Freight 360

Freight Fraud Uncovered: Preventing Scams & Protecting Your Cargo | Episode 260

September 06, 2024 • Freight 360

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Ever wonder how a few fraudulent truckloads of sugar could cause chaos? In this Freight 360 episode, we discuss major freight issues alongside NFL matchups like the Buffalo Bills vs. Arizona Cardinals. Beyond football, we highlight a $3.5 million federal grant for CDL schools and speculate on how the presidential election could impact GDP and shipping. We then dive into a real-world scam where a scammer held four truckloads of sugar ransom, emphasizing the need for carrier verification. Finally, we expose freight fraud tactics like double brokering and commission scams, sharing tips to protect your operations from con artists.

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Speaker 1:

Welcome back. It's another episode of the Freight 360 podcast and for all the hecklers and haters on YouTube, this is the episode that's going to release the first weekend of the NFL season. So go ahead and skip ahead and skip our football banter or sports banter if you don't like it. But for everybody else, welcome back and we're glad you're with us. Make sure to share us with your friends. Colleagues, leave that review. Check out our other content at Freight360.net, including the Freight Broker Basics course. All right, ben, how's South Florida today? We're in September. Now Labor Day is behind us. The summer season is kind of like unofficially over, even though it's probably it's like 100 degrees for you while I'm over here wearing a hood, yes, I'm super jealous, but we're rounding the corner like it is.

Speaker 2:

Well, it's always been one of my favorite seasons of the year, like I just always like fall, football season, but the weather changing halloween going into the holidays, so definitely didn't get a break in the weather. But we weather changing Halloween going into the holidays, so definitely didn't get a break in the weather, but we've gotten some break in the humidity, which is. I always laugh when people are like, oh, it's a dry heat, but I can tell you that like 92 with 98% humidity and 92 with like 50% humidity is a completely different story. So I'll take what I can get.

Speaker 1:

Yeah, yeah, so this is the weird time of year and in at least in western new york and I'm sure other folks across the country can probably relate where, like it's like today, for example, it's 50 degrees when you wake up and it's going to be 80 degrees in the middle of the day. Yeah, so yeah, and I'll be. I'll be playing army at fort drum this weekend, out in the woods for a few days, sleeping in a tent. So who knows what kind of weather we're going to have. Is it going to be hot, is it going to be cold? I have no idea.

Speaker 2:

So wow, Like a hotel room, an apartment, I think Right.

Speaker 1:

Yeah, back in a real unit now. All right, but we'll give a quick, little, brief sports update here. It is NFL season kicking off here. The Buffalo Bills will be starting off with the season and home opener Sunday at 1 o'clock hosting the Arizona Cardinals. I think the Bills will take a decent win there. Notable matchups though Baltimore, kansas City two favorite AFC teams starting off Thursday night. By the time this releases, that game will already have happened. I'm taking KC on that game Just because they're the reigning champs. Other than that, who do?

Speaker 2:

you guys got Steelers announced Russell Wilson will be the starting quarterback.

Speaker 1:

Oh yeah, pittsburgh and you guys are in Atlanta Gotcha. So Ross Wilson getting his debut or getting the start, huh At the league minimum salary. Monday night New York Jets, or the New Jersey Jets as we call them, are playing in San Francisco, so that should be a good Monday night game. Let's hope Aaron Rodgers does not bust his knee on the fourth play like he did last year. But all right, outside of that, I don't have anything else in sports. Neither do I. We'll have much more commentary next week once we have some results.

Speaker 1:

Uh news if you guys are not subscribed to the newsletter, please do so. Go to freight360.net, type your name in the email newsletter box goes out every tuesday and thursday. I was actually just putting together our thursday newsletter earlier this morning. That goes over like the market, you know, market updates and some some new stuff. Um big takeaways. There were, uh, the I think it was the dot at fmcsa granted like three and a half million dollars for like cdl schools, so basically like trying to um boost the educational side for truckers. So I think I don't know if that's like an attempt to get a lot of new, younger folks into the industry.

Speaker 1:

And the other thing and I really didn't think about this, but we've talked a little bit about how the presidential election and how that might be impacted, or how that might impact our industry, right, and the long term. They said if Trump this came from transport topics if Trump is elected, that they would expect the GDP to fall versus reason being the tariffs on imported goods. Again, no one's got a crystal ball, but GDP is a rough correlator of I think you know how much shipping activity there is either way. So who knows man, who knows Time, will tell you got anything else in the news or anything. We're going to talk fraud today.

Speaker 2:

We're going to tell some stories. Canadian rail strike has been over or resolved. No more news I've read related to the potential one this fall.

Speaker 1:

Oh, that's right, Other than that, Did. I say they were ordered to stop? Yeah, I think I don't know how, I don't know about unions and stuff, but your government can force you to go back to work and stuff, but your government can force you to go back to work.

