CSA White Paper: Cargo Theft by Fictitious Pick-up

Executive Summary

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, 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 eight percent of the reported types of cargo theft after stolen trailers, and 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

  • Of 1,192 cargo theft incidents reported to CargoNet in 2012, 73 were described as fictitious pick-ups, a 25% increase over 2011.  Fictitious pick-ups are already up over 8% year-to-date through August 31, 2013.
  • The commodities most frequently targeted for fictitious pick-ups are foods and beverages, electronics products and metals.
  • The average value of cargos stolen by fictitious pick-up was $203,744 vs. $174,380 per incident for cargo thefts overall during the study period, a 17% differential.  This may reflect the fact that fictitious pick-ups are typically more pre-meditated, targeted and carefully planned than opportunistic trailer and container snatches, which constitute the majority of cargo thefts.
  • 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. 
  • Fifty-five percent 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 paper at: www.securecargo.org