5 Ways The Auto Transport Industry Can Combat Carrier Fraud

Bek Abdullayev, founder and CEO of Super Dispatch, a leading software platform for the auto transport industry.

The $10.5. billion auto transport industry is built on trust, but fraud continues to cast a long shadow. Beyond stoking doubt and straining relationships, fraud can result in severed partnerships, legal hassles and massive financial losses. Make no mistake: Everyone is feeling the pain, from owner-operators to small trucking companies and large carriers.

While double brokering, bait-and-switch pricing scams and vehicle theft may seem inevitable, that doesn’t mean industry players should take this behavior lying down. Quite the opposite; there’s strength in numbers and the industry would benefit if everyone took an active role in standing up to fraud.

To get started, here are five proactive strategies carriers, shippers and brokers can take to combat carrier fraud and safeguard auto-transportation activities:

1. Do your due diligence and prescreen your partners.

Steer clear of fraud before entering into a partnership or service agreement by pre-screening potential carrier and shipping partners. Start with the basics. Look at the company’s website, search for online reviews and verify their contact information. The absence of such reviews and suspicious or sparse contact details should set off alarms.

Look out for other red flags including a partner’s reluctance to provide a quote or detailed service agreement, missing motor carrier numbers or demands for full payment before services are rendered.

Taking it further, you can also verify a potential partner’s insurance coverage upfront to confirm they’re being honest about their operation and type of coverage. You can utilize online shipping platforms with built-in screening requirements that weed out, and help prevent, bad actors from taking advantage of potential partners. Conducting your due diligence is a necessity.

2. Go all in on technology.

Some people blame technology for the rise in fraud in auto transportation, but it’s also the key to overcoming it. By embracing technologies like artificial intelligence and the Internet of Things (IoT) to enhance load matching, shipment tracking, delivery workflows and inspections, you can protect your transport operations against many fraudulent activities.

Transportation management systems can also provide safeguards against fraud that include user verification services, the ability to track and analyze carrier performance indicators, real-time truck tracking services and inspection measures, to name a few. Taking advantage of such technologies enhances transparency and accountability by providing concrete evidence of all auto-transport activities and reducing the risk of fraudulent acts.

Before integrating these advanced technologies into your transport operations, conduct a thorough risk assessment to identify potential vulnerabilities and gauge how technology can mitigate them. Protect your assets and investments by establishing cybersecurity measures such as regular password updates and multi-factor authentication. This is particularly important for smaller operations lacking dedicated IT support.

3. Lay out your terms and expectations.

When you clearly define your terms and expectations at the front end of a partnership, you establish a foundation of mutual trust and accountability. This transparency goes a long way in curbing fraud.

Consider laying out your service agreement terms and transportation expectations as a roadmap that guides all parties toward mutual understanding. By setting guidelines early on, you create a framework that minimizes the risk of fraud from taking hold.

If a potential partner hesitates to your terms or proposes questionable terms of their own, trust your instincts. Don’t hesitate to step away from any arrangement that doesn’t align with your standards. Clarity and honesty are key to thwarting fraud. Keep a digital paper trail via email or an online platform, ensuring you have a documented history of your communications should something go awry.

4. Keep lines of communication open.

Communication is a critical line of defense against fraud in the auto transportation industry. Clear, honest and frequent communication isn’t just a nicety; it’s a major linchpin of trust between carriers, brokers and shippers.

By establishing regular updates via phone, email or a dedicated online platform, transportation partners can build a rapport, share information, resolve issues and quickly identify signs of fraudulent behavior. If a partner or potential partner suddenly goes silent or fails to respond to your inquiries promptly, it could be another red flag signaling trouble. Remember: Maintaining communications with carriers, dispatchers and drivers goes far in protecting your interests.

5. Establish a fraud response plan.

Despite your best efforts, fraudulent activities can still happen. That’s why implementing a plan to deal with fraud is essential. This starts by simply making your team aware of warning signs. Before working with a partner, remind them to check for online reviews, verify contact information and trust their instincts if interactions with potential partners simply don’t feel right.

If they encounter any of these issues or suspect fraudulent activity, provide them with steps to escalate their concerns, including internally reporting and externally filing a complaint with the Federal Motor Carrier Safety Administration. Have your plan include a reminder for your team to regularly update their system passwords and only use protected networks. An online shipping platform can also be part of your fraud response plan to help you identify untrustworthy partners from the start, but also provide support should fraudsters slip through the cracks.

Once you have a proactive fraud-response plan in place, stay on top of evolving tactics being used by fraudsters by regularly reviewing and updating your plan. This ensures you can swiftly respond to shifting schemes and any damage done to your operation, financials and reputation.

Final Thoughts

Where there is opportunity and money to be made, bad actors will find a way to exploit the system. So while there isn’t a 100%, fail-safe way to prevent fraud, that doesn’t mean you can sit out this fight. Accepting fraud and theft as the norm of our industry is a costly mistake. Combating costly fraudulent activities takes a concerted effort from all industry stakeholders.

By working together, industry leaders can foster a culture of transparency, accountability and collaboration that will curb fraud, protect their interests and uphold the industry’s integrity.

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