Speaker 2:

Yeah, I think and again, I for sure don't take my word on the details but I think it kind of goes back to like if there's a national interest in an industry, the government can basically just end it and resolve it somehow. I don't exactly know how that plays out. I know Reagan did it famously in the 80s with the air traffic controllers. Like they went on strike and it shut down, like all of airline travel, so like they forced them to go back to work. They've done that with, I think, like railroad workers, probably back in the day, maybe coal miners, like there's like lots of instances where it has happened. And I'm guessing, when there's a national interest, they don't allow a union to hold the country hostage until they get what they want, because clearly, if you shut down the railroads and all the goods coming into your country or a good portion of it, it's different than a union strike because you are arguing a TJ Maxx or whatever or because you want higher pay. It's not just you and the company.

Speaker 1:

Here's what it is Like. It's not just you and the company. Here's what it is Like. Here's the industries that basically federal law prohibits and says like you got to work Police, firefighters, paramedics obviously right First responders, air traffic controllers, public school teachers in many states and other government employees in many states.

Speaker 2:

That's kind of like the uh, which makes sense I kind of disagree with the school teacher one because I feel like, honestly, that that whole sector has been, you know, paid less and less over the years to where, like it's really hard to get good teachers and obviously, being a parent now I have a different, it's more important to me. So, like you know, having to literally move to make sure our daughter was in the school district we wanted to like I feel like teachers should be getting paid more. I mean, I don't know the ins and outs of how they negotiate those things.

Speaker 1:

It is wild to see the disparity, like the difference, even in Western New York my wife's a teacher in a suburb though versus what the city schools' salaries are, and it's just wildly different. But that has nothing to do with freight. So, yeah, canadian Rail Lines, no strike happening right now. Oh, one more thing in news and freight. This came from I think it was from Dean DAT that the, with Labor Day behind us now, they looked at the load surge capacity shrinkage around a holiday, comparing it to 4th of July, and they said it might even have been freightways. I don't remember where the data came from, but basically there was a tightening around the Labor Day holiday weekend, but it wasn't nearly close to what they had projected. So where they said, like 4th of July was very noticeable, labor Day not so much.

Speaker 2:

And I think this is relevant to for sure freight and I read a lot that he puts out. I read his every week and Jason Miller from, I think, university of Michigan, puts a ton of great stats on our industry, like capacity tightness, looseness of the market, and the one thing Jason pointed out literally last year if not longer, but he's been saying this is everyone talks about carriers leaving the market and that tightening up Like Craig Fuller wrote the article about the COVID money in the trucking side that has kept it buoyed basically longer than it normally would have. However, the point Jason made is like none of the bull markets in our industry, right? Jason made is like none of the bull markets in our industry, right, like the tight markets where all of our industry grows and profits the most have been the result of the carrier side. It's all been the freight side.

Speaker 2:

The demand of the carriers like needing more trucks, right, and he's like for sure, you kind of need both, but one has far more impact on shifting the market than the other. So even though carriers are kind of losing, leaving the market faster and the point he makes is like carrier demand is very elastic, meaning like if the market moves a little bit. People rush in to fill it very quickly and sometimes leave it. Now on the other side, how much cargo is actually needing to be moved right? When that expands? You can't scale the trucking side up fast enough, like they can't just buy trucks that quick sometimes.

Speaker 1:

You can't drive fast enough.

Speaker 2:

Yeah, correct. So you know. His point was as you're seeing this, you're seeing more of this, which is good news for the industry because it's going back to a normal cycle of things. He's like, however, we're really not going to see the market move significantly until the economy picks up, and the things I'd read related to GDP were over the past two years, GDP has been positive. We technically weren't in a recession.

Speaker 2:

However, I ran the numbers on what makes up GDP the one time from, like rough math back of the napkin sketch and like there's been a huge increase in government spending, which also fuels jobs and healthcare and things, which is a big portion of GDP. So a lot of why we weren't in a recession is because of the government spending. And government spending isn't freight Like they're not. They're not the goods and things like yes, there's definitely military spending that needs shipped, but for the most part, that impact on GDP is not reflected in the freight market and the things that are shrinking like. This morning I read the what do they call it? It's like the manufacturers index. Basically, when we're making more physical goods, right, like it's either shrinking or, you know, staying the same. So like the actual number of things that need moved right. Goods in our economy is not growing, it's been shrinking and a lot of that is intentional, right.

Speaker 2:

The Fed increased rates to slow the economy, to bring inflation in line, which has happened. However, you see less things manufactured. You see less inventories being held because it costs money to borrow money from a bank and leave goods in a warehouse. Right, if you're not selling them fast enough, they have less of them. So I mean I think really big news too for our industry and our market is like there's going to be a rate cut, almost unilaterally expected.

Speaker 2:

Everybody expects the Fed to cut at least 25 basis points, maybe 50 in the next coming weeks, in September. That's not going to be immediate. You know the impact on our industry. But they're also expecting more rate cuts this year and if they start pulling back the interest rates, more money goes into businesses. More goods and services are needed. So it's good for jobs, it's for sure good for our industry. And now I think you're going to start to see where we get more freight and less carriers, because it's just been such a difficult market for so long that maybe towards the end of this year, maybe fourth quarter looks a little different than last year's fourth quarter. Maybe we're going to see more spikes in rates and then for sure, I think into the spring we're going to start seeing more of the markets. We've all been used to, outside of the four years of COVID, the two unicorn years where rates are enormous, the two years after where they've just been in the trash. So hopefully this is the end of that period, at least for our industry.

