Fraudulent freight forwarders and their scams

The activity of Freight Forwarding has been around for many years and there has been a recent resurgence of the forwarder especially in the form of a digital freight forwarder. Unfortunately fraudulent freight forwarders have permeated this industry as well.

A freight forwarder is an important service provider not just for companies importing and exporting their cargo, but also for individuals whether they are looking to relocate their entire household to another country or just ship individual items like a piano.

fraudulent freight forwarders - shipping and freight resourceLike any industry, freight forwarding has its good and bad sides and it is quite easy to become a victim of fraud and most of the time, freight forwarders are not associated with the crime or fraud and they may be co-victims just like you.

There are many unscrupulous elements in the market with their fake websites and fake news pretending to be able to handle your shipments and naturally you may be suspicious and rightfully so.

 

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Here are some ways you may be taken for a ride 

1) Bill of lading held to ransom – This can happen if a scammer poses as a freight forwarder or you get stuck with a fly by night freight forwarder. They offer a ridiculously low rate which may sound very attractive to you at the time of rate negotiations.

After a shipment has been effected, the freight forwarder must issue a bill of lading. Without it, you will not be allowed to take possession of your shipment.

This type of fraud often happens after the goods are packed and shipped from the port of loading. Instead of getting this important document, you will receive an email asking you to pay certain additional amounts of money citing various issues. If you don’t pay this, you may not receive your goods.

2) Cargo Theft – They will offer cheap rates with only one goal in mind – stealing your shipment. Because once you hand over your cargo to the freight forwarder, you don’t have visibility of your cargo anymore till there is some documentary proof like a freight forwarder’s receipt or bill of lading after the shipment.

3) Change of bank details – You may often receive messages claiming to be from the freight forwarder your contracted informing you of changes in banking details and asking for the freight and other charges to be sent to that account.

It is very possible that scammers have hacked your forwarder’s account or are phishing you to get the money into their account.

4) Lack of transparency – At the time of discussions on shipping and rate negotiations, you may get a cheaper rate which you like.

But after the shipment reaches its destination, your consignee might be charged few charges that were not discussed or was supposed to have been paid by the shipper, but the freight forwarder didn’t declare those charges in order to get the business from the shipper and doesn’t care once the goods have been shipped.

 

How to Avoid Being a Victim 

Fortunately, there are many ways you can avoid being a victim of fraudulent freight forwarders.

1) First things first, you need to understand the role of a freight forwarder and what functions they are required to carry out.

A freight forwarder can be a person or a company which organizes and plans your shipment, as well as getting cargo from the point of origin to the destination point. They may not always move your cargo physically, but they do simplify the process by communicating with all the people and moving parts that are involved.

The whole process involves many parts and people, making things a little more complicated for an average person or company who do have neither the means nor knowledge to handle this.

So always do the research on this and seek recommendations from business associates, friends and family who may have used reliable freight forwarders.

2)    Understand the mode of transport your goods require :

  • Air freight – for a quicker but more expensive mode of transport for international or domestic shipping, usually chosen for smaller volumes of cargo;
  • Ocean Freight – for a cheaper and most environmental mode of transport for international or domestic shipping, you can use ocean freight usually used for the carriage of large volumes of cargo;
  • Road Freight – for a quick delivery from door to door either locally, regionally or between various countries within a bloc, road freight is the most common mode of shipping. Usually cheaper on short hauls;
  • Railway Freight – for long haul deliveries where there is a requirement to carry large volumes of cargo either locally, regionally or between various countries within a bloc or these days even between continents

3) Know your trading terms. Those are not everyday terms we use, so before you hire a forwarding company to transport your cargo, do some thorough research. Understand what charges will apply for your shipment when using various Incoterms. This will protect you from fraudulent companies who may start charging you with illegitimate fees.

4) You should know the normal shipping costs. Get multiple quotes from multiple freight forwarders which will give you an idea if the amount offered by the freight forwarder is legitimate or not. If it seems too good to be true, it probably is. If the prices are too low or too high, it may be the first sign of fraud.

5) Always watch for fake numbers and addresses. Always pay attention when checking the validity of your freight forwarding company. You can check their legitimacy from their websites. But at the same time also be aware and beware of fake websites.

 

How to identify legitimate Freight Forwarders?

Apart from the obvious global or big freight forwarders that you may know locally, there are a few ways to identify legitimate freight forwarders.

Pay attention to below points on their websites:

  • People photos – On the website, look out for photos of the team including the Managing Director, management team and board members.
  • Social media – links like LinkedIn, Twitter etc will further boost credibility.
  • Pictures of shipments – This is always a good bonus. If you see real people doing real things, while having the company’s logo, you are in the right place.
  • ‘Contact Us’ – Another important part of the website is a place where you can ask any questions, leave comments or just find important phone numbers and email addresses.
  • Visit – If your freight forwarder is in the same city as you are, it may be best to pay them a visit to ascertain their legitimacy.
  • Photos from meetings – many forwarders have Annual General Meetings of their networks. If they were part of it, they should have pictures to prove it.
  • Video – A YouTube video is great insurance. Even a short one, including answers to some frequently asked questions, should prove validity.
  • Brochure – Everything is easier with a brochure. Either on paper or online, all legitimate freight forwarders have brochures.

Have you had any experience with fraudulent freight forwarders and how did you tackle it ?


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1 thought on “Fraudulent freight forwarders and their scams”

  1. Good article.
    There are scams by the side of clients too, as a FFWW received an email about a very profitable shipment, then searching in google we discovered that is a way of scam. If you are interested in that case contact me, I can sent you the emails for your next article.
    Best regards.

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