By Jonathan Stringer, Cargo Claims Attorney
Robert Todd, Vice President
An old cargo scam recently reappeared in the Windy City (Chicago). Each time the scam follows a basic plan and relies on one key for its success. The key is a motor carrier who took a short cut and did not check the background and reputation of the broker they hired. Remember what the Donner party learned, “don’t take no shortcuts and don’t tarry.” Here is how the scam works: First, a legitimate broker advertises for a motor carrier to move a relatively high-value load. In one case, it was a load of copper chips, in another case, it was brass, and in a third it was expensive rice.
Second, the imposter, a.k.a. the crook or purloiner, responds to the broker providing the legitimate information (often with fraudulent certificates of insurance) leading the broker to believe that the imposter is a legitimate registered motor carrier. In two of the cases encountered, the faxes from the imposter were from a copy shop and not the office of the motor carrier. Certificates often originate from the imposter and not an independent insurance agency. Paying attention to the source of faxes (headers or footers) and document sources could have helped the legitimate broker in detecting the brewing scam. The broker at this point may have some liability because of failure to verify. The imposter, assuming the identity of a legitimate motor carrier, is engaging in a type of identity theft, in addition to the cargo theft.
Third, the legitimate broker enters into a broker-carrier contract with the imposter providing the imposter with the pickup, delivery, load information, and the security requirements for the carrier to obtain the load from the shipper.
Fourth, the imposter, now acting as a broker, advertises for or contacts a naïve motor carrier and hires the unsuspecting motor carrier to pick up the load and bring it to an intermediate location (the short cut) not listed on the bill of lading.
Fifth, the crook then meets the imposter at this intermediate location, immediately pays the motor carrier (normally cash, another warning sign), takes the cargo, hits the road, and disappears into the night. The unsuspecting carrier has their truck information and their driver’s signature on the bill of lading, in the hands of the shipper.
Finally, when the shipper and consignee realize the load is gone, they track down the unsuspecting carrier and file a claim for the lost cargo with the unsuspecting carrier whose driver picked up the load and delivered it to an unauthorized consignee. Now the naïve motor carrier and their insurer must hire attorneys and pay the fees to try and unravel the mess to the best extent possible, asking the initial legitimate broker to share monetarily in the experience. The losses in these two cases each exceeded $100,000.
An innocent motor carrier looking for work can often overlook the signs of fraud which usually accompany these scams. One sure sign is payment in cash. Next, the so-called broker does not have a permanent office address, a verifiable history, or reputation. The faxes originate from copy shops or other stores unrelated to the transportation industry. Finally, the motor carrier delivers the load to a consignee or location not mentioned on the bill of lading which is usually, now, prepared by the shipper.
Thank you to our cargo attorney Bruce Spitzer, in Chicago, Illinois who works to defend Great West insureds.
A publication of Great West Casualty Company – Copyright 2012 – All Rights Reserved