Speaker 1:

So I'm looking back at the interest rates. It's interesting because we're talking about like 50 basis points. You're talking one half of 1%, and how much difference will that really make? But the reality is that would be the beginning of probably a step down, because I went back to it. So interest rates during the peak of COVID were at 0.25% Basically nothing. It was almost next at 0.25% basically nothing.

Speaker 1:

It was almost next to nothing to borrow money from the Fed, that's the Federal Reserve interest rate. So in March of 2022 was the first hike, the first hike, and by july of, let's see, july of 23 so 14 months they had it up to five and a half percent, so five full percentage points in just over a year. So, literally, like every month, they're moving up a little bit, a little bit, a little bit a and like. So again, if they peel it back and we're not saying they're going to peel it back down to next to nothing again, but if they peel it back, even half a word set now, it takes months to get there, right, yes, so expect this to be more of a fluid shift. So, between that, a geopolitical, who knows what's going to happen, depending on who's in office?

Speaker 1:

You got a lot of things up in the air as far as government spending, commercial spending, which all then trickles down into demand to ship. So, speaking of Labor Day and if you recall, we talked about this around 4th of July is fraud, is wild. So I had a really crazy fraud story in 4th of July weekend and you just had a wild one over Labor Day weekend. So would you like to start off with kind of telling your story a little bit, and the general point of this discussion today is to share with you guys what can go guys, how things can go wrong and how to protect yourselves. Because this stuff does happen, typically around holidays, when people aren't paying attention as much, but it does happen year round as well. So what do you got for us, ben?

Speaker 2:

Yes, so this is the one that occurred. Well, saturday. Yes, so this is the one that occurred. Well, saturday. So client that we work with reached out and had said and we think four of our truckloads have been scammed, frauded, like didn't really know what was happening at first, right, so what? They first reached out and said you know, we're pretty sure that, like, our loads are held hostage and it's like, ok, and we'll talk about, step by step, things you can do in these scenarios, or at least what I've done and what you and I have talked about, are like best best practices, right. So this scenario right, it was four truckloads of sugar that were loaded out of a warehouse on Saturday. Well, it's Labor Day, weekend, so you've got a skeleton staff, not as many people there, obviously, and lots of managers aren't there, so it's an opportune time for criminals to try to take advantage of this, right? What?

Speaker 1:

are they shipping?

Speaker 2:

Sugar four truckloads of sugar Sugar okay, and I looked up Like sugar, like granulated sugar.

Speaker 2:

Yes, like sugar, you would like organic sugar, like the brown, yeah, and again, like I would say roughly $90,000, $100,000 a truckload, so like significant amount of money for each one. So, and I got the recordings for these and listen to this, and so this is how this plays out is the first call recording comes over and this guy's on the phone who they thought was the carrier and, by the way, like I look this carrier up and like they did have some warnings. However, the warnings were like from a year ago and a year and a half ago and definitely weren't sure if they were probably on the borderline. If you could use them, I guess I would say Right, like they were old enough and they didn't. They weren't like double brokering warnings, but they were definitely.

Speaker 1:

Do you want to call off the MC or you want to keep that private?

Speaker 2:

I don't see why we shouldn't, because I don't think anyone should use them for the very reason. So I think we can. Let me pull it up. I think it's Wilmer. I actually wanted to pull them up in highway while we're, while we're talking through us and talk through some of these insights. Yes, let me, it is. I'll give you the mc. It's wilmar, trucking w-i-l-m-a-r trucking. Hang on, I'm still logging in mc number um give me one second.

Speaker 1:

Wilmar Trucking. Well, whenever you find it, we'll come back to it.

Speaker 2:

Yeah, we can pause this for a second. Give me one second, I'll find it All'll come back to it.

Speaker 1:

Yeah, we can pause this for a second. Give me one second, I'll find it. Yep, all right, what's the MC?

Speaker 2:

1-4-6-6-8-4-4. 1-4-6-6-8-4-4.

Speaker 1:

Wilmar with two L's. Okay, that's why I couldn't find it. Okay, yes, no-transcript identity theft.

Speaker 2:

That's the one that I think you always want to look for. Like if you see victim of identity theft like, that is the one that I think is the one that scares me the most, because you don't know if you're talking to this company.

Speaker 1:

So well, either way, double brokering I'm never going to use these guys if they, if they've been reported for especially like this is, you know, not even like it was forever ago. This is like, and it was more than once, they've got three reports, so, um, okay, so now we got that. Wilmar trucking mc number one, four, six, six, eight, four, four, for those who wanted to check that one out.

Speaker 2:

The first thing I always do is I'm like, okay, like as, like a policy, like, even when I'm booking a load, right, I always suggest that you look for the verified phone number on highway or RMIS or like carrier 411 and you make an outbound call to it.

