Dave Zamsky
Perhaps I am stating the obvious.
The reality is the impact of fraud is felt by everyone, including customers, policyholders and the general public, who are left to foot the bill by paying increasingly higher insurance premiums.
According to a report published by the FBI, the annual estimated cost of insurance fraud is $40 billion, and that does not even include health insurance fraud.(1)
Fraud losses related to shipping of high-value goods are a significant concern today and will continue to rise, especially as e-commerce shipping continues to grow dramatically. According to the Technavio Luxury E-tailing Market 2015-2019 report, the online sale of luxury goods will likely double to nearly $42B by 2019. So it’s important for the industry to be vigilant and be aware of ongoing scams and find ways to mitigate more common fraudulent activity.
High-value shipments are generally targeted well in advance by criminals, who often have a buyer already lined up before the crime actually occurs. And criminals are quite savvy in how they hit their marks. Small package shipping is often an easy target as fraudsters have identified some scams that appear to be effective if the right processes are not in place, and we’ll share some of those with you.
Combatting fraud requires awareness and planning.
According to Steve Abegunde, our Security Manager at Parcel Pro™, we’re definitely seeing commonalities in the types of fraud losses. A few of the more prevalent scams include:
- Identity theft – A thief uses another person’s credit card information to make a fraudulent purchase.
- Tracking scams – Someone impersonates a shipper, by providing the carrier a tracking number, then requests the shipment be re-routed to an alternate address.
- Address intercept – Someone opens an account with a jeweler and orders on consignment providing a false address. Upon delivery, they greet the driver asking, “Is that package for me? I’m from [business name in Suite #]. They are able to then intercept the package from the driver before he/she actually gets to the door.
- Empty package – Recipient discovers the goods are missing from the box.
Since fraud is not typically covered by an insurance policy, its best to find ways to avoid these costly disruptions.
Here are some best-practices that can help minimize your risk for being a victim:
- Do your homework – Follow-up with the credit card issuer to validate the buyer’s card matches the address of where shipments are to be sent. Verify how long the company has been in business and don’t be afraid to ask for references.
- Take it slow – Build trust over time. Send lower value shipments at the beginning of your relationship.
- Limit information – Don’t give out tracking numbers as they could be used to re-route shipments. Parcel Pro NOTIFY, available at parcelpro.com, masks the actual carrier tracking number to reduce risks of fraudulent re-routing.
- Break it down – Literally, divide a high-value shipment into multiple pieces to limit your risk.
- Get paid – Preferably up front and use methods that limit your risk. C.O.D. can often be scammed with fake cashier’s checks.
- Inspect – If possible, open the goods in front of the carrier and confirm the packaging doesn’t reflect tampering and the product is acceptable. If the package looks suspicious, have the carrier note details on the delivery receipt and take pictures.
Be prepared. Be aware. Plan ahead.
Dave Zamsky is the Vice President, Marketing, UPS Capital/Parcel Pro.
References:
(1) https://www.fbi.gov/stats-services/publications/insurance-fraud,
Additional material is adapted from: http://partners.wsj.com/ups/shipping-theft-challenge-and-response/?sr_source=lift_taboola
Follow UPS Capital on Twitter at @UPSCapital and on LinkedIn at https://www.linkedin.com/company-beta/1525/
