How to avoid being a victim of freight forwarding scams

Various anti-scam organisations have been warning the public about freight forwarding scams. Today we summarise the main tactics used by these scammers, and how to avoid them.

How do freight forwarding scams happen when importing?

Unwary or inexperienced importers are usually the target of freight forwarding scammers. They generally promote themselves via email marketing or B2B website advertisements (including Alibaba).

At first glance these freight forwarders would seem legitimate. Without careful evaluation, however, you could find yourself in a trap. Your shipment could be held to ransom and, in order to get your cargo, you may be forced to pay a lot more than you expected.

How to avoid being a victim of freight forwarding scams

Freight forwarder scams – exposed!

Knowledge is power. By knowing the scammers’ strategies, you can safeguard yourself and your business from falling prey to the very low freight quotes they offer.

Step 1

The importer orders the goods from his supplier and pays for them.

Step 2

The supplier produces the goods and informs the importer they are ready for shipping.

Step 3

The importer finds a freight forwarder that can move the goods into Australia, either through a scammer’s online marketing scheme or via 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). He sends to his client copies of this and the export docs, such as the commercial invoice and packing list.

How scammers freight forwarders trick importers

How regular freight forwarding works

Looking at steps one to five, it seems everything is moving safely and according to what you have discussed.  At this stage everything the scammer has done is legitimate and nothing is out of the ordinary. Any regular freight forwarder would be doing the same.

Regular freight forwarding process flow

Here comes the freight forwarding scam alert!

The next thing that happens, however, is not something for which you are prepared.

You patiently await 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. Without this, Customs cannot release the cargo.

You contact the freight forwarding scammer and their response is not what you are expecting. They ask you to pay triple, or more, than the agreed freight cost in order for them to release your bill of lading.

The scammer knows he now has you in his hands. You can’t do anything with your shipment unless he gives you the original bill of lading. Thus he holds you to ransom until you give him the money he wants. This can range from $900 to $35,000 just for a single shipment.

At this point you are left with no option but to accede to his request.

How freight forwarders process orders

Can I resolve freight forwarding scams in court?

Yes, you certainly can file freight forwarding scams in court. Be prepared, however, 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 will 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 – let’s say China. Let’s also say the cargo was indeed transferred via sea to its destination port in Australia. This doesn’t imply theft of the goods 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.

Checklist to avoid freight forwarding scams

No-one would want to go through the nightmare of freight forwarding scams. Here are some tips on how you can avoid this.

Anti-scam freight forwarding checklist

Choose wisely and pick a freight forwarder with integrity

All importers would like to save money when importing their goods. It is, however, not safe to engage with a freight forwarder who only deals with you via email.

Choose wisely. Work with a freight forwarder for whom credibility is easily established, or someone referred to by your friends in the industry.

Check if they have:

• Telephone and office in an Australian capital city
• Social media pages such as LinkedIn, Facebook or YouTube
• Official website with an About Us page section to learn more our company
• Active blog with latest freight forwarding trends, insights and tips

Choose your freight forwarders wisely to avoid getting scammed

If freight rates are too good to be true, it’s a scam

Always remember, anything that sounds too good to be true most probably is! Legitimate freight forwarders can only offer their services at a certain price because they know and understand the freight forwarding costs these services require. If, therefore, a freight forwarder approaches you via email, or you respond to website ads offering very low rates, be very wary and be extra careful.

Compare freight rates and learn about the breakdowns

How will you know if they are offering very low freight rates? Before closing any deal, obtain several quotes providing a breakdown of the various costs. Compare these with the rates of other freight forwarders. If the price offered by one looks suspiciously low, you can see from others what might have been excluded to make it so cheap.

Freight rates too good to be true are scams

Know your Incoterms and difference between shipping methods

You are new in the industry, but this is all the more reason for you to learn about some of the important International Commercial Terms (Incoterms).

Be aware of the costs, whether you’re buying or selling Ex Works (EXW), Free on Board (FOB), Cost Insurance and Freight (CIF), and Delivered at Place (DAP). If unsure, consult with an experienced, reputable freight forwarder like Freight Forwarder Quote Online Australia so you understand exactly what these terms mean. This will not only help you learn more about the industry, but also help you get a feel for the level of customer service they deliver and if it is to your expectation.

Know more about your INCOTERMS

Contact us if you think you are walking into any freight forwarding scams

Avoid dealing with freight forwarding scams. Be informed. Deal with credible Melbourne freight forwarders such as Freight Forwarder Quote Online Australia and Freight Forwarding.