Speaker 2:

Right, because a lot of the times when somebody steals their identity, right for the FMCSA like, they'll change the email address but not necessarily the phone number, right, sometimes they get both.

Speaker 2:

So the one that I had a month ago we found out because, like, we check, called before the driver arrived, called the phone number and the carrier was like hey, we didn't book this load with you. And we're like, wait a minute, what do you mean? And they're like okay, then we worked through it and find out that the guy there was another carrier booked through somebody that impersonated the trucking company, right, and that's the one that happened last month you and I worked through. So what I always do, at the very least, is call back first to see if you're reaching the same person that's trying to reach you. And in this scenario, the person that answered this phone and was calling them from this phone number was like and I heard this recording, they went we're not Wilmar trucking and we have your loads and the dispatcher's like, okay, well, what do you need? And he goes we need $10,000 per truck.

Speaker 1:

So did Wilmar take the load and rebroker it to this other carrier.

Speaker 2:

I don't know yet, so I'll get to that part of the story. So at this part of the story, right, they're speaking to this person and, like you could tell, like this guy flat out says we don't have insurance, we're not Wilmar trucking, we have your loads. And the dispatcher is still a little bit confused and goes, like what do you, what do you mean, what do you need? Like just trying to understand. And he says you know, we need $10,000 per truckload to take them. They were going from like Oregon to Jersey, for instance. Right, he goes we want 10 grand to take them to New Jersey, or give us seven grand and we'll take them back to the shipper, back in like Oregon. And they're like okay, well, like we'll give you a rate, con, and when you deliver it we'll pay you, because they're still not really necessarily understanding.

Speaker 2:

And this guy's like no, you don't understand, I'm not negotiating the rate. In one word, you guys have been scammed. Like he full, like admits exactly what is happening. And he goes we are not wilmar trucking. Like, we have your loads and if you don't pay us, we, we are going to take them. And then this was like what do you mean, take them? He's like they're sugar. So we already have a buyer and we can sell these truckloads and we're going to get cash. So either you pay us today or we're just going to sell your freight and take the money and you're never going to see it again. This is how this is playing out. Saturday. Now this is what's interesting, right? If you read Dean's weekly update, he wrote about this, he did an interview, I guess last week, and the transcription somewhere in there, and what they talk about is like the fraud.

Speaker 1:

Oh yeah, that's in our newsletter, as well as Dean's piece on that.

Speaker 2:

Yep, and these they're not just like one person, like they're entire organizations that just steal freight and operate like companies, right? And the guy says this he goes listen, I have a boss, if you don't pay me today, like they're going to take it. And they're like well, what do you mean? You have a boss. He's like this is a big organization, this is what we do, and he's just fully admitting this on these recordings, right? So they reach out, they try and like we always get this question a lot too like well, can you call the police? Well, the first thing is like they did call the police, they notified the authorities. However, one they didn't get a call back for hours. I don't even think they got a call back that day from the authorities. It was Saturday, it's a holiday weekend, for whatever reason. And also, even when they did reach them, it's like well, how do you find out? Or let the local police know where this truck is? Because nobody knows. It might not even be in that state anymore. You don't know which truck it's in, because, like I was going through gen logs and I was looking up through Asset Locator to see if I could see the trailer numbers, the VIN numbers of anything related to Wilmar right related to Wilmar right. However, we didn't know if Wilmar's trucks actually picked this up and they were in on it or if it was somebody impersonating Wilmar. And I couldn't find any of their trucks showing up anywhere near there. And it's like, okay, well, we still didn't really know which drivers had this or what was happening.

Speaker 2:

So again, they're trying to negotiate and hold this hostage. And the client's like, well, you know, like should I even try to negotiate? I'm like, well, I don't know of anybody that has ever actually paid the ransom and I don't know if they have ever gotten their freight back. If they did. Every time I ever worked through these, I had about 25 so far this year, give or take. And I'm like nobody's paid it because there's no guarantee that they're not just going to take your money and still sell your freight right, like you have. I mean, it's not exactly a trusting relationship. They just defrauded you and they're holding your freight hostage Like there's no reassurance Right and like, and then I said, you know, try to get as much information as you can so we can try to work through this step-by-step. So they're like, well, hey, I said, ask them how they want you to pay them. Like, ask them which bank account they want you to pay them. Like, ask them which bank account they want you to wire, whatever. So at least you can give this to the authorities and maybe it's one more point that they can go and try to, you know, find these people and the guy's like listen, I know you're trying to ask for my bank account number. Like we do this all the time. This isn't going to work. And they're like, well, we can't send you money unless it's to a bank account. Like we have no ability to do anything but a wire. And they're like, well, it's a holiday, it's not going to come through anyway. You need to send it with, like, a cash app or something. And they're clearly not going to do this, right? So this is how this is playing out.

Speaker 2:

Saturday, oh my gosh.

Speaker 2:

Now here's the good news, though right Is.

Speaker 2:

I still don't know Cause.

