Preventing Fraud Associated with the Freight Forwarding Industry

Service Objects is committed to fighting fraud and bad data wherever we see it. Through our APIs, best practices when handling sensitive data, or through recommendations on clients’ business logic, we are here to help enhance data quality and eliminate fraud.

A good example of the latter is educating our customers about how to avoid fraud losses. One way is by paying closer attention to orders using freight forwarders – which are legitimate services that are often misused by fraudsters. At the end of this post, you will find a free resource to make this easier: an extensive list of shipping and freight forwarders that you can use to help fight fraud when fulfilling orders.

What is a freight forwarder?

Freight and shipping forwarders arrange for the exporting and importing of goods. These companies often specialize in storage and shipping of goods on behalf of customers. In short, they help arrange for goods to get from point A to point B.

Are all freight forwarders associated with fraud?

Absolutely not! There are many reputable freight forwarders that do great work in coordinating the shipping of goods between consumers and sellers. When fraud is perpetrated, they are co-victims along with the seller. That being said, freight forwarders are often a go-to-tool for duping vendors and sellers into footing the bill for fraudulent purchases.

The typical process may go as follows:

  • A customer will place a large order, and ask that the product(s) be shipped through a specific freight forwarder.
  • The customer will offer to reimburse the seller for shipping through the freight forwarder – and normally wants the order shipped quickly, before the scam is discovered. (Money is no object for orders like these, because they are usually being placed with stolen or compromised payment methods.)
  • Often the fraudster will have set up a legitimate-looking website ahead of time to give the appearance of a legitimate and trustworthy business.
  • After the seller ships the goods and they are picked up by the fraudster, the payment for the shipping fee and the products itself usually falls through, leaving the seller to foot the bill for both the freight forwarder’s services and inventory loss.

How do I avoid fraud where freight forwarders are used?

Great question! One of the best and easiest ways to help mitigate this type of fraud as a seller of goods is to pay extra attention to orders using a freight forwarding company’s address. For PO’s like these, it would be smart to build in business logic for some extra vetting to ensure the purchaser’s legitimacy and help prevent fraud from the start.

That is why we are providing a list of all the freight forwarders we could find. We recommend using this list to detect matches between an order’s shipping address and a freight forwarder’s. To do this, run an order’s shipping address through our DOTS Address Validation – US service and use the BarcodeDigits field as a unique identifier for an address. If the BarcodeDigits address matches a freight forwarder’s address, the order should be flagged for some additional vetting to verify its authenticity.

Service Objects is committed to helping our clients avoid fraud however we can, and this list and the business logic is just one strategy that can make a real difference. If you need help setting up our address validation tools, please feel free to contact us, we are always happy to help.

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