ITIC says simple checks will defeat shipping industry fraudsters

International Transport Intermediaries Club (ITIC) says ship brokers and agents are among those most at risk of exposure to fraud in the shipping industry, and urges them to carry out simple checks in order to protect themselves.

In the latest issue of its Claims Review, ITIC cites the case of a ship broker which received an emailed freight invoice from an owner for $120,000. The bank account detailed in the invoice was the same as that previously used by the owner but, several hours later, a further email was received, apparently from the owner, advising a change to the bank account details because the original bank account was ‘no longer available to receive payment due to an internal audit.’

The message was not in fact from the genuine owner, but from a very similar email address created by a fraudster, who had also provided a fake account registration form. The broker failed to notice the change in the email address, and it was only after the owner enquired about the whereabouts of the freight that the scam was discovered. The charterer had to pay the freight again and claimed from the broker for negligence. The broker reimbursed the charterer and ITIC reimbursed the broker.

In another incident, a ship agent received an email purportedly from its principal explaining that the principal’s bank details had changed and that funds were to be sent to a new bank account. Although the new bank account had no apparent link to the principal, the agent duly transferred into it the sum of $53,000. The principal, however, did not receive the funds, because the agent had paid the money into the wrong account, failing to notice that the email address notifying the change of bank account was slightly different to the correct email address of its principal. ITIC duly reimbursed the agent for the full amount.

ITIC says it continues to see a large number of such frauds. While most of the victims and intended victims have been ship brokers and ship agents, ITIC has also received reports from members carrying out a wide range of other activities.

ITIC emphasises that anyone making a payment could be the target of fraudsters, and warns that any message purporting to change bank account details should be regarded with suspicion. It has urged its members when transferring funds to use
the telephone to check account details with a trusted representative at the recipient’s office. Simple checks, it says, will defeat the fraudsters.

To access a dedicated fraud section on ITIC’s website, which contains advice and information relating to potentially fraudulent activity, go to:
https://www.itic-insure.com/knowledge/circulars/fraud-circulars/

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
charlotte.kirk@thomasmiller.com

ITIC warns on fraudulent diversion of funds

International Transport Intermediaries Club (ITIC) says fraudulent diversion of funds