At Alpha Cargo Technology (ACT!), we advise our clients about three types of cargo crime: Those are:

• Blind crime;
• Organized crime;
• Insurance fraud crime.

Blind crime is unpredictable and very difficult to prevent. It is typically a one time robbery.

Organized crime, the second listed, is conducted by intelligent, ruthless groups of perpetrators (hence organized) who have the means, equipment, and knowledge of how to achieve their cargo crime goals. They are well coordinated and generally work for many years in one particular area, with product theft their primary goal.

The insurance fraud crime, the last type listed, occurs individuals or groups of perpetrators not only steal cargo, but also generate false insurance claims for additional revenue. It is generally the manufacturer or shipper who plans in advance to steal and also claim the insurance proceeds.

Our database indicates that more then 60 percent of cargo crime is accomplished by those directly involved with the cargo, such as the manufacturers, factory owners, security personnel, miscellaneous workers, drivers, etc. Therefore, the focus of this document will be on insurance fraud.

The main goal of those involved in insurance fraud is to steal the product without leaving evidence they were involved. It is vitally important to them that, during transit from point A to point B, nobody is aware that the conveyance (container, rail car, truck, drum, etc.) was opened after it was sealed and shipped within the presence of factory representatives, Customs, or other official representatives. In this case, when product arrives at its destination and the client complains about shortages, the manufacturer or shipper who insured the cargo can claim the insurance.

Recently, ACT! succeeded in an insurance fraud operation involving a company president, its Director of Security, and other security personnel involved in organized insurance fraud. The company manufactures tires which are exported to seven countries. Its insurance claims over the last five years total more than $1.2 million USD. The primary reason this company was so successful in defrauding the insurance industry was its use of cargo security seals that were poorly manufactured, easily tampered with, and also copied.

Fortunately, more insurance firms are reviewing and investigating these types of claims. The first step is to understand the vulnerabilities of most, but not all, seals on the market. Better designed product which cannot be tampered without leaving evidence is available and not expensive to obtain. The next step is to review the types of security products being used by client companies. Understanding the limitations of certain products and how they can be used as tools in perpetrating insurance fraud can save millions of dollars in claims.

For more information about this specific case or about premium grade cargo security seals that prevent insurance fraud, please contact:

Scott Smith, President
Alpha Cargo Technology (ACT!)
E-mail: Scott.S@ActSeals.com