Supply chain scams pull no punches

Grace Macej 31 May 2022

Learn how to protect your business from the three worst freight forwarding scams.

From one perspective, the global supply chains our industries have built all around the world are beautiful and impressive. Some are more elaborate than others, but they all act as long-distance assembly lines, each third party doing their part. The supply chain model opens up opportunities for smaller companies to be a piece of something bigger. Unfortunately, it also opens up opportunities – many, many opportunities – for bad actors to entangle themselves in the process and take it down.

Supply chain scams can enter at any point in the chain, from parts creation to inventory warehousing to shipping to invoicing, insurance, and even systems access. The terrible vulnerability of supply chains is that one bad link can jam up the entire chain’s process. Vetting and closely watching every part of the chain is key for any company that wants to keep business running smoothly.

Some of the more common supply chain scams involve the freight forwarding stage, when companies ship their goods. A freight forwarder is a company that organizes the logistics to transport goods. Business owners looking to ship their products abroad will hire freight forwarders, and competition in that area has grown immensely. This has drawn the attention of criminals who have devised ways to take advantage of the situation. 

The 3 most common freight forwarding scams

1. Withholding the Bill of Lading (BOL)

The BOL is an important legal document that serves as the contract of carriage and receipt of the company’s goods. Without it, the port of destination will not allow anyone to claim the shipment. In this scam, the bad actors pose online as a low-cost freight forwarding company. The unwitting victim will usually choose the false company because its prices beat everyone else’s. Everything goes smoothly until the goods are packed, loaded, and out for shipment, then the scammers deny the release of the BOL unless the victim pays a certain amount of money. Essentially, the BOL is held for ransom.

How to avoid this scam: Before searching for a freight forwarder, know the realistic general cost for your shipment. That way, you can tell if the quote you find online is too low to be legitimate. Also, choose companies that have their own official websites and check the customer reviews.

2. Lookalike company names

The duplicate name scam is another trick that can snag victims, particularly if they are in a hurry and not looking closely. Scammers know which freight forwarders are popular, so they try to imitate them as much as possible. Buyers beware – it is possible for companies to have the same names. Picking a bogus company pretending to be legitimate can lead to wasted time and lost money. 

How to avoid this scam: First, look at the company’s URL and make sure the spelling of the company name is correct. While companies can have the same names, they cannot share the exact same website. See if the name has been slightly misspelled to trick users. Also, look at the domain. If it’s a free hosting site like Wix, HubSpot, or Homestead, there’s a good chance it’s a fake site trying to be a lookalike.

3. Cargo theft

This scam follows the same pattern as the BOL scam. The cost of the service will be suspiciously low, and everything will go as planned until the goods are packed, loaded, and out for shipment. At that point, communication drops and the victim never hears from the scammers again. They take the goods for themselves and sell them on the black market. 

How to protect yourself: Use the advice for the above scams, and additionally, ask questions before agreeing to anything. Ask the company how it operates, read its terms and conditions, ask for contact numbers, and get its billing and shipping address. If anything seems off, you’ve probably stumbled upon a scam.

Tips to protect you against all supply chain scams

  • Practice vigilance at all times. Do not be in too much of a hurry when selecting a vendor. Properly vet any and every company with which you’re considering doing business.
  • Train all employees of your company to beware of scams like those mentioned above.
  • Deploy reliable cybersecurity tools, such as firewalls.
  • Exercise regular audits of all third-party partners and processes.
  • Investigate any unusual circumstances or financial anomalies right away.

Finally, check out Supply Chain Game Changer to learn more about supply chain scams. 

Further reading:
Could you be the weak link for hackers?
Protect your online store against Magecart attacks
Is your small business being targeted by supply chain hackers?

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