviour and putting an end to discrepancies which give customers a false feeling of security as well as an end to contracts excluding all liability. This is something I have already proposed to the four main platforms in the form of a new ‘Modus Vivendi’ in which they should – in some cases but not in all scenarios - accept some kind of financial liability or compensation when they are deemed to be at fault.”
A lack of due diligence by companies making bookings with transport providers also falls under the watchful eyes of the insurance industry and there is little doubt that this costly lack of attention to detail is impacting insurance liabilities for businesses which fall victim to a fake carrier.
“For sure, more and more insurance companies will exclude this risk from their cover. Many logistic operators are not aware of this, nor of the fact that, in such a scenario, they will face an unlimited liability under the CMR conditions, because a fake carrier scenario is construed as ‘wilful misconduct’. The risk that this leads to a bankruptcy of the logistics operator is real!” Wim adds.
The role of law enforcement agencies in crimes involving fake carriers should also bear greater scrutiny, he says. In some major European countries, Wim estimates that in 99% of cases, there is no successful outcome from police investigations though, on a more optimistic note, he highlights positive approaches by special police squads in the Czech Republic and Romania which have achieved significant results. He believes more public-private cooperation can replicate this progress in other countries too.
The big challenge is to overcome the image problem often associated with cargo crime, that it’s a low priority for police agencies and, principally, only the loss of a truck’s load and a matter for insurers. In reality, Wim states, such transport crime can be linked to more serious crimes like the narcotics trade or even terrorism.
Innocent transport providers also need to be vigilant so they do not become unwitting accomplices to a fake carrier cargo crime. It is not unknown for crime groups to make low, successful bids for loads via online freight exchanges and to then outsource the collection and delivery to a legitimate trucking company. The genuine operator will turn up to receive the goods with a driver, vehicle and documentation that all checks out, only to be diverted to an unauthorised location by the offenders once the shipment is en route, from where the cargo subsequently disappears.
Wim is well aware of such a scenario: “This is indeed the case… so the criminals do not even need to have their own trucks.”
Wim Dekeyser says logistics providers simply cannot be given enough warnings about the risks of fake carriers. His best advice, not surprisingly, is to only work with known transport partners and he recommends following 7 golden rules to help protect the resilience of cargo loads:
1) Refrain from working with carriers operating only with mobile phones and/or anonymous e-mail accounts, i.e. gmail, hotmail, etc;
2) Always check: - the official contact details of the contracting carrier
(via internet/phone or business directories; companies not listed or which cannot be found are not reliable!);
- the VAT number (on the EU.VIES website);
- the location of the company via Google Street View;
- the freight exchange member code.
3) Request and carefully check documents:
- Transport License;
- Insurance Certificate (check with the insurance company to confirm the certificate is genuine and is still valid for the time period).
4) Beware of very low price quotes which do not confirm to the normal market level;
5) Refrain from offering valuable shipments on freight exchange sites, for instance cop per, alcohol products, electronics, etc;
6) Always stay within the computer programme of the freight site to confirm the transport order. Never confirm an order directly to an unknown partner;
7) Stay away from freight sites if your Principals have forbidden the use of these.
“These guidelines are good basic principles for companies but the best guarantee of secure transportation is to remain extremely prudent and to contract only with reliable and known transport partners. There is no absolute guarantee to avoid these types of fraud and absolutely no room for complacency because criminals are becoming better organised and more inventive every day,” Wim comments.