The Journal. - How Cyber Thieves Are Disrupting U.S. Goods

Episode Date: April 19, 2024

Reports of freight fraud are on the rise, vexing trucking companies and regulators. And victims say that they aren’t getting any real help from law enforcement. WSJ’s Inti Pacheco unpacks one form of this fraud, called double brokering, and a trucking executive explains his personal efforts to stop the scammers. Further Reading: - A Brazen Yogurt Heist Shows How Cyber Gangs Are Hijacking U.S. Goods  - Growing Freight Fraud is Peeling Millions From the U.S. Shipping Market  Further Listening: - Nike’s Sneaky Sneaker Thieves  Learn more about your ad choices. Visit megaphone.fm/adchoices

Keith Brown works in trucking. He's a vice president at GMH Trans, which hauls cargo from the Northeast all around the country. What do you like about trucking? The job itself, I like the fast pace. It's always something new. You know, you think you've seen it all and then you haven't. In 2022, Keith came upon something new that he didn't like.

He got a call from a trucker. This trucker was confused because GMH's name was on the paperwork for the trucker's load, but GMH wasn't the company that had hired him. So he Googled us, found a phone number, called me, and, you know, basically asked, you know, how he ended up with our load through this third party. And that's when we kind of started digging. Keith discovered that a criminal operation

had intercepted some of GMH's loads. He tried to catch them. And then the scammers retaliated by impersonating GMH and harassing its customers. That was extremely disruptive. We would run into different customers of ours that we've worked with for 10, 15 years, all of a sudden said they couldn't work with us. What kind of cost did that have for your business? Upwards of $100,000, easily. Trucking companies like GMH have been falling victim to this crime. Freight fraud costs at least $500 million in payments annually, according to an industry group. For Keith,

payments annually, according to an industry group. For Keith, this fraud would turn him into a vigilante who has taken it upon himself to try to stop these criminals in their tracks. Welcome to The Journal, our show about money, business, and power. I'm Kate Linebaugh. It's Friday, April 19th. Coming up on the show, how the trucking industry is being infiltrated by online scammers. We'll see you next time. delicious food, and diverse cultures. You'll love it so much, you'll want to extend your stay beyond the matches. Get the ball rolling on your soccer getaway. Head to visittheusa.com. Double brokering is a scam, and it's been taking off in trucking.

Here's how it works. Let's say I have a shipment of goods that needs to get delivered, and I hire someone to take that load. But then that person turns around and essentially subcontracts my load to a different carrier, and I don't know about it. The fraudster pays the other carrier less and pockets the difference. That's the scam. That's double brokering. Our colleague Indy Pacheco has been reporting on it. And why is giving a load to someone else illegal? Well, it would be illegal if the person who owns the goods doesn't know that you're giving it to someone else.

Because everything happens, like, with contracts. You know, you've got to be able to trace the paperwork to see who owned the load, where it was supposed to get delivered. It's like accountability. Yeah, exactly. This double brokering happens online in centralized hubs that match truck drivers with loads. Trucking transactions, delivery transactions these days happen on something called a load board. There are many load boards and what you have there is like whoever wants to deliver something from California to Florida, you'll find carriers there who will bid to take care of your cargo.

So then you just assign the cargo through that platform. Yeah, they call them essentially matchmaking as opposed to, I don't know, like... Yellow pages? Yellow pages? Yellow pages, yeah. And this is only possible because of the internet, basically. Basically, yeah, because it all moved online and people are not used to vetting people online. Yeah, like double checking, like, oh, is this a real company?

Who are these scammers? We've heard that there's a lot of international groups getting involved in this because they realize how easy it is to do it. And so we've heard that there's people from Armenia or other European countries that are involved in this and do it as basically as a daily job. You know, one expert was telling me that there are call centers, you know, dedicated to double brokering. And that means there's, like, someone whose job is to go every day to work and try to double broker loads and make money by committing fraud.

