What You Need to Know About Bills of Lading and Fraud

An important piece of paperwork in today’s trucking industry has been around in some form or another for centuries: the bill of lading. The document’s history can be traced as far back as the 13th century, when merchants recognized the need for a written agreement documenting the transport of goods.¹ 

Today, a bill of lading (BOL) is a legally binding document summarizing the terms and conditions for a specific shipment. At its simplest, a BOL describes the type, quantity and destination of goods being shipped. It also serves as a receipt for the shipper once the shipment is delivered.² 

Why is a bill of lading important? The document not only helps ensure the safe and efficient delivery of goods, but it also provides a paper trail that protects both the carrier and shipper by documenting facts about the shipment.³

In addition, a BOL provides the driver and carrier all the details they need to process and invoice the shipment correctly. As one supply chain expert notes, not having this document removes built-in protection for the carrier and makes getting paid for a load, whether through a shipper or broker, extremely difficult.⁴

While a BOL is one of the most critical documents in shipping and transport today, it can also be used to commit fraud – and in turn, help protect against fraud. Developing a better understanding of bills of lading and fraudulent schemes can help transportation professionals and their insurance brokers identify and protect against losses. 

Here are some examples of how a BOL could be used fraudulently: 

Incorrect and fraudulent bills of lading: A BOL with false information can be used to commit fraud, money laundering and other illegal activity, which is more common with ocean freight.⁵
But trucking companies should take heed. When picking up loads, drivers should carefully check the BOL before leaving the pickup site, ensuring the items loaded on the truck match the inventory listed in the document. Any agreed upon terms should be listed on the BOL. Drivers are also advised to pay attention to any restrictions on delivery, especially those that could result in docking of pay, such as guaranteed delivery dates. Taking pictures of the load and paperwork can help trucking professionals protect themselves should any issues arise.⁶

Holding a BOL for ransom: Freight forwarders are legitimate: They act as an intermediary between the company making shipment and the final destination for the goods.⁷ But there are imposters. In a fraud scheme, a scammer (typically online) will pretend to be a freight forwarder offering unreasonably low rates. When the goods arrive at the port of loading, the scammer will withhold the BOL, which is required for the release of the shipment. They then proceed to contact the client and demand more money if they want to receive their goods.⁸ If the BOL is not released, it can cause severe supply chain delays and disruption. It can also cost companies thousands of dollars in losses, especially if quality of their goods is affected due to disruptions.⁹

Most ransom situations involve pirates and ocean-going cargo vessels; in trucking, this type of crime is much less prevalent. However, there have been incidents of drivers holding their cargo for ransom from their employer or the broker. Trucks and cargo aren’t usually hijacked and held for ransom; they’re simply stolen. The thief is usually intent on selling the stolen goods on the black market.

Double brokering scheme: With some fraudulent acts, such as double brokering, a BOL can be a carrier’s first line of defense. Double brokering occurs when a broker or carrier transfers a load to another trucking company without notifying the shipper. An unauthorized load transfer can lead to many potential risks, including liability, reputational damage and delayed or absent payments. In fact, carriers run a high risk of not being paid after hauling a double-brokered load and may have trouble identifying and contacting the original broker responsible for the load.¹⁰

The BOL can help carriers protect themselves from falling prey to double brokering. A BOL requires three signatures: the shipper’s, the carrier’s, and the receiver’s. The shipper’s signature confirms the quantity and quality of the loaded goods meet the industry standard, the carrier’s signature verifies the load was in good condition upon receipt, and the receiver’s signature verifies that goods were received.¹¹ If you’re a carrier and your name is not on the BOL, that’s a red flag.¹²

With any type of paperwork—and there’s still a lot of it in the trucking industry—the unfortunate reality is fraud does happen. By ensuring all the i’s are dotted and t’s are crossed on bills of lading, trucking professionals can guard against becoming a victim. 

Sources 

¹ ATS, “What is a Bill of Lading (BOL) in Freight Shipping?”
² Parseur, “The Beginner’s guide to Bill of Lading in 2023,” April 4, 2023
³ Redwood, “What is a Bill of Lading and Why is it Important?” 
⁴ Truckers News, “What is a Bill of Lading? Why’s it so important?” Sept. 3, 2021
⁵ Safety4Sea, “IMB protects shipping against fraudulent bills of lading,” Sept. 16, 2019 
⁶ Western Truck Insurance Services, “Paperwork Fraud: Don’t Be A Victim,” Dec. 2, 2013 
⁷ DSV, “What is freight forwarding?” 
⁸ Best Yet Express, “Freight Fraud Is a Real Problem. Here’s How to Avoid Scams,” July 6, 2022
⁹ Global Trade, “The Rising Risk of Cyber Crime in the Supply Chain,” Dec. 22, 2022
¹⁰ eCapital, “Don’t Let Your Trucking Company Get Trapped By Double Brokering”
¹¹ Commonwealth Capital, LLC, “The One Thing that Must Be on Every Bill of Lading”
¹² Transport Dive, “3 red flags that could signal a double-brokerage scheme,” March 14, 2023