Fighting ID fraud in the broker-carrier transaction isn’t solely on truckers

Frederic Marcinak and Lesesne Phillips of the transportation-focused Moseley Marcinak Law Group last week spoke to trends they’ve been seeing this year with respect to a scam that many of you will know well. It’s one that, despite federal and state law enforcement’s best efforts, with some success, as we’ve reported, continues and may even be getting more common with such a broad swath of our person-to-person interactions moving to a virtual setting.

It’s identity theft at its root, with thieves getting between legitimate brokers and carriers to steal fuel-advance money and in many cases full load payment that should be going to the carrier. With the increasing prevalence of high spot rates, you might easily see the renewed and growing attraction of this to the crooks.

I wrote about the scheme as part of the “Broker reforms” feature series in March. It starts with thieves, often overseas (allowing them to remain outside the reach of U.S. law enforcement), stealing a legitimate carrier’s ID information, doctoring an insurance certificate so that it appears legit (though with contact information going back directly to the crooks) and convincing a broker to tender them a load. They then take separate stolen broker information and “pose as a broker and double-broker it [often] on that same load board or a different load board,” Phillips said.

They contract with stolen broker information — rate confirmations doctored in ways similar to the insurance certificate they faked to present to the real broker — to basically double-broker it to a motor carrier.

The real carrier in the hypothetical Marcinak and Phillips presented is on the far right in this diagram, the real broker on the far left. “Moseley thinks it’s dealing with Phillips Trans, but the real person that’s transporting this is Marcinak,” Lesesne Phillips said. (Jackson Logistics is the brokerage the thieves impersonate to double-broker Moseley’s load.) And assuming the real load actually gets delivered, the thieves are successful in taking the full load payment, and Marcinak Trans is left in the lurch, to any broker who might think this is no big deal because load was moved safely, Phillips added this: “The real freight rate that Moseley posted is usually lower than what the ID thief [goes on to post]. They want it to get off the load board really quickly. They usually jack up the rate.” The real carrier is going to want that rate either 1) from you, or 2) your customer.There’s several ways to combat this from both the carrier and broker sides, all reported on here back in March. On a coming edition of the Overdrive Radio podcast, you’ll hear an in-depth take on how to spot these things as they’re occurring – and what to do if you get taken – from U.S. Postal Inspection Service Inspector Steve Cohen delving back into the scheme. Cohen, you may recall, worked closely on carrying through to prosecution and conviction a principal U.S.-based collaborator key to carrying out this type of fraud for a ring investigators believed to be in Pakistan. Cohen’s seeing it continuing to happen, unfortunately, and knows there are others out there doing the same – his advice for both carriers and brokers on red flags and how to prevent these things is well-founded and evolving. Stay tuned for that, later this week, or catch his view from earlier this year at this link on prevention.

What I wanted to emphasize today is twofold:

It’s No. 2 that’s most critical. And for brokers working often with first-time carriers, the same ends up being true. Carriers should use the two/three-step independent verification of identifies from third-party sources described by the owner-ops and security specialists I talked to back earlier this year.