Does Your Factoring Software Protect Carriers from Rate Sheet Scams?
There are a litany of fraud schemes to which carriers and their factors can fall victim. Mike Kingham of WinFactor takes a look at altered rate sheet confirmation fraud and how factors can help their clients identify the problem before things go wrong.
BY MIKE KINGHAM, PRESIDENT, WINFACTOR
As the freight market gets tighter, like we’re seeing today, fraud tends to increase. That is bad news for multiple reasons, including the fact that one sophisticated scam by way of modern-day freight broker identity theft could seriously harm your carrier’s future.
Here is how such a scam might work. It starts with a legitimate load from a legitimate broker. Through an intermediary, like a load board, a scammer with a newly minted Federal Motor Carriers Safety Administration's number contracts to haul the load. So far, so good (well, except for the scammer being involved already, but at this point, no scam has been perpetuated). The problem surfaces when the scammer pivots from being a carrier to an illegitimate broker and finds a victim carrier to haul the load. In this instance, the scammer will pose as a broker by stealing the identity of a real brokerage company.
The key to this scam is an altered rate sheet confirmation that lists the name of a well-known broker but with the contact details of the scammer. This may include an email address with a and/or photoshopped logo that looks similar to the legitimate broker. Such a rate sheet confirmation will lure the victim carrier into thinking they have a real load. Along with these clever alterations, the scammer will often offer an above market haul rate to further entice the the victim carrier to lower their guard and take the bait.
From there, the victim carrier hauls the load and submits their paperwork to the scammer and waits to get paid. Meanwhile, since the haul was completed, the scammer submits paperwork to the real broker and usually asks for a discounted quick-pay.
This cycle of fraud can go on for several weeks before the victim carrier discovers that they are not getting paid and begin researching the haul to find out who really brokered the load and got paid. But by then, the scammer has probably committed this fraud on several other victim carriers, and once they are found out, they can just shut down the email account and phone numbers the victim carriers have been contacting, leaving a slew of unpaid loads in their path.
A single unpaid load can devastate a carrier. With an average profit margin of 5%, it can take almost 20 loads to make up the cash a carrier could lose in this single example of fraud.
As a factor, it's your job to help your carriers spot these fraudulent rate sheets before they take the load. There are multiple ways to do this, but one of the best is to ensure your factoring software mitigates your risk with fraudulent rate sheet detection features. Catching a fake rate confirmation sheet at the time of purchase may reduce your risk, but the damage will have already been done to the carrier. So, here are a few tips for spotting fraudulent rate confirmations:
Know your rates. If the rate offered is above market rate for that trucking lane, be wary.
Look up the broker's name on the Federal Motor Carriers Safety Administration's website to get the broker’s registered phone number and use that number to verify the load instead of the number (or email) on the rate sheet confirmation.
Google the name of the broker to find its website and compare the spelling of the domain name to the one on the email address. Fraudsters often purchase a domain name that is close to the real one (i.e., Allen Lund Company’s domain name is allenlund.com, but a fraudster might use a domain name like allenlund.us)
Check recent load numbers. Most brokers use sequential load numbers, so comparing the load number on the rate sheet confirmation to recently used load numbers can help detect a made-up load number.
Compare the rate sheet confirmation with a known ‘golden’ copy of a rate sheet confirmation from that broker. Slight changes in the font, logo placement, etc. can help detect one that has been altered.