Speaker 2:

They literally just got this message as we started the recording and the client just messaged me and said they got all four loads back. Somehow they were able to reach the drivers, or the drivers maybe reached back to them somehow, and they were able to get the loads delivered. So this one ended well and the client was able to at least get in contact with the carriers that did pick up the freight and were able to recover it contact with the carriers that did pick up the freight and were able to recover it. So this one worked out. But I mean, there's just so many things I think that are helpful for the audience to learn on, like what and how you can do in these scenarios, cause it's like there really isn't, like the FBI is going to come swooping in and throw on some triangulation from satellites to find this truck, to be able to like go and pull them over and get like it's very hard for them to be able to even locate it, let alone be able to get there in time to do anything about it.

Speaker 1:

Yeah, there's a. Well, I'll. I'll give you my thoughts on your story there. Then I'm going to. I want to segue into one that I dealt with. It's been ongoing for a couple of years, like it's a big thing that I have an update as of yesterday on. But anyway. So Wilmar Trucking right when I look at my vetting software we already mentioned this but if they're flagged for double brokering, and especially multiple times, I'm just not using them.

Speaker 1:

First of all my rule set is set to not allow Correct. They can't be used Again. Everyone's different Everyone you know. Different brokers use different vetting platforms and different brokers have different risk tolerance levels. Some brokers might say, hey, if they're double, if they get reported for double brokering and it was two years ago we'll take steps to ensure that they're running a tight ship now, and others might say we're just never using them again. But you know it's up to you. So I've got them flagged on my rule set for they have published watchdog reports from TIA.

Speaker 2:

Same with me, all there right, like they would have not gotten through ours for the exact same reason. This is a newer broker, that's why a client who needs coaching.

Speaker 1:

this is how they learn stuff right, exactly. So yeah, they've got published TIA watch reports fail. Further, they've got a scheduled autos insurance policy with no VIN numbers listed on it, so they have no insured trucks. Apparently that's a red flag. They've never had anyone inside of North America log into their highway account. That's a flag.

Speaker 2:

That's a big one, yep. It says literally only accessed from outside North America.

Speaker 1:

Yep. They have published identity alerts, double brokering, a couple of times on there. I've got a slew of lists here of the they found the clear physical and digital footprint or ELD connection. So basically, between highways, ELD connection and FMCSA's inspection history, this carrier has never been seen ever in the 23 months or whatever that they've been in business and there's like six different sub categories that they fail underneath, that Can't verify insurance for bodily injury, personal damage, Cannot verify insurance for bodily injury, personal damage, cannot verify insurance for cargo coverage and fails the test of do they have current coverage that may expire in the next week because they don't have any current insurance on file. So, yeah, would never have used this carrier. But you know, two months onto the job I probably wouldn't know what the heck any of this stuff means, Right?

Speaker 1:

And that's kind of the big takeaway here is you'll learn with time, but when in doubt, like ask, like ask us if you want to email and send us an email and be like hey, how's this MC? Number. Look when we get a chance, we'll look it up and be like, hey, how's this MC number? Look, when we get a chance we'll look it up and say like, yeah, you're probably fine or no, I wouldn't use them.

Speaker 2:

Agreed. And before we go to the next story, right, like, I want to again just make people aware of how these are normally done so that you just kind of understand how the criminals are approaching it. And we've talked about this a lot right. Done so that you just kind of understand how the criminals are approaching it, and we've talked about this a lot right. But it's mostly usually they are either hacking a legitimate carrier where they get access to their like, dot or FMCSA login. Like there was a big article a couple of weeks ago where there was a phishing scam sent to lots of carriers that said update your you know FMCSA pin. And they got a few carriers that responded because it looked like an FMCSA email. And then they were literally able to go into, log into the system and change the info, change that legitimate carrier's info to a different phone number and a different email address. Now they're able to go and find a load that is posted on a load board. They'll call and go hey, I can run this, they'll give you a favorable rate. They'll go look at my MC, you'll look at their MC and there'll be a legitimate carrier because they are. But what you don't know is that you're not talking to that carrier. You're talking to somebody calling you pretending to be that carrier. So that's the first thing to be aware of.

Speaker 2:

If you're getting an inbound call, especially if you're a new MC or new brokerage, like, you're an easier target, they're going to go with the newer ones rather than the older ones because they're more likely to get through because of what you just said Like there's just less experience a lot of times. So the one thing you want to do is and it doesn't catch all of them, but it's just one more way is, like I always call the phone numbers back and then I look at all three systems to see if I can find any other phone numbers. Like I'll look in RMIS, fmcsa, 411 and highway and see which phone numbers I can find that aren't listed on all of them, and I'll call literally two or three of them If there's any doubt. Like I'm for sure going to call them, because even if you get like the accounting phone number or something, you'll be like hey, like I just want to make sure you know we sent the load to the right place. Can you guys verify your emails? Have you had any instances of like fraud or whatever?

Speaker 2:

And they'll usually very quickly be like oh yeah, like, you booked this load with Jimmy. Or, and again, that doesn't prevent all of them, but it's another step that is going to help, and we caught one two weeks ago by doing this and we were able to get to the real carrier. So they basically will call you to take a load, pretend to be another carrier that they aren't and that carrier might be legitimate, right, like it doesn't mean the carrier was involved, right? So now they take your load, you tender it to them.

