As the freight forwarding industry evolves into one of the most lucrative global sectors, independent freight forwarders are increasingly facing incidents of fraudulent activities within the shipping and freight domain. Moreover, the shift towards increased reliance on online interactions, particularly accelerated by the pandemic, has made it challenging to verify the legitimacy of certain operations.
Additionally, the surge in online financial transactions has propelled financial fraud to the forefront in this industry. Present-day fraudsters are not only impersonating freight forwarding companies to divert payments into their accounts but are also targeting valuable cargo for hijacking. Beyond inflicting substantial financial losses, freight scams can disrupt customer service and tarnish the reputation of independent freight forwarders like yourself.
Tips for independent freight forwarders to avoid a scam
Beware of unusually low rates
There are instances where fraudsters pose as well-known logistics companies and present exceptionally low shipping rates that may seem incredibly tempting. Once your shipment is dispatched, the forwarder may demand that you issue the Bill of Lading, without which you won’t be able to claim your cargo. In this type of fraud, once your cargo is packed and shipped, you may be confronted with a substantial payment request for various purported issues in order to take possession of the shipment.
Therefore, as an independent freight forwarder, it’s crucial to exercise caution when confronted with excessively low freight charges. Conduct thorough research and gather multiple quotations from legitimate freight forwarding companies to gauge the approximate freight rate for your cargo. This vigilance will help safeguard you against potential scams and ensure the security of your shipments.
Familiarize yourself with Incoterms 2020
As an independent freight forwarder, it is imperative to acquaint yourself with the most recent edition of Incoterms, specifically the Incoterms Rules 2020. A significant portion of freight forwarding fraud arises due to a lack of awareness regarding the applicable Incoterms for a given transaction. Possessing a comprehensive understanding of Incoterms 2020 will enable you to ensure the seamless progression of your international cargo operations, mitigating potential risks.
Ensure the authenticity of your partner
Prior to finalizing a business agreement and proceeding with payments, it’s essential to verify the legitimacy of the freight forwarding company you intend to collaborate with. When you are a Coop member, you can have confidence in the authenticity of your network partners, as they have all undergone a rigorous screening process before gaining entry into the network.
However, exercise extra caution when considering partnerships with unfamiliar agents outside the network. It is advisable to conduct thorough research about the company before engaging in any financial transactions with them. This proactive approach will help safeguard your interests and protect you from potential risks associated with unverified partners.
Inquire about hidden charges
During price negotiations with a freight forwarder, it’s essential to ask about any potential hidden charges. It’s crucial to confirm that the forwarder will not impose additional fees or charges when the shipment reaches its destination. This proactive approach ensures transparency and helps you avoid unexpected financial surprises once the shipment has reached its final point.
Double check the website of the company you’re partnering with
It’s crucial to be vigilant when assessing websites, as fraudulent ones may attempt to mimic legitimate businesses with blogs, videos, and even fabricated testimonials. However, scammers often make subtle errors, such as in the logo or spelling. Notably, cloned websites tend to remain outdated. If you observe that a website’s blog hasn’t been updated for an extended period, particularly more than four months, it raises suspicions of it being a duplicate site.
Furthermore, scrutinize the consistency of the freight forwarding company’s website. Look for authentic photos of the team, including those of the CEO and the management team. A website populated solely with stock photos is likely to be fraudulent. Additionally, pay attention to the domain name of the website. If the website’s URL includes a free hosting name like .wix, .hubspot, .homestead, and similar domains, it’s advisable to regard the site as counterfeit and immediately cease all interactions. This cautious approach can help protect you from potential online scams.
Exercise caution with unknown business partners
When entering into a business arrangement with a freight forwarder for the first time, especially when you lack substantial information about them, it’s essential to take specific precautions. For instance, if you’re shipping goods overseas and have agreed to cash payment upon delivery, exercise prudence by refraining from issuing a Telex Release or a Sea Waybill before receiving the payment. In such situations, the safest approach is to issue the Original Bill of Lading (OBL) and release it only after payment has been received.
Under no circumstances should you issue a Telex Release or OBL based solely on proof of payment from an unknown or unverified forwarder, as there is a significant risk that the provided proof may be counterfeit. Avoid taking any action until the payment is securely received in your account. This precautionary measure helps safeguard your interests and minimizes the risk associated with unverified partners.
Prioritize in-person meetings
When dealing with a freight forwarding company, make an effort to schedule in-person meetings. Request paper or electronic brochures to assess the company’s credibility. Legitimate freight forwarders typically provide brochures where they detail their experience and services. Before making any payments, it’s crucial to verify the bank details by speaking directly with the relevant person. As a member of The Cooperative Logistics Network you will get to attend a yearly freight forwarders conference where you will be conducting face-to-face meetings with 346 trusted and vetted international freight forwarders.
The Cooperative Logistics Network selects its members based on various criteria, including business volume, creditworthiness, reputation, financial stability, and other factors. When conducting business with The Coop members, the risk of falling victim to scams is virtually nonexistent. This is because rigorous background checks are conducted on all applicants before they are accepted as members, ensuring the safety of both members and their clients.