Fraud is an insidious and growing problem in the transportation industry. From phishing scams and identify theft (impersonating reputable carrier brands) to data spoofing (misrepresenting driver location or load status), freight fraud materializes in the field as double brokering, fictitious pickups and deliveries, mode switching, and cargo theft. This multifaceted issue impacts multiple stakeholders, including freight brokers, third-party logistics providers, shippers and carriers.

As the bad actors become more sophisticated, logistics-focused organizations must step up their efforts to detect and combat fraud. Yet many are underperforming in this area. They lack the right people, processes, and technology to mitigate fraud risk, and they’re paying the price. 

Cargo theft surged to record-breaking levels in 2024, with 3,625 reported incidents across North America, compounding the stark 600% increase in cargo thefts reported between November, 2022 and March, 2023, according to the Transportation Intermediaries Association. California, Texas and Illinois were the unlucky hotspots, representing 46% of all theft in 2024, while food and beverage and household goods were the top targeted commodity types. 

Hitting businesses where it hurts, the average estimated value per theft rose from $187,895 in 2023 to $202,364 last year—a staggering $733.6 million annual loss. However, the total value of monetary losses is likely much greater, potentially exceeding $1 billion when factoring in the lost business for insurers and retailers as stolen goods are re-sold into the marketplace.

To stay one step ahead of the brazen criminal networks involved in cargo theft, shippers, 3PLs and brokers are quickly realizing that a multi-dimensional solution — anchored by advanced technology that can assess and flag potential instances of carrier and driver fraud by evaluating billions of location and event data points — is integral to mitigating fraud risk, preventing supply chain disruption, and protecting revenue. 

The Data-Spoofing Scourge

Bad actors attempting to spoof location data and other vectors are becoming increasingly common. For example, a driver app can report consistent pings as “on-time” or “arrived,” while in reality the freight may be lost, stolen, or the perpetrator is holding the cargo hostage. In response to the malicious use of data spoofing in mode switching, double brokering and stolen loads, freight brokers and shippers are turning to technology that relies on sophisticated algorithms and advanced data integrity checks to highlight potential fraud and detect suspicious behavior. 

In addition to deploying two-factor authentication across their platforms, transportation companies are implementing fraud-detection capabilities that uncover data spoofing using geolocation data by vehicle information number. With automated alerting, for example, brokers can establish whether the VIN on the truck picking up the goods is the expected vehicle.

Similarly, by employing location and image-verification technology, shippers and brokers can thwart data-spoofing attempts with real-time location data and confirmation that the driver is onsite, based on delivery photo metadata. With verified location visibility, brokers can validate the authenticity of shipment information.

On top of the benefits of advanced verification, fraud-detection technology can continuously analyze patterns in tracking data to identify inconsistencies and uncover data-spoofing attempts. For example, sudden jumps in location or unrealistic travel times can be red flags that indicate potential spoofing. Modern technology can also differentiate between tracking data generated from within an organization’s system and data coming from unauthorized sources, flagging discrepancies for further investigation. 

Expanding Visibility Strategies

Brokers rely on real-time freight visibility to track loads, ensure carrier compliance and win more business, but visibility is equally as important for carrier vetting. To enable early detection of fraud, granular visibility insights into individual carriers are invaluable for determining risk profiles and building a reliable and reputable network.

By deploying technology to enhance pre-tender visibility, brokers and shippers can gain deeper insights into a carrier’s history, assets and reliability before tendering a load. Advanced systems can provide a comprehensive footprint for each carrier, highlighting any red flags around insurance, lane history, VIN validation, or past tracking-compliance issues. 

With cargo thieves buying operating authority motor carrier numbers for nefarious purposes, brokers need immediate knowledge of suspicious activity. Automated visibility tools can alert stakeholders to changes related to the carriers in their networks.

Looking ahead, as the market grows and potential capacity constraints arise, brokers and shippers may move to expand their carrier networks to meet freight demands. When they do, visibility tools, insights and monitoring capabilities can help ensure that they don’t exponentially expand their risk as new carriers are onboarded. 

Room for Improvement

With so many companies low on the maturity curve when it comes to safeguarding their supply chains, there’s great opportunity for improvement. By incorporating fraud risk strategies into procurement and carrier management processes — in tandem with advanced technologies that automate, simplify and expedite identification and fraud prevention — shippers, brokers, and 3PLs can maintain the integrity of the supply chain.

At the same time, the human element should not be overlooked. Brokers and shippers need to have ongoing conversations with their transportation partners to make sure they’re dealing with the right people and carriers. By building trusted relationships with key stakeholders, promoting transparency, and sharing best practices and mutual fraud experiences, brokers and shippers can better navigate the complex landscape of carrier fraud.

Given the sheer volume of data in transportation and logistics today, and the increasingly sophisticated tactics of bad actors, supply chain and logistics leaders are recognizing the need for having the right people, processes and technology in place to monitor and minimize the impact of fraudulent activities. By detecting freight fraud early, they can save costs associated with cargo theft, improve carrier scorecards and carrier network performance, and enhance trust with customers and carriers.

Andrew Wimer is senior director, operations & professional services with Descartes.