Speaker 2:

What they then do is turn around and pretend to be a freight broker. They will literally create like a rate con and the one we had two weeks ago. They impersonated a legitimate freight brokerage it was a very large one in our industry and they book another carrier, a real carrier, that doesn't know that they're working with a fake broker. They'll send the real carrier in to pick up your load and they'll change either the delivery address on it so it goes to a warehouse where they can steal it, or they'll try to hold it hostage while it's in transit, right.

Speaker 1:

Because I remember I told a story about the 4th of July with the rerouted Nike apparel and that's exactly what happened.

Speaker 2:

Yeah, so when you've got the real care, that's, picked up, the load Right, what you're trying to do is to work through this step-by-step one to understand what has happened and, more importantly, to be able to get back in contact with whoever actually has your freight. So why I outlined this is that in most of the scenarios that, like I've worked through, like there's a real carrier that doesn't know they're part of this fraud and a driver who just thought they booked a load with a real broker that doesn't know any of this is happening. So it's like you as a broker find out like okay, this guy calls me as either holding my load hostage, or I found out that it's not that carrier that loaded my shipper tells me a different MC picked it up. Or you call and you can't reach anybody, like well, where is my load Right? That's where it starts. So you want to work through it step by step to try to get in contact with the driver Because, again, most of the times at least, I've ran into it like they're not in on it. They've just been paid a crazy amount of money to pick up a load and they think they hit the lottery. So it's like a $4,000 rate. The fraudulent broker hires a real carrier and offers them like six grand. So now that carrier right is just literally driving from the pickup to the delivery or to a stolen warehouse with a different rate con, but we don't know this yet. So you want to call your shipper and see if they've gotten the MC of the truck that loaded.

Speaker 2:

Now, unlike our scenario, our shippers are pretty good about this. Like they got the driver's license, they got the trailer number, you know, and the MC. So we were able to call this driver because once we got the MC, we looked up the phone numbers, we called the carrier and go hey, is so-and-so on this load. And they went yes, and we went okay. Quick question Like who did you book this load with? They tell us it's this other brokers that we aren't aware of. We're like okay, we think we know what happened, we think that you know somebody was impersonating another company, took our load, then impersonated a broker to book a real truck on it. But once we got to the real driver the drivers they don't believe you either because they thought they were working with a real brokerage and they think they're getting six grand on a $4,000 load. The driver's on his way to delivery and they just don't know what's happening.

Speaker 2:

So your first step is like you don't want to overreact and you don't want to for sure yell at them or start accusing somebody that is literally also a victim of the same fraud, that is also in possession of your freight, because their immediate reaction is that you're fraudulent. They didn't realize that they're part of it. Everyone's got their guard up at this point, right. So again, like in that one, like we were able to talk to the driver and the dispatcher explain the scenario and some of these we've gotten the shipper on the phone with us to tell them hey, like we know, you loaded this, this is our cargo, this is where it's supposed to go. You were booked on this load by somebody that wasn't who they said they were, and most of them. We've been able to get them to deliver.

Speaker 2:

And then you've got to renegotiate the rate too, because they think they're getting six grand. You've got four grand in the load. Now you've got to work through the last piece, which is like they might not want to deliver the load because they think they're supposed to get paid six grand and you might have half of that in the load. And you've got to be able to work through that step-by-step in order to make sure the cargo gets delivered.

Speaker 2:

Like that is the biggest risk, I think, because I had somebody once like literally fighting and arguing over the rate to get like an extra $300 out of this carrier that was also defrauded. I'm like, wait a minute, you're gambling with like $20,000 of freight to win 200. Like would you go to a casino to bet 20 grand to win $200? Like to me that seems asinine. Like you need to be aware of what you're risking and what you're getting, because that carrier can also then just decide to not deliver it and maybe it's perishable and maybe now you've got a claim you've got to worry about. So like there are many steps, even once you've uncovered this, and risks that you've got to work through to try to get this freight back in the possession of who it's supposed to be in, to get it delivered where it needs to or back to where it picked up Wild man Absolutely wild.

Speaker 1:

I want to do hit on some internal scams that could happen. So this is a warning to anybody that has independent agents and you oftentimes, if you talk to someone and then they want to hire them and they're going to work remote under your authority as an agent, you need to thoroughly vet these people. I'm going to tell you a couple of couple of stories that I've seen over the years, and one of them is is pretty insane. That's that's happening right now. Um years and years ago I saw one where a girl signed on as a freight agent at a company and set up like a customer that wasn't like. She basically didn't move any freight, she just pretended she was moving freight and got paid commission. So what she did was she goes to set up this customer they're a legitimate customer but she changes the email address so and a phone number so the actual company won't get called or invoiced. But whoever the email and phone number that she provided for them was like her friend or something like that who was in on it. But basically the company that ran the credit finds the actual shipper and is like yep, they were good, let's approve them for whatever $100K or whatever the case might be. Next thing, you know, there's all these fake loads being put in the system that look legitimate. There's fake BOLs and invoices from these carriers being sent in to get paid, and so she's getting commissions paid to her and I think it was to the tune of like 30 grand before. They were like hang on a second. Like these, the email address on the custom resin matchup, these carrier invoices look doctored, um, so that one ended up going to the fbi and this girl basically had john I think her name was shelby, shelby mccain, I think um, but she like bounced around from company to company and like when she would get caught she'd go somewhere else, make commissions and pay off the company before until finally they went to the fbi and like got this girl. Like finally, like they got to the bottom of it.