Sometimes the fraud goes even further, and the scammers steal the truckloads or hold it ransom. And Inti says this kind of crime is really hard to stop. You just don't know who you're dealing with, right? Because it's all online. And so everyone's using fake names, fake addresses, fake phone numbers. So like, how do you catch that? And then the pace at which it happens, like it's happening every single day. It's happening to a lot of people, like the person who I talked to at the

largest load board. They said that it's like an ongoing daily siege of attacks. Let's say your whole operation is discovered and you get shut down. You just set up another phone number. You just pretend to be another company and you keep doing this. When GMH, the company Keith works for, got double brokered in 2022, Keith wanted justice. So he reached out first to the trucking industry's main regulator, the Federal Motor Carrier Safety Administration, or the FMCSA. And they directed him to another agency. And from there, he kept getting passed along. We'd get somebody to set up a call with us. You know, it was like a little bit of excitement. You know, finally someone's going to listen to us. And sure, sometimes they listened, but

nothing ever came of it. Did you feel helpless? Yes, very much so. Was there like a moment when you, when it really sunk in that no one, there was no agency that would be able to help you? I mean, I think it was in this case with the 11 loads that got double brokered, where we had all of the evidence, we had solid evidence. We had people from start to beginning that knew what happened. You know, we have a paper trail, we have everything. And it was just, you know, no big deal to anybody that we tried to, you know, bring it up to. An FMCSA spokeswoman said the agency plans to update its systems to help prevent fraud. Inti says many of the trucking companies he spoke with are at their wit's end.

Many of the trucking companies he spoke with are at their wits end. It's a very easy crime to commit. It's very hard for law enforcement to, you know, stop this. And people are getting very frustrated. Carriers like Keith are finding themselves alone with no help once, you know, they get defraudeduded once the cargo gets stolen and their business is at risk they have almost no one to listen to them to like try to fix this it's a very slow process like and the criminals are not slow as a criminal i believe that if you see this is the situation you you just keep doing it. It's easy. It's good money. So why not?

Double brokering kept happening to GMH and lots of other companies Keith knew of. For Keith, this was such an impossible situation that he felt like he had to do something about it. That's next. Summer's here, and you can now get almost anything you need for your sunny days delivered with Uber Eats. What do we mean by almost? Well, you can't get a well-groomed lawn delivered, but you can get a chicken parmesan delivered.

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Terms apply. Keith Brown wanted to expose the fraudsters who were double brokering. And so he and some colleagues set up a database and a website. It has tools to help companies avoid getting scammed, and it points out carriers that are suspected double brokers. How would you describe this work? Are you like a vigilante or? Well, that's probably the best way to describe it, given the fact that the government isn't doing anything about it. And are you like obsessively trolling these boards to find scammers?

Yes. It's more challenging these days because they all know who we are. But, you know, we still find a way to do it. When Keith thinks he's identified a double broker, he lists them on his website. And sometimes he'll call them up to let them know he's onto them. Like in this recording Keith shared with us. Hello? Hi there. How are you?

Good. How are you? I'm doing well. Do you have any more trucks available? Yeah, the trucks are a lot. Keith's talking to someone he's suspected of being a double broker. Oh, you are with which company? I'm sorry. You are with Tracker? No, I'm with your company.

I work for you. Oh, sorry. What? On this call, Keith says he was talking to a person who'd been using the name Gordon. The real Gordon is the owner of GMH Trans. He's Keith's boss. So Keith is playing that up in this call. I work for you, Gordon. You're the owner of GMH, right?

Okay, Gordon. Okay, yeah, my name is Gordon. I don't know from where you find my name, okay? But anyways, okay, Gordon. According to Keith, this call got heated. We tried to contact this fake Gordon to corroborate Keith's account. We got a phone number and an email address from Keith. But the phone number didn't work, and we got no response to our email. Do you feel like you're trying to stop the bad guys? Yeah, yeah. That's what we're trying to do. And you're a good guy?

Yeah, sometimes I play a bad guy, though. A few months ago, from out of the blue, Keith got a message. He says it was from the person who double-brokered GMH in 2022. Why do you think this was the person behind the double-brokering from 2022? He admitted to it. What? Yeah. He wasn't shy about it.

What did he say? He knew things that he wouldn't know unless it was him. You know, as far as what transpired, the number of loads, stuff like that. Wow. Yeah. And he basically was asking me for a job. He wanted to be an agent for us. You know, tried saying that, you know, he's not a double broker anymore.

He's turned a new leaf. What was your reaction to that? It was very clear that that would never happen. Did that feel like a victory? It did. It did. That's all for today. Friday, April 19th. The Journal is a co-production

of Spotify and The Wall Street Journal. The show is made by Annie B of Spotify and The Wall Street Journal. Our engineers are Griffin Tanner, Nathan Singapak, and Peter Leonard. With help this week from Sam Baer. Our theme music is by So Wiley. Additional music this week from Peter Leonard, Griffin Tanner, Blue Dot Sessions, and Extreme Music. Fact-checking by Mary Mathis. Thanks for listening. See you Monday.