Parcel shipping fraud will result in your company paying more for shipping than it should. Worse yet, you may not even realize it’s happening. Some forms of fraud are easy to spot, but others can go unnoticed for a long time — and add up.
TransImpact’s Parcel Spend Intelligence (PSI) platform is a comprehensive tool that automatically identifies and corrects fraudulent charges that most shippers don’t have the time, technology, or experience to catch.
Here are four common types of fraud shippers overlook (and unknowingly pay for) that PSI can eliminate.
1 – Internal fraud
A common type of internal parcel shipping fraud is when unauthorized shipments originate within the company. This happens when someone at the company sends packages under an account number that the company should not pay for. The larger a company is and the more locations it ships from, the greater the risk of this happening.
In 2023, PSI identified almost $100,000 of unauthorized shipments on a new client’s account. An employee at a franchise location with access to the retailer’s shipping account was making the shipments, knowing it was theft. The problem was detected because PSI helped the shipper see unusual shipping patterns and extra costs.
Given that the company ships millions of packages a year, it’s understandable that the issue was overlooked for a while. Thanks to PSI, the problem was stopped and dealt with to prevent it from happening again. With PSI in place, future fraud will be quickly identified and stopped.
2 – External fraud (Example 1)
Fraud can happen from people outside companies and not just by employees. Another new Parcel Spend Intelligence user discovered that a non-employee had stolen its parcel account number and had used it for months to ship unauthorized packages.
Lacking software to audit and identify the charges, the company continued to pay the shipping costs because it had no process to validate any of the charges on its invoices.
Our software alerted the client to over $36,000 in external fraud on the first day using PSI. It identified which account numbers were stolen and how long the fraud occurred.
Moving forward, the client can proactively pinpoint suspicious packages based on several criteria and receive alerts for any problematic charges that appear. Best of all, with PSI, they can now spot offending shipments without spending excessive hours manually sifting through invoices.
3 – External Fraud (Example 2)
Catching external fraud doesn’t just happen with new customers. In 2023, several PSI users suddenly saw a drastic increase in UPS Missing PLD (Package Level Detail)/ Not Previously Billed charges with no explanation. Three customers alone saw these charges spike by over $400,000 combined!
Identifying this pattern, the PSI system started flagging shipments as suspicious. Then, TransImpact helped the shippers drill down into their data to discover a slowly building pattern of packages being billed to these clients’ accounts with different manifested and drop-off cities. This is a new tactic the perpetrators figured out. They learned if they go slow, they can get away with shipping under stolen accounts — at least for a little while
Thanks to Parcel Spend Intelligence, the shippers were able to quickly identify the problem, and help the clients stop the issues and secure the appropriate carrier refunds.
4 – Billing Fraud
Everyone has to admit that for all the carriers’ faults, UPS and FedEx provide exceptional delivery service. But, they are far from perfect when it comes to billing. Thankfully, PSI catches a lot of carrier billing errors.
Errors on invoices can happen for many reasons. The common mistake is billing for a level of service that is not provided. An example is a shipper that pays for next-day delivery, but the package takes two days to get delivered.
Some billing errors can be larger issues and simultaneously affect vast volumes of shipments. Recently, it was discovered that a carrier was overcharging a PSI customer, but only for a specific service type. The carrier claimed it to be a systematic error in the billing system. The issue was that even though the shipper had negotiated a discount for a specific service, the carrier’s automated pricing had a bug, and it was not applying the company’s negotiated discount for a short period.
Worse yet, it turned out the issue was impacting a lot of shippers (and not just the PSI customers). This meant all the impacted companies were charged a higher price on shipments they believed were being discounted. While the additional cost per package was no more than a few dollars, it cumulatively added up to millions of dollars lost for any companies having the issue.
But it gets worse. Even though the carrier eventually spotted the error, it did not notify and refund clients. PSI users, however, were alerted to the issue. The software identified the trend across PSI users and flagged the problem shipments.
It might be a stretch to call the issue intentional, but it’s a costly problem, no matter what you call it. When it was escalated to the carrier, it admitted that a system error caused the overcharge.
Another key point is that even if users had discovered the overcharges on their own, they would likely be unable to understand the extent of the problem. Thanks to PSI, our users were alerted and provided the exact total they were overcharged. Most importantly, PSI users were able to receive refunds. We don’t know whether or not the non-PSI companies received refunds.
Do you have a shipping fraud problem?
The answer may not be as simple as you’d like. If you’re struggling to identify and catch shipping fraud, it’s time to see what Parcel Spend Intelligence can do. Visit Transimpact.com to talk to a parcel expert today.