Two California residents, both Russian citizens, were sentenced in June on charges related to a double-brokering scheme that yielded $2.9 million over three years. Beginning in 2005, Nicholas Lakes and Viacheslav Berkovich of Los Angeles hacked into the FMCSA SAFER database and substituted their own contact information for the records of real trucking companies. Posing as carriers, they found loads on internet load boards (but not on 3sixty Freight Match!) Then they posed as brokers and subcontracted the loads to legitimate carriers.

When the original brokers paid Lakes and Berkovich, the criminals did not pay the actual carriers. Then the two men would go back to SAFER, falsify another carrier’s contact information, and double-broker more loads.

Defrauded carriers complained to the Department of Transportation (DOT), who investigated and eventually indicted the two men in October 2008 for computer fraud, mail fraud, and wire fraud. On June 29, Lakes and Berkovich were sentenced to 70 months in prison and $4.3 million in restitution.  (For details, see the original article from Wired Magazine or the sentencing summary from DOT.)

Sadly, fraud is a serious problem in the transportation industry. And in today’s difficult economic climate, even law-abiding companies have been known to renege on payment terms or file bankruptcy without meeting their commitments. Here are five ways to keep from becoming a victim:

1. Monitor credit changes, for your company and your brokers. Use TransCore’s new Credit Patrol service to monitor changes in brokers’ credit, so you’ll be among the first to know if a usually reliable partner is delaying payments to other transportation service providers. Equally important, you’ll be alerted immediately of any changes to your own credit profile, which could be a warning sign that someone is using your company ID fraudulently.

2. Track trucks, trailers and/or cargo to prevent theft or rejected loads. Deploy trailer tracking or in-cab communications, plus cargo sensing and advanced temperature control for sensitive goods and reefers. Trailer tracking can prevent equipment loss due to error or theft, and in-cab communication gives you constant access to the truck’s location and status while monitoring both driver behavior and engine health. Trailer tracking and cargo monitoring can also provide proof of delivery, cargo status and temperature, so loads are not challenged or refused by the consignee. Tracking can also protect your company from fraudulent insurance claims arising from fictional traffic accidents. Next time a motorist says your truck’s bumper damaged his car in Tennessee on Thursday, you can challenge the claim with location reports that prove your truck was in Kentucky at the time.

3. Choose a secure load board. Search for loads on TransCore’s freight matching systems, where our employees check the credentials of all participants to be sure they are legitimate. While other loadboards do not typically monitor their users’ activities, TransCore follows up on complaints, mediates payment disputes and offers a payment guarantee to carriers. Companies that are guilty of non-payment or double brokering are barred from posting. Because TransCore takes these extra steps to protect customers, many of the industry’s top brokers – the ones with the best credit scores and fastest carrier settlement record – post to TransCore load boards exclusively.

4. Update your information in the TransCore Registry. Sign up for the TransCore Registry, and keep your entry up-to-date. This free service provides an independent, public record of your company’s correct contact information that can be compared against the fraudulent documents that might be offered by prospective identity thieves.

5. If you have an in-house brokerage, qualify carriers every time you load them. Don’t assume that your favorite carriers still have full insurance coverage and current authority. CarrierWatch® insurance certificate service enables you to check the carrier’s records in the integrated DOT files against an image of the actual insurance certificate, provided by the insurance agent. Verify that names, addresses and phone numbers match, in case the DOT and FMCSA records have been altered.