Speaker 1:

Um had another one a couple years years ago, again fake loads. So it was a mix. I want to say this one was caught pretty quickly but it was like seven or eight loads were built. This is an agent who's posing to be like a legitimate freight agent. Like seven or eight loads built in the system for a couple of. I think it was all built under one customer. So, like again, they ran a legit customer's credit, um, even around a couple of legit loads for that customer, um, but then built a bunch of fake loads under that customer and, ironically, this same um, random carriers on all of them, and was, quick, paid on every single load and find out half the loads didn't exist. We go back, we talked to the actual shipper. The shippers like, hey, these ones actually were real, but that's not the rate we agreed to. So so now you've got a carrier that was paid, that was in on it, for loads that you know didn't happen, and an agent who was paid commission on loads that were heavily inflated on the profit and some of them weren't even real. So all that to say, that was caught fairly quickly. Did he get any of the money back? Not on that one. So we had a oh actually with that one. This went to law enforcement police and went to court and a judgment was made against the bad guy because his name was Alberto Magalin. He no-showed to court on his hearing date, naturally, but I think there's a judgment for like 30 grand on him.

Speaker 1:

This next one and I'll try to keep this very brief, this guy. So I've been working with the Office of the Inspector General from the DOT for like the last year on this, or year, year and a half on this one. So, basically, there's this guy, uh, his name is ramadan corkmaz. If you, uh, if you google his name, you'll probably find some whatever stuff about trucking companies in the past and fraud, whatever.

Speaker 1:

This guy's part of a massive criminal ring. Right now he has gone. What's it called? What's that? How do you spell? What is it? R-a-m-a-d-a-n and then k-o-r-k-m-a-z? Um kgr trucking is like the, the company that he used to own, um.

Speaker 1:

So, basically, like, this guy has gone from brokerage to brokerage, posing as like an agent, and he comes in and the the one that I'm I'm helping work on right now and I like keeps you know a lot of the details of like the bigger case around it I don't have because they wouldn't share with me yet and they're close to the end but he goes in, becomes an agent, builds a bunch of loads and then he's sent like he sent wire advances out that his son was cashing to the tune of like two hundred thousand dollars.

Speaker 1:

Um, never, not even a real load.

Speaker 1:

Um, no idea who the trucking companies were that were on the load if they were in on it or not.

Speaker 1:

But that one was that one's wild and it's like it's a, it's a much bigger ring, like it involves him, his family and I'm sure, like others, and I've had like other friends that work in the industry and they're like, oh yeah, like we got this, this new big guy, coming to our company and and then I hear his name and I'm like no, no, no, no, no, no, that's a bad guy.

Speaker 1:

Like, like I don't know how dumb this guy is.

Speaker 1:

He keeps using his real name and signing on as an agent at all these different companies.

Speaker 1:

But the reality is like, if you're going to like we run background checks for an agent, so we need like a social security number and and all that stuff.

Speaker 1:

So, um, this guy somehow showed up clean on a background check. But, yeah, stay away from ramadan or he might go by ray corkmoss. He even tried to come back around a second time like months later with someone else's name. Like he, he stole someone's identity like an old guy and like, provided the guy's license and everything, and you could tell on the phone it's the same guy. So, yeah, wild. So watch yourself if you're, if you're dealing with you know agents, cause you really don't know what they're doing, what they have permission to do. I will say in the advance scan that that guy did, the TMS had a failing point to it, so like there was a safeguard put in place where the agent cannot advance out more than X amount of money and a carry, a single carrier can't receive more than X amount of money in a certain given period of time, and for whatever reason, the TMS didn't it. It failed to provide it to implement that rule.

Speaker 2:

Here's something else that's important, right, like because, again, like I've done background checks and get driver's license. But what's also important is that you do a video chat and you see that this person is the person in their driver's license. Right, because, like, they're looking to be able to, like you said, impersonate someone else to avoid a background check. If it's a situation like that, at the very least you want to know who you're doing business with. If they are far away and they are remote, at least do a video call, make sure they're providing you their ID. You should do a background check Again, just as like a matter of policy, like SOP.

Speaker 2:

I think it's just good practices to do, because it is rampant everywhere and lots of industries too, like my wife's in real estate, like there's a ton of scams related to this where they're hacking realtors emails and then changing the wire instructions the day of closing, so like literally all the funds to buy a house get stolen. Imagine buying like a half a million dollar house and like the bank wired the money to somebody that just stole it. Like I don't even know how they resolve scenarios like that. That's wild. The other one, too I wanted to talk. Oh, I don't even know how they resolve scenarios like that that's wild.

