How motor carriers outsmart fraudulent credit card transactions
In an industry where financial transactions are as common as miles driven, safeguarding against fraudulent credit card transactions has become a critical priority for trucking companies.
Credit card fraud occurs when someone uses a stolen card or the information from the card to make unauthorized purchases in the card holder’s name. Many trucking companies are learning about this criminal activity the hard way. Credit card fraud has become more sophisticated in recent years, and it can be difficult to identify.
Understand red flag indicators
Declined transactions are often the first sign of fraudulent activity. Many times, another credit card number with a different name and address will be used after the initial transaction has been declined. Criminals illegally purchase batches of credit card information, and they cycle through the numbers until they find one that is accepted. A credit card chargeback will occur within 30 days of the fraudulent activity but at that point, the freight has already been delivered.
To prevent this type of fraud, educate your employees on multiple declined transactions. If the initial card has been declined and the caller offers another card with different identifying information, the incident should be further investigated before being approved.
Reconsignment is another common tactic used by criminals to cover their tracks. It involves purchasing freight from a shipper with a fraudulent credit card and then changing the destination location. The credit card holder’s address is initially established as the delivery location but after the freight has been picked up, the delivery location is changed to an address in another state. Again, it may take up to 30 days before the card holder learns about the fraudulent activity.
To prevent this type of fraud, a motor carrier should always contact the shipper to ensure that a reconsignment has been approved. Most customer contracts require shipper approval to change the delivery location for a shipment once it has been picked up.
Implement preventative measures
If you identify a fraudulent credit card transaction, the Federal Motor Carrier Safety Administration (FMCSA) recommends the following:
- Report the incident to local law enforcement immediately,
- Contact your insurance company,
- Notify the shipper, and
- Stop the shipment in transit if it hasn’t delivered.
Law enforcement will request the following information:
- All email communication (suspect, shipper, etc.),
- Recorded phone calls,
- Credit card institution contact information,
- Credit card holder’s contact information, and
- Shipper’s contact information
The credit card holder and the shipper are also victims of fraudulent credit card activity. A carrier’s loss on the freight charge is typically less than $5000, but the shipper’s loss of the freight can exceed $100,000. If the motor carrier did not prevent fraudulent activity that should have been discovered, then the shipper can pursue restitution in court with the motor carrier.
Key to remember: When fraudulent activity is identified, follow your training and respond quickly to protect the shipper, the credit card holder, and your brand.