In today’s fast-paced world, where we are flooded with hundreds of pieces of information every day, we often act almost automatically, without stopping to consider the purpose of our actions.
Such an approach is frequently ineffective. When the objective is lost, it becomes difficult to perform tasks with due diligence.
In fraud-related loss cases, I have encountered situations where a freight forwarder had doubts about a subcontractor but still decided to cooperate because the verification procedure had been completed and formally “passed.” Instead of withdrawing from the cooperation and seeking another carrier, the transport order was issued—resulting in the disappearance of cargo worth several hundred thousand euros.
Proper carrier verification is not an end in itself. It is a tool designed to achieve a specific objective—or several objectives.
The goal should never be merely to complete a procedure imposed by an employer. Completing a procedure may be only a means to an end.
Introducing an effective verification process, and convincing employees to follow it, should always start with defining clear objectives. Only then can there be a genuine belief—at every stage of applying what is often a burdensome procedure—that the actions being taken actually make sense.
Very often, freight forwarders receive verification procedures from their employers with a strict instruction to complete them every time. However, no one explains why these procedures exist, what risks arise if they are ignored, or what the purpose of individual steps is. As a result, employees either perform the actions mechanically—simply ticking boxes—or look for ways to bypass the procedures altogether (with imagination being the only real limitation).
What does it mean that activities are performed automatically?
It means that the freight forwarder limits themselves to performing the actions described in the procedure, without any analysis of the results obtained.
For example, the procedure requires the freight forwarder to check whether a subcontractor is listed in the commercial register. If the company exists, the freight forwarder considers it acceptable. At the same time, they fail to take into account that, according to the register, the company has no members of the management board or does not conduct any forwarding or transport activity at all.
What does it mean that a freight forwarder looks for ways to circumvent burdensome procedures?
In some forwarding companies, two verification procedures exist. The less burdensome one applies when the subject of transport is low-value goods, such as agricultural products, paper, and similar cargo. A freight forwarder whose verification department has rejected several carriers in the past, and who currently has only one carrier willing to perform the transport, may attempt to increase the chances of a positive verification result by indicating that the transport concerns low-value cargo.
In situations where the procedure requires obtaining references, it sometimes happens that positive references are obtained from parties with whom the carrier-subcontractor has never cooperated. A freight forwarder from forwarding company X contacts a colleague from forwarding company Y, who then provides the required reference. Only after a loss occurs does it become apparent that company Y has never cooperated with the carrier in question, and that its freight forwarder simply wanted to “help” a colleague complete the verification procedure.
In forwarding companies where freight forwarders are aware of fraud-related risks and understand why individual verification activities are performed, the risk of the above-described events is minimal.
What May Be the Objectives of a Verification Procedure?
Most freight forwarders would answer that the objective is to significantly hinder their work and prevent cooperation with certain carriers.
In reality, however, the objective should be to increase the security of transport operations and to minimise the risk of losses and the obligation to pay compensation from the forwarding company’s own assets.
In my opinion, the main objectives of verification procedures created and applied by forwarding companies should be the following:
I. Minimising the Risk of Assigning Transport to a Fraudster
The methods used by fraudsters (described in more detail in our article Methods of operation of fraudsters) make it impossible to eliminate such risks entirely. Cases where fraudsters impersonate existing companies are still relatively easy to detect.
More problems arise when fraudsters take over existing transport companies. Even more difficult are situations in which fraudsters infiltrate legitimate companies, for example by working as drivers or dispatchers.
Fraud methods constantly evolve, and fraudsters are often one step ahead of forwarding companies.
However, a well-designed verification procedure combined with proper staff training—so employees understand why they check specific elements—can significantly reduce risk and enable fraud attempts to be detected before an order is issued or cargo is loaded.
II. Demonstrating Due Diligence in Carrier Selection – in cases where a forwarding contract, not a carriage contract, is concluded.
Assuming that liability arises from a forwarding contract, Article 799 of the Polish Civil Code may apply:
“The freight forwarder is liable for carriers and subsequent forwarders used in the execution of the order, unless the forwarder is not at fault in selecting them.”
According to the judgment of the Court of Appeal in Kraków dated 6 October 2015 (case no. I ACa 840/15):
“Due diligence of a freight forwarder within the meaning of Article 355 of the Civil Code in conjunction with Article 799 of the Civil Code is exercised if the forwarder demonstrates that the carrier entrusted with the transport was a professional whose quality of services inspired confidence. The freight forwarder should therefore prove that, at the time the transport was entrusted, the carrier’s professionalism and quality of services justified trust.”
Unfortunately (as described in the article Freight Forwarder’s Liability Insurance in Losses Resulting from Fraud), forwarding contracts in road transport are very rare. However, their occurrence cannot be entirely ruled out.
The possibility of relying on Article 799 of the Civil Code and excluding one’s own liability appears to be a strong motivation for implementing verification procedures and applying them in practice.
III. Demonstrating Compliance with Insurance Requirements
Some forwarding companies hold insurance policies that provide coverage also for losses resulting from assigning transport to a so-called fraudulent carrier. Based on relevant clauses, insurers on the one hand grant coverage (usually subject to limits, e.g. EUR 50,000), but on the other hand impose a number of detailed obligations on the insured.
If fraudsters manage to pass the verification procedure and cargo is lost or misappropriated, it is crucial to demonstrate that all insurer requirements have been met. Without such proof, obtaining compensation is highly unlikely, meaning that the entire burden of repairing the loss remains with the forwarding company.
IV. Minimising the Risk That the Carrier’s Insurer Will Refuse Coverage
Fraud-related losses occur relatively frequently and are severe. However, apart from these, there are also “typical” losses, such as accidents, fires, water damage, or theft during stops.It is therefore advisable for the procedure to impose obligations relating to verification of the carrier’s insurance policy to ensure that its terms provide adequate protection in the event of such “common” losses.
There have been cases where transport was assigned to a carrier whose policy did not cover the type of goods transported (resulting in a loss of nearly EUR 600,000).
There are also losses where it turns out that the carrier did not have the appropriate territorial scope of insurance coverage (e.g. no extension for cabotage transport).
Carriers sometimes undertake to transport cargo worth more than EUR 1,000,000 while holding insurance with a sum insured of only EUR 300,000—particularly relevant in domestic transport within Poland, where liability is limited to the ordinary value of the consignment.
A careful review of the insurance policy in order to verify its actual scope should therefore be carried out every single time.
Whether insurance policies should always be confirmed directly with insurers is discussed in the article Insurance Contracts and the Resulting Duty to Verify Carriers’ Insurance Policies.
And What Is the Objective of BtrustUP and Its Founders?
To be socially useful.
The means to achieve this goal include the application itself, the blog, and all activities aimed at raising awareness among transport and forwarding companies.
The combined experience of those involved in developing the project gives reason to believe that this objective is achievable. It will not be easy and will require continuous effort—but nothing truly valuable comes from staying within one’s comfort zone.