Freight marketplaces are on the frontlines of some of the most brazen fraud schemes in business today. Every day, scammers impersonate legitimate shippers, post fake loads, and vanish with cargo or payments — costing the industry millions. And the problem is picking up speed. In 2024, reported cargo theft losses jumped to a record $455 million, with the average incident costing over $200,000.
And while verifying carriers has become increasingly streamlined thanks to centralized federal data, shipper verification remains a fragmented process that’s difficult for freight marketplaces to conduct at scale. That complexity is exactly what fraudsters are taking advantage of.
Freight platforms sit at the intersection of shippers, carriers, and brokers — and fraudsters are relentlessly pursuing every opportunity to exploit information gaps between each party. Sophisticated rings now use synthetic identities, stolen credentials, and social engineering to game the system and steal significant amounts of goods and money. In 2023, there were 576 reported instances of cargo being picked up under false pretenses, where bad actors used fake identities to arrange freight movements and then vanished with the goods. One way fraudsters do this is by fraudulently registering as drivers and companies to impersonate legitimate operators.
Unlike carriers, who must be registered with the FMCSA and DOT, many shippers operate without centralized oversight — making them harder to vet and easier to fake. As a result, shipper-side fraud is a particular vulnerability for freight marketplaces. Below, we’ll take a look at why shipper verification is such a challenge for these platforms and what they can do to protect the integrity of their marketplaces by enhancing their KYB processes.
How shipper verification differs from carrier verification
Carrier verification is relatively straightforward. Motor carriers must register with the U.S. Department of Transportation and obtain operating authority through the FMCSA (Federal Motor Carrier Safety Administration). This centralized system allows freight marketplaces to instantly validate whether a carrier has an active DOT number, proper insurance, and clean safety history.
Shipper verification, by contrast, is all over the map.
- Freight brokers must also register with the FMCSA and maintain a surety bond, making them easier to verify.
- Auto dealers are licensed at the state level. Some states have online portals for license lookup, others don’t. Fraudsters often forge licenses from states with weaker systems.
- General business shippers may not require any industry-specific license. They might be registered with a Secretary of State or operate as sole proprietors with no formal registry at all.
This means freight platforms rely on dozens of data sources — federal databases, state licensing boards, business registries — just to verify a single shipper. There’s no FMCSA equivalent for most shippers, and fraudsters know that.
The particular challenges of verifying shippers
Verifying shippers is a minefield of operational and reputational risk. Here’s why:
- Disparate data sources: There’s no single source of truth. Marketplaces must piece together business licenses, tax IDs, and incorporation records and often verify them manually.
- Impersonation is rampant: Criminals may steal documentation from real businesses and use it to onboard as imposters. In fact, we recently heard from a freight platform about a scam in which a fraudster reached out to a broker about doing business together. The broker sent over documentation for due diligence, and the fraudster hijacked the real broker’s identity on FMCSA.
- Synthetic businesses: Some fraudsters form shell companies solely to commit theft. These entities may have EINs and incorporation documents, but no real operations.
- Manual processes slow everything down: Without the right business identity platform, verifying a new shipper can take days, involving phone calls, document review, and even neighborhood address checks.
- There’s no continuous monitoring: Most marketplaces verify shippers once during onboarding. But a business that was legitimate last month might get compromised or suspended this month.
While marketplaces might feel like they have no choice but to manually verify all of their shippers, they slow down onboarding in the process and don’t necessarily enhance their fraud screening as a result. It may seem like an impossible situation for growth-minded freight platforms and marketplaces, but there is a better way.
How a layered KYB approach supports smarter shipper verification
To solve the shipper verification challenge, leading marketplaces are moving toward a layered KYB strategy. Instead of relying on a single source or cumbersome manual processes, layered KYB automatically pulls together multiple data sources and risk signals and does it in real time.
Here’s how it works:
1. Check authoritative data
A strong KYB program starts with validating the fundamentals:
- FMCSA registration: For brokers and freight forwarders, validate that the motor carrier (MC) number is active and bonded.
- Secretary of State databases: Confirm that the business exists, is in good standing, and matches the information provided.
- Industry licenses: Auto dealers, importers, and rental companies must hold valid state or federal licenses. A missing or expired license is a red flag.
- Tax ID (EIN) matching: Ensure the EIN matches the business name and registration records.
Authoritative records indicate that you aren’t dealing with a totally fake entity. But we’re just getting started.
2. Layer in alternative signals
To detect impersonators and synthetic businesses, KYB systems pull in additional data:
- Email domains and phone numbers: Is the contact info consistent across the business? Or is it a Gmail address and a VoIP number from a different state?
- Web presence: Does the business have a working website, a LinkedIn page, or any signs of legitimate activity online?
- Ultimate Beneficial Owner (UBO): Who owns the business? Are they linked to any other suspicious companies?
- Behavioral data: Is a new account immediately posting high-value loads? Logging in from unusual locations? If a shipper is on the platform, these early red flags can stop fraud before it causes real damage.
A fake company might clear one or two checks. A layered system ensures it can’t clear them all.
3. Use real-time automation
Accuracy is critical for business verification. Traditional KYB processes are often disjointed, slow, and incomplete, and they simply don’t scale. If you can maintain the highest standard of accuracy while doing it efficiently, that’s a big boost to your business that can give you a major leg up over the competition.
Automated KYB platforms like Middesk can verify business registration status, FMCSA authority, and license records in seconds — not days. They can match W-9 forms to IRS data, flag inconsistencies in real time, and return a risk score while a new shipper is still completing onboarding.
That means you don’t have to choose between fast and safe. You can have both.
4. Continuously monitor for changes
A shipper that’s legitimate today might not be tomorrow. But a layered KYB strategy that includes continuous monitoring is purpose-built to detect risk signals throughout a customer lifecycle. That means you can weed out fraud if it emerges weeks, months, or years down the line. With continuous monitoring, an agile KYB solution can:
- Alert marketplaces when a business loses its good standing
- Monitor for changes in ownership or license status
- Flag suspicious activity patterns post-onboarding
Continuous oversight helps catch bad actors before they cause damage, not after.
5. Escalate the right cases for manual review
Not every case can be automated (nor should it be). A strong KYB workflow surfaces only the highest-risk or hardest-to-verify shippers for manual review and gives your team the context they need to make smart decisions quickly.
Instead of chasing paperwork, digging through state registries, and spending time manually verifying low-risk customers, analysts get a clear dashboard showing what’s missing, what’s mismatched, and what needs attention.
How Middesk is helping freight marketplaces accurately and efficiently verify shippers
Solving shipping fraud doesn’t have to mean building a giant risk team or slowing the growth of your business to a crawl. With a layered, automated KYB approach, you can verify more shippers in less time and catch fraud before it happens.
Talk to an expert at Middesk to see how you can enhance the shipper verification of your freight marketplace.
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