The Link Between Hyper-Competition and Freight Fraud

Training gaps and outdated tools have left freight security full of blind spots; competition makes them wider.Article content

The trucking industry carries roughly 70% of all goods across the United States, yet it’s operating in the middle of a freight recession. Volumes are down, rates are volatile, and with many providers fighting load to load just to stay in operation, competition is at an all-time high. This downturn isn’t happening in a vacuum. A slowing economy means both businesses and consumers are purchasing less. Lower demand ripples directly into trucking, driving fierce competition for every shipment. And despite frequent headlines claiming otherwise, this isn’t a driver shortage story. Capacity exists; it’s freight demand that has shrunk, leaving carriers and brokers battling harder for fewer loads.

The people on the front lines of this industry are working harder than ever – balancing coverage speed, customer service, and compliance under extreme pressure. But that same intensity comes with a cost: security practices are being stretched thin at the exact moment fraud is growing more sophisticated.

The challenge isn’t that companies are careless or unwilling to train their people. It’s that many systems in use were built for a different market cycle, and they’re showing their age. Paired with the reality of today’s fraud schemes, blind spots are inevitable.

The Competitive Trap

Competition has always been part of freight, but a recession magnifies it. With volumes down and margins razor-thin, providers are under relentless pressure to win business. That pressure reshapes security in three ways:

Immediate rewards, delayed risks: Shippers reward speed. A load booked in minutes looks like a win, while fraud may not be uncovered until weeks later. That lag makes it harder for operators under pressure to slow down and double-check. Coverage over caution: When customers are pushing for lower rates and faster turnarounds, pausing to investigate anomalies feels impossible. If one provider hesitates while another jumps, the load is gone. In this climate, every second feels like the difference between keeping and losing business. Tools outpaced by fraud: Many of the systems in use today were designed to catch traditional compliance issues, not the sophisticated identity theft and document fraud that dominate now. Providers may be following the process, but the technology itself can’t see what’s hiding in plain sight. Fraudsters count on that.

This isn’t about anyone “cutting corners.” It’s about a market that demands speed at the same time fraud has become more complex. That combination leaves blind spots wide open.

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The Gaps Technology Doesn’t Flag

Technology has transformed how freight is booked, tracked, and vetted, but it hasn’t eliminated risk. Systems are built to catch what they’re programmed to see: safety scores, expired insurance, duplicate MC numbers. But fraud doesn’t always follow those patterns.

In today’s market, the absence of an alert isn’t proof of safety. It’s just silence. Busy, overworked operators in high-pressure, high-volume roles often have to keep moving if nothing obvious is flagged. That isn’t neglect; it’s the reality of covering freight in minutes, not hours. The challenge is that fraudsters know how to design their scams to pass as “normal” inside these systems.

Fraudsters count on this. They know how to slip inside the gaps: activating dormant authorities with a few legitimate trucks to appear “normal,” forging insurance certificates that pass at first glance, or impersonating carriers whose data looks clean on a platform. On the surface, everything checks out. Underneath, the risk is already in motion.

It does not help the industry when many so-called fraud prevention experts are exposing “how” they are catching some of these anomalies.  Broadcasting how a scam was detected may generate views, engagement, and impressions, but it is also tipping our hand as to what the bag guys are doing wrong.  In the short term, fraudsters may be getting caught in some of these publicly advised traps, but at the end of the day we have only shown the bad guys what exactly they did wrong, and they will change it.  This keeps the already battle-weary groups of legitimate carriers and brokers wondering what the next evolution of scam is coming their way.

Case Studies: How Blind Spots Become Breaches

Case Example 1: The Ghost Carrier with Rented Authority

A logistics provider onboarded a carrier whose MC and DOT numbers checked out as valid. Their authority was active, insurance was current, and they even had a couple of trucks on file – enough to pass a surface-level review. On paper, everything looked normal. But behind the scenes, the carrier wasn’t hauling most of the freight they booked. Instead, they were renting out their authority to other operators and sub-brokering loads. Because they had a minimal fleet, they could appear legitimate while moving most shipments through unaffiliated drivers.  This is a classic example of illegal brokerage.

The provider only realized the problem when a shipment failed to deliver and could not be traced to the supposed carrier. The authority holder insisted they hadn’t hauled it themselves – and technically, they hadn’t. The fraudster had simply leveraged their “legitimacy” to hide the scheme in plain sight.

Case Example 2: The Recycled MC Number

A dormant authority suddenly reappeared in FMCSA records as “active.” To a logistics provider under pressure to cover a load, it looked like a small fleet restarting operations. The system showed it as compliant, so the load was booked.

What didn’t show: the carrier’s authority had been hijacked. The listed address no longer matched the company’s history, the phone number was a VoIP line, and the “carrier” had no verifiable equipment. The freight was immediately re-brokered, and by the time the scam was uncovered, it had vanished.

Case Example 3: The Stolen Identity

A mid-sized 3PL was stung by a fraud ring that impersonated a well-known regional carrier. The scammers didn’t stop at recycling the carrier’s MC number – they layered their deception. They created a nearly identical Gmail domain to mimic the company’s email addresses, set up a prepaid phone to field calls, and even spoofed phone numbers to appear as if they were calling from the carrier’s real office.

In some cases, fraudsters go further still by exploiting call forwarding or even SIM hijacking, a tactic where they convince a phone carrier to transfer a number to their own device. When that happens, all calls and texts, even verification codes, are routed to the fraudster. From the outside, it looks like you’re speaking to the real carrier. On the surface, everything matched. With freight moving fast, it was almost impossible for busy staff to distinguish the scammer from the legitimate carrier. By the time the deception came to light, the freight – and the money – were long gone.

Turning Tools Into Real Protection

No technology can replace the discipline of looking past the surface. Fraudsters know how to make their paperwork look clean and their records appear compliant inside the very systems providers trust. That’s why technology should be used to support human judgment, not replace it.

Compliance platforms like Carrier411, Highway, and Carrier Assure can surface carrier history, safety scores, and operating patterns. Fraud-prevention tools such as FreightValidate add identity verification and facial recognition, while DAT and Truckstop have rolled out stronger anti-fraud features on their load boards. Insurance verification services like RMIS give real-time policy checks.

All of these are valuable. But the reality is that fraud doesn’t always show up in a system. A COI can still be forged. An reinstated authority can still be hijacked. An email domain can still be off by a single letter. These are the small details that systems miss, and the cracks fraudsters step through.

And while time is the scarcest resource in a freight recession, the few extra moments it takes to verify what’s behind the data can be the difference between protecting freight or losing it.

Why Security Has to Evolve

The freight recession has created a paradox: at the very moment providers are working harder than ever to win and protect business, fraud is getting more sophisticated and harder to spot. Competitive pressure demands speed. Systems deliver data. But neither alone is enough to close the gaps that fraudsters exploit.

The blind spots aren’t the result of neglect. They’re the natural outcome of a market moving faster than the tools designed to secure it; of teams asked to do more with less, in an environment where every load feels like survival. Security doesn’t have to slow providers down, it simply has to evolve with the market. But the tools have to be matched with training, the process has to adapt to today’s fraud schemes, and the industry has to share more openly about what’s working and what isn’t.

Freight isn’t failing because people don’t care. It’s failing where competition collides with outdated tools and limited time. Until that alignment is addressed, fraud will keep finding its way in. For 3PLs, brokers, and providers of every size, the path forward is clear: keep competing on speed and price alone  – and risk opening the door to more fraud – or build resilience into security and give customers a reason to stay.

The post The Link Between Hyper-Competition and Freight Fraud appeared first on FreightWaves.

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