# New TIA Report Delves into Methods for Addressing Freight Fraud
Author: Jeff Berman September 19, 2024
This week, the Transportation Intermediaries Association (TIA), based in Alexandria, Virginia, released a new report titled “The State of Industry Fraud 2024,” which examines fraud phenomena and their impacts within freight transportation.
The conclusions of this report are based on feedback from 200 TIA members across various industry sectors, focusing on the most common types of fraud, financial impact on businesses, and the prevalence of these incidents.
Key findings in the report include:
– 98% of respondents indicated that full truckload freight is a primary target for fraud;
– Eight types of fraud were identified—deception, illegal brokerage scams, phantom pickups, phishing, identity theft, email/virus, incoming calls, and text messages;
– The average total cost of reported fraud was $402,340, with an average cost per load of approximately $40,760. Fraud increases the cost of goods, impacts supply chains, and affects consumers;
– One-fifth (19%) of respondents spent a full day each quarter on fraud prevention, according to TIA, which diverts time from business operations and also affects productivity—34% spend more than two hours daily on fraud prevention, while 30% spend less than two hours. These efforts include monitoring, verification, and responding to fraudulent activities;
– California, Texas, Illinois, Georgia, and Florida were identified as states with the highest number of theft incidents, their key logistics hubs making them prime targets for criminals;
– The most commonly stolen goods are electronics, solar panels, and household items;
– TIA Watchdog, an important service for reporting and sharing fraud information, received 974 reports on various types of fraud from January 1 to August 31.
“We are currently in a compromised industry where we do not receive the support from government and law enforcement agencies needed to combat this scourge in our supply chain,” TIA President and CEO Anne Reinke said in a statement. “When people think about fraud in the supply chain, they only see its impact on businesses but fail to recognize the ripple effect it has on consumers and the economy. Fraud is an issue that needs immediate resolution.”
Asked what measures are needed to obtain government and law enforcement support to help combat fraud, Reinke explained that the Federal Motor Carrier Safety Administration (FMCSA) must take a multi-faceted approach, including enforcing existing regulations, cracking down on illegal dispatch services, modernizing their technological platforms, and implementing individual and corporate verification tools to increase scrutiny of carriers and brokers entering the industry.
“We are all working to combat fraud, but there is an urgent need for increased action from this agency,” she said.
Regarding the high percentage of full truckload freight fraud and methods to reduce it, Reinke stated that preventing fraud in full truckloads requires companies to adopt a multi-layered approach combining rigorous review procedures with technology-driven solutions.
The main preventive strategies cited by Reinke include:
– **Thorough Carrier Reviews**: Cross-referencing FMCSA data, verifying insurance, and checking for warning signs such as recent changes in contact information to ensure carriers are legitimate;
– **Secure Communication Channels**: Limiting fraud through the use of encrypted communication systems to transmit sensitive data like payments and load details;
– **Real-Time Tracking and Geofencing**: Using GPS tracking and geofencing can help detect route deviations or suspicious activities, allowing for immediate intervention when necessary;
– **Continuous Monitoring**: Regularly re-evaluating carrier information and maintaining up-to-date review practices to capture fraudulent activity before it escalates.
“By combining these efforts, companies can significantly reduce their exposure to fraud,” Reinke said.
Reinke also provided examples of anti-fraud measures that companies are utilizing:
– **Thorough Reviews and Monitoring**: Businesses are implementing detailed review procedures, including verifying carrier documents, checking FMCSA safety ratings, and regularly re-validating information to capture inconsistencies;
– **Technology Integration**: Many companies are using advanced tools like real-time GPS tracking and geofencing to monitor shipments and ensure they travel along the intended route;
– **Collaboration with Shippers**: Collaboration is key. Companies work closely with shippers to verify loads, check documents such as bills of lading (BOLs), and implement additional security measures like inspecting truck placards and using tamper-evident seals;
– **Using TIA Watchdog**: Companies leverage platforms like TIA Watchdog to report and monitor carrier issues, reducing their exposure to fraudsters.
“These efforts are helping to fortify the industry’s defenses against fraud and theft,” she said.
Earlier this year, TIA released an updated publication focusing on fraud in freight transportation titled “The Anti-Fraud Framework: Prevention & Response to Fraud and Theft.”
TIA states that this 40-page publication delves into the latest trends in supply chain fraud and helps TIA members take necessary steps to develop and implement their own policies and procedures to reduce potential fraud and cargo theft.
The publication also covers five types of fraud (in addition to case studies): cargo theft, financial theft, identity theft, internal theft, and data/information theft.
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Source: Logistics Management
