Cargo theft has traditionally been a local and low-tech affair. Typically thieves snatch a product-laden trailer from a yard and then fence the stolen goods. The criminals are often tipped off by a disgruntled or terminated employee looking for a quick payday—or are employees themselves. On-the-road hijackings, long the stuff of organized crime lore, are actually a rarity.
Yard heists are still the leading type of theft. But in recent years, they have been joined by two new strains: fictitious and fraudulent pickups. Both involve a level of technological acumen generally not required to ply the trade the old-fashioned way. Both can have an international component to them with counterfeit but lifelike commercial driver licenses created online as far away as China. And they are increasingly the modus operandi of tech-savvy criminals who find this approach less risky than traditional theft.
The two terms are often used interchangeably. But there is a key distinction: Fictitious pickups involve goods pilfered using fake identifications and sham businesses set up to divert and steal cargo. Fraudulent pickups are typically defined as the taking of funds instead of cargo; an example would be the theft of cash advances used for such essential expenditures as diesel fuel.
However they are sliced, both constitute fraud. As far as fictitious pickups are concerned, the practice is becoming more commonplace. A study by two security groups, CargoNet and the Cargo Security Alliance, found that 51 fictitious pickups were reported nationwide through August, equal to 8 percent of the 605 total thefts reported through the first eight months. For all of 2012, fictitious pickups accounted for 74 reported thefts nationwide, or 6 percent of the total reported number of 1,195 reported thefts. In 2011, that figure was 5 percent.
The data represents thefts reported to CargoNet, an organization formed by Verisk Analytics, a Jersey City, N.J.-based risk assessment concern, and the nonprofit National Insurance Crime Bureau. CargoNet was created to help reduce theft and increase recovery efforts by allowing victims, their business partners, and law enforcement to share information about crimes.
Because victims are reluctant to publicize incidents of fictitious pickups or cargo theft in general for fear they might reflect badly on their security programs, crimes often go underreported, according to the report's authors, Walt Beadling, managing partner of Cargo Security Alliance, and Keith Lewis, vice president of operations at CargoNet.
According to the report, more than half of the fictitious pickups so far this year have occurred on Thursdays and Fridays. This isn't surprising, the authors contend, because those are the days that shippers are heavily pressured to rush cargo out the door to meet delivery deadlines and may not be focused on who is picking up the goods.
California, long a popular state for cargo theft given its size and proximity to international border crossings, is home to nearly 60 percent of all fictitious pickup incidents reported so far in 2013. That is more than the next nine states combined, the report said. There were 35 loads stolen in California as a result of fictitious pickups during 2012, down from 51 loads in 2011, according to data from the California Highway Patrol's (CHP) Cargo Theft Interdiction Program. However, the decline was offset by increased activity in states like Texas and Nebraska, where a number of arrests involved alleged perpetrators holding California residency, CHP said. For the first nine months of 2013, 45 loads were reported stolen in the state, reflecting a pickup in activity from the prior year, the CHP data show.
The loads reported stolen in California through fraudulent activity accounted for 10 percent of all reported stolen loads last year, the data show. From 2010 to 2011, the number of loads reported stolen due to fraud increased tenfold, according to the CHP data.
As they were in 2012, food and beverage items have been the most popular commodities targeted both for fictitious pickups and for overall cargo theft this year, according to the Cargo Security Alliance/CargoNet study. The value of stolen loads in general averages about $150,000 per load, according to Beadling. He doesn't have hard numbers on the value of goods snatched in a fictitious pickup.
NEW ERA, NEW RULES
A decade ago, such new-age forms of cargo theft were nonexistent. There was little need for identity verification because transactions were based on long-standing relationships and contracts were signed in face-to-face meetings, the report said.
Fraud-based theft emerged with the advent of digital processes that spawned new techniques of faceless chicanery. Digitization enabled thieves to expand their own unique supply chains, putting cohorts in offshore markets to work creating digital versions of CDLs that eerily resemble the real thing, Beadling contends.
Today, it is relatively easy and inexpensive to create a dummy company by using prepaid cell phones and credit cards that eliminate any way to trace identities or payment history. Obtaining a P.O. Box and a federal tax I.D. number is equally easy, according to the report. Sham companies can register with the U.S. Department of Transportation, obtain interstate operating authority, and get liability insurance online, the report said. Rented or stolen rigs can easily be masked by bogus placards, and drivers are able to obtain fake uniforms.
Once equipped, the thieves hit the Internet load boards, find an unsuspecting broker with a load to tender, and get busy. Late Friday afternoon pickups are preferred because shippers are particularly anxious by that time to move product, according to the report. The fake drivers tender their paperwork, take the load, and then depart. After one or two perfunctory phone calls to the shipper or broker to notify them they are "en route," the thieves are gone for good.
Many crooks are former employees of trucking and logistics companies, the study found. In one case, a recently terminated driver absconded with a customer's load by arriving in advance of the former employer's assigned driver, the report said.
The bad guys' task is made easier by trusting brokers who will "readily turn over a trailer with $1 million of tablet computers to someone they've never met," the authors wrote.
The report augments its findings with two illustrations so laughable that only an imbecile on the loading dock could miss them. One shows a rig with a placard that misspells the word "trucking." The other is an image of a falsified CDL with photos of two people on it.
The report suggests shippers employ several common-sense remedies. These include subscribing to services that issue daily reports of fictitious pickups in a specific area or region; communicating frequently with all supply chain partners; insisting that carriers follow all security guidelines and, if noncompliant, assume responsibility for the full value of lost or stolen cargo; vetting carriers and drivers by performing various background checks; and investing in monitoring tools to ensure an unbroken chain of custody.
In the case of driver vetting—perhaps the most crucial part of the process because it is the last time the shipper sees the cargo—shippers should require at least two forms of identification, the authors said. One overlooked form of identity verification is a driver's government-issued medical examiner's certificate, they said. "All drivers are required to have one, but no one thinks of asking for it," they wrote.