CSA White Paper: Cargo Theft by Fictitious Pick-up

Cargo theft by fictitious pick-up is a growing threat to supply chain security.  A proliferation of information technologies enable thieves to defraud shippers and carriers at multiple points across the supply chain.  This paper seeks to better define the terms and scope of this new and rapidly evolving brand of “supply chain cybercrime”, and recommends 7 Best Practices that can help prevent it.    

Definition 

Fictitious pick-ups are criminal schemes that result in the theft of cargo by deception that includes truck drivers using fake IDs and /or fictitious businesses set up for the purpose of diverting and stealing cargo.  Crimes of this type are also known as “fraudulent” or “deceptive” pick-ups, and the terms are used interchangeably.  We’ve chosen to use the term “fictitious” because the perpetrators are picking up cargos using fake identification and/or fictitious carrier names, and (in most cases) fencing the stolen goods on the open market.    

We further distinguish fictitious pick-ups from scams in which cargo isn’t stolen, but monies are taken from shippers, freight brokers, and legitimate carriers; for example, by “double brokering” loads and taking expense advances for cargo about to be shipped or in transit.  From a legal standpoint, all crimes of this type are classified as “fraud”, “theft” and/or “identity theft”.  

Our available data is from incidents of fictitious pick-up in which cargo has been lost and reported after the fact.  Because victims are often reluctant to report fictitious pick-ups due to inadvertent failures to vet carriers and drivers properly, this crime is underreported, however, it now accounts for over nine percent of the reported types of cargo theft after stolen trailers, and is becoming increasingly more common.

What is Fictitious Pick-up?

Fictitious pick-up is a form of cargo theft that involves criminals posing as legitimate truck drivers to steal cargo directly from shippers, sometimes setting up fake transportation companies to do so.  It is one of several types of identity theft crimes targeting the motor freight industry that include theft of advance freight payments by commercial wire transfer fraud (T-Chek, Comcheck, etc.).  

In a fictitious pick-up, criminals fool companies into willingly turning over loads to them.  They use on-line load posting sites to win transportation bids, or simply show up as drivers with fake credentials, claiming to be assigned to a load.  Variations of this scam include a recently terminated  driver arriving in advance of his former employer’s assigned driver.

The internet has increased the ease with which criminals can set up fake companies and acquire motor truck cargo insurance, and fictitious pick-up schemes are proliferating. 

Fictitious Pick-up Data Highlights: 

  • Overall, reported cargo thefts in the US decreased in 2013, continuing the trend seen in 2012.  In 2013, CargoNet recorded 1,090 incidents, down 9% from the 1,197 incidents reported as of the end of 2012.  Cargo theft in the first half of 2013 decreased significantly from 2012 while the second half had a similar number of reported incidents.  The overall decline may be due to the shift to  cybercrime, which is far less risky, physically dangerous and demanding than stealing a tractor-trailer.  Cyber thieves are harder to catch and much less likely to be arrested and prosecuted.
  • Of 1,195 cargo theft incidents reported to CargoNet in 2012, 74 were described as fictitious pick-ups, a 27% increase over 2011.  Fictitious pick-ups were  over 9% of all cargo theft incidents in 2013, an increase of 50% over 2012, and 90% over the two year period from 2011. The average value of cargos stolen by fictitious pick-up was $154,134  vs. $159,376 per incident for cargo thefts overall in 2013, a 3% differential, not statistically significant.
  • The commodities most frequently targeted for fictitious pick-ups are foods and beverages, electronics products and metals, however, a disproportionate number of fictitious pick-ups are directed at food and beverage – 60 % vs. 30% overall – suggesting these commodities are being deliberately targeted because they are easy to fence, but not necessarily a long-term trend.
  • Over half of fictitious pick-ups occur at end of week, on Thursdays and Fridays when the main concern of shippers and brokers is in meeting a delivery date and satisfying the customer; this urgency to deliver causes some shippers, brokers and warehouse operators to slack off on driver and carrier screening and the due diligence processes to verify ID’s.  
  • Over 50% of all reported fictitious pick-ups  from 2011 through 2013 occurred in California.  Significant fictitious pick-up activity has also been reported in Florida, Texas and New Jersey.  Interestingly, in some areas of the Midwest-- including Indiana, Nebraska, Wisconsin-- conventional cargo theft is relatively rare, but fictitious pick-up is occurring.   

For additional informatiion, download full paper below.