In a time when digital transactions have become the order of the day, there are several instances of customers getting caught in some kind of scam or another. In the last five years, we have seen a rise in the number of frauds in the freight forwarding industry. Although there are many genuine logistics companies out there, fraudulent freight forwarders are on the rise. The most common victims of scams in our industry are the importers and exporters who prefer going it alone rather than hiring the services of a competent freight forwarder. In today’s blog, we will deal with the topic of the most common scams in the freight forwarding industry. Keep reading to find out how to prevent getting cheated by frauds in the transportation and logistics sector.
Most typical scams in the freight forwarding industry and how to avoid them
· Bill of landing held on ransom
In this case, the scammer poses as a freight forwarder and quotes an incredibly low rate. The rock bottom price is what attracts the client to deal with this person and start negotiations. This scam mostly takes place once the cargo has been packed and shipped from the point of loading. Now, the client expects the forwarder to provide them with a bill of landing without which they won’t be able to receive the shipment at the destination port. Simply put, instead of receiving this document, they will get a ransom letter where the scammer demands a certain sum of money. They usually cite various legalities for which the money is required and without which they will not be able to take possession of the cargo.
· Change of bank details
Not only importers/exporters but even freight forwarders partnering with another company can become a victim of this scam. In fact, this is one of the most common scams in the freight forwarding industry. It comes in the form of an email from a scammer impersonating the person to whom the importer/exporter/forwarder owes money. This person could be a supplier or a freight forwarder. In this email, they inform the receiver of a change in the bank details. Many people make the payment thinking it to be legitimate but the money goes to the fraud instead of the person to whom it is directed. Keep in mind, that these scammers hack into the account of others to send such emails. This allows them to have all the necessary info pertaining to the shipment.
· Shipment theft
Customers with high-value cargo are the usual victims of this scam. Here the imposter will offer a super low rate that will prompt the client to hire their services. However, their only target is to make away with the high-value shipment. As soon as they get hold of the cargo, they will vanish into thin air without leaving the slightest trace.
· Scam involving a duplicate name
This is yet another common type of scam in the transportation and logistics industry. In this scenario, the scammer creates a fake website with the same name as a legitimate and reputed freight forwarding company. They create this spurious website to con the clients and steal their money. Since many freight forwarding companies have similar names one has to be extra careful before starting their negotiations. In other words, you have to do proper research to distinguish the imposter from a legit company.
· Lack of transparency in processes
Once again during this scam, the client will be offered a rate that is markedly low than the regular price. However, after your cargo reaches the destination, the consignee will be charged for several processes that were not discussed before. The unscrupulous freight forwarders can have several hidden charges which they do not declare just for the sake of obtaining the business. In this scenario, the client needs to pay a lot of hidden charges only after their shipment reaches the destination port.
Tips to avoid freight forwarding scams
Having said that, there are many ways in which importers/exporters and even freight forwarders can prevent themselves from getting scammed. Lets us now take a look at the few things that one can do to avoid getting scammed.
· Do a little research about the company before hiring them
To begin with, you have to conduct thorough research about the company you are about to hire. Just checking their website is not enough. As already mentioned, many imposters create a duplicate website with the name of a professional company. Ask for recommendations from your industry peers when you need the services of a reliable freight company. Lastly, you need to check out the social media pages of the company. Most professional freight forwarders have a strong social media presence where they regularly post content for their followers. Additionally, checking the online reviews about the company is always a good idea.
· Double-check the websites
Although a duplicate website might come with blogs, videos, and even testimonials, chances are high that the scammer makes a few mistakes in the logo or the spellings. Moreover, cloned websites are not updated usually. Therefore if you see that the blog of the website has not been updated for more than 3 months then chances are high that the site is duplicate.
Additionally, you have to check for consistency of the freight forwarder’s website. Try to find the pictures of the team including photos of the CEO, management team, etc. A website with only stock photos is most likely spurious. Also, make sure to check out the domain name of the website. For example, if their website url has a free hosting name such as .wix, .hubstpot, .homestead, etc then consider the site as fake and stop all interactions immediately.
· Get an idea about the regular shipping costs
A low rate should not be your determining factor when it comes to choosing the most competent freight forwarder. Most scammers lure in clients by offering a rate that is lower than normal. This is precisely why you need to know about the current shipping prices. This will help you understand if the price they are quoting is legitimate or not. If the rate is lower than the market price then ask how they can deliver the services at such a low rate.
· Ask about hidden charges
Whenever you are negotiating prices with a freight forwarder make sure to ask about any hidden charges. You need to make sure that the forwarder doesn’t ask for any extra charge when the shipment reaches its destination.
· Rely more on in-person meetings and phone/video calls rather than messages and emails
In case the freight forwarder you’re hiring is from your city try to have an in-person meeting with them. If you are a freight forwarder partnering with a logistics company in another city then set up a one-to-one video conference and ask all the pertinent questions. Ask for paper or electronic brochures to check the credibility of the company being hired. Almost all legitimate freight forwarders have paper or e-brochures where they talk about their experiences and services. Before making any payment make sure to call the person and double-check the bank details.
In conclusion, it needs to be said that this industry needs to rely on vetted freight forwarders who are part of one of the best freight forwarders networks. The Cooperative Logistics Network carefully selects its members on the basis of their business volume, creditworthiness, reputation, financial solvency, and several other factors. When doing business with a Coop members the possibility of getting scammed is nil. This is because we conduct a thorough background check of all the applicants before selecting them as members. This ensures that none of our members or even their clients do not fall prey to a scam.