Various anti-scam organisations have been warning the public about scams in freight forwarding. Today, we summarise the main tactic used by these scammers and how to avoid them.
How does a freight forwarding scam happen when importing?
Unwary or inexperienced importers are usually the target of freight forwarding scammers. They usually promote themselves via email marketing or B2B website advertisements (including Alibaba).
At first glance, these freight forwarders would seem legitimate. But without careful evaluation, you could find yourself in a trap. You could have your shipment held for ransom and be forced to pay a lot more than you first thought in order to get your cargo.
Freight forwarder scam – exposed!
Knowledge is power. Safeguard yourself and your business from falling prey into the very low freight quotes offered by scammers by knowing their strategy as shown below:
Step 1: The importer orders the goods from his supplier and pays for it.
Step 2: The supplier produces the goods and informs the importer it is ready
for shipping.
for shipping.
Step 3: The importer finds a freight forwarder that can move the goods, through either the scammer’s online marketing scheme or B2B online advertising.
Step 4: The importer pays the scammer with the agreed rate. The scammer prepares the cargo for shipment and moves the shipment to the requested destination.
Step 5: The scammer prepares the bill of lading (B/L) and sends copies of this to his client together with the export docs such as the commercial invoice and the packing list.
At this stage, everything that the scammer has done is legitimate and nothing is unusual. Any regular freight forwarder will be doing the same.
Here comes the freight forwarding scam alert!
Looking at Steps 1 to 5, it seems everything is moving safely and according to what you have discussed. But the next thing that happens is not something you are prepared for.
You patiently await for the arrival of the original B/L in the mail. Sadly, nothing arrives.
You know you need the original B/L to claim ownership of the goods because, without it, Customs won’t be able to release the cargo.
You contact the freight forwarding scammer and their response is not what you are expecting. They ask you to pay triple, if not more than triple, the rate of the agreed freight cost just for them to release your B/L.
The scammer realizes he now has you in his hands. You can’t do anything with your shipment unless he gives you the original B/L. Thus, he holds it ransom until you give them money.
At this point, you are left with no other choice but to give in to their request.
Can I file a case in court against freight forwarding scam?
Yes, you can most definitely file this in court. But be prepared for a lengthy and complex process in order to prove your case. It will most likely result in many meetings, working with a lawyer, hearing the matter in court and cost a lot of time and money. Worse, you have no clear assurance you will get the original B/L you need.
Could it get any worse?
Here’s more.
The fact that the cargo was picked up in another country, and was indeed transferred via sea to its destination port, doesn’t imply theft of the goods was made by the forwarder. It doesn’t clearly break any laws. This type of case is a grey area which is hard to resolve in court.
How can you avoid freight forwarding scams?
No one would want to go through the nightmare of freight forwarding scam. Here are some tips on how you can most certainly avoid this.
Choose a freight forwarder with integrity
All importers would like to save money when importing their goods. But engaging with a freight forwarder that deals with you only via email is not very safe.
Choose wisely. Work with a freight forwarder that is easy to establish credibility or someone referred to by your friends in the industry. Check if they have:
- Phone and office
- Social media pages such as LinkedIn, Facebook, Twitter, Google Plus,
and YouTube - Official website with an About Us page section to learn more about the manager and owner of the company
- Wide network of partners around the globe
- Active blog that shares latest trends, insights and tips regarding
freight forwarding
If it’s too good to be true, then it’s not true
Always remember that anything that sounds too good to be true is most likely not true. Legitimate freight forwarders can only offer their services at a certain price because they are aware of the freight forwarding costs these services require. Thus, if you are approached by a freight forwarder via e-mail, or respond to website ads with very low rates, that’s already a hunch to be extra careful.
Compare freight rates and learn about the breakdowns
How will you know if they are offering very low freight rates?
Get several quotes with a breakdown of various costs before closing any deal. Compare it with the rates of other freight forwarders. If the price offered by one looks suspiciously low, you can see from others what might have excluded to make it so cheap.
Know your INCOTERMS
You are new in the industry but it is not enough reason for you not to learn more about some of the important International Commercial Terms (INCOTERMS).
If unsure, it is best to consult on what these terms mean with a freight forwarder. This will not only help you learn more about the industry but it will also help you get a feel for the level of customer service they deliver and if it is to your expectation.
Avoid dealing with freight forwarding scammers. Be informed. Deal with credible freight forwarders such as Logical Maritime Services Limited.
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