Speaker 2:

The other one too, I wanted to talk. Oh, I don't want to cut you off Go ahead.

Speaker 1:

No, I was going to say like one last note on like the internal thing, like in this, whether it's you could hire a W2 that's implanted in there and their job is to like just do as much damage, of damage, in the first couple weeks as possible and then get fired or quit.

Speaker 2:

Right, just quit one day and they could be, you know, sending all this stuff out to the body. That happened the other. There was an article, I think it was in freight caviar like a couple weeks ago, where a company I think it was in tennessee, hired a freight broker and then, um, the guy just like disappeared after two or three weeks and they found out that guy was already an employee of a competing freight brokerage, like literally like a few miles up the road. So basically, this W2 broker.

Speaker 1:

He was trying to steal information.

Speaker 2:

Went and got a job at the other company to go and grab customer info and rates and then just didn't show up for work and they found out he was already and can still was employed by their competitor right up the street and I think in the article they had said like they think maybe like management was involved. I don't know how it played out, but I definitely remember reading this, like very recently, that this just happened. That's insane.

Speaker 1:

Wow. So, yeah, if you're dealing with a hire or a agent 1099, um, just heavily monitor um activity from the beginning, right, make sure everything looks legitimate. Um, we have a policy where, like you can't, you're not giving out advances for the first X amount of months and then, if you, if you, want to request that permission, at that time we'll, we'll take a look and make that decision. But, um, yeah, like, thoroughly checking customer history, uh, customer addresses, if, like I mean, you don't want to be like big brothers watching, but like, hey, if this is your organization, right, look at an audit of what they're doing in your system. Are they downloading a bunch of customer stuff? Like, does anything seem weird about what they're doing? Right, and those are the red flags you want to look out for. What else do you have? On the fraud part Cause I think we've told some pretty good stories today.

Speaker 2:

Yeah, the one I also. This one happened recently too, where a shipper was hacked in a phishing scam. So what happened was, whoever this criminal was hacked, the shippers email through a phishing email address and got access to their inbox their email right Waited for the freight brokerage to send them an invoice for like $25,000. Okay, they deleted the real invoice that the that the brokerage sent to the shipper and then created a fake invoice that looked exactly like it but changed the email address by one character, made it plural, right Instead of singular instead of like logistic. It was logistics, so it looked almost identical. And they changed the wire and the bank information.

Speaker 2:

So the shipper went oh yeah, I paid that bill. And our client went we didn't receive any money. Can you send over the details? And they sent back the bank info and they went like that's not our bank. And they went why did you pay them? Like, did you see? Like our? And then they sent them the remittance again, went like here, look, this is our bank. And then the shipper sends them back the fake invoice that they didn't know was fake. And then they were like, wait a minute. Like, this isn't ours, we didn't send this to you, and the email address is not ours, so whoever you were talking to was not us, that is not our bank and that is not our invoice. So the shipper paid $25,000 to a scammer, thinking they were paying the bill at the brokerage.

Speaker 2:

Well, now you have the other issue, the shipper didn't have a ton of cash, so now they're on like a payment plan to pay it off because it was the shipper's fault. For you know email I don't know what you call it like email hygiene or like you know.

Speaker 1:

Like a social engineering hack is how they manipulate their way in to get access.

Speaker 2:

But again, like it's everywhere and like brokers, carriers and shippers nobody is immune to it. I mean we talked when we had Erica Voss on, like this happened to Maersk in like 2017 or 18. Like that's the largest shipper in the world got hacked, and like there were reports that it was like a nine figure ransom. Right. So I mean big, small, medium, wherever you are, this is something really important that you should be keeping an eye on, right, like it could literally take down your business. It could bankrupt you. I mean, it could destroy years of work. Like there are huge risks that everyone needs to be aware of and I know everybody starting out can't afford all of the best tools, right, and that's something we try to help clients with. But I think you absolutely need at least two vetting softwares if you're going to broker any freight as a new broker, because, like you just can't tell who you're doing business with anymore and if you don't have, like, a relationship with these carriers, like you don't know if you're dealing with the carrier that you think you are Right.

Speaker 2:

And again, I think highway is still best in class at this. I think carrier 411 and RMIS are also good. I think my carrier packets is helpful. Most of them share most of this data, but highway is the one that really has better, I think, data on like who's logging into these systems, the IP address tracking and things that the others just don't have, and to me I would not feel comfortable brokering any loads without Highway still to this day, and it's like it's 500 a month, I think. Give or take around there for like a newer, smaller company. I mean, that's a few loads, right, like I think it really is the cost of doing business and I don't think you should be operating without them For sure.

Speaker 1:

Well, hey, that puts a wrap on our discussion on fraud today. Make sure to join us for the final mile that will come out on Tuesday. We've got an interesting one which I believe we're going to be unraveling a broker-carrier dispute. Any final thoughts, ben?

Speaker 2:

Whether you believe you can or believe you can't, you're right.

Speaker 1:

And until next time. It's finally this time of the year again. Go Bills.

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Benjamin Kowalski

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Nate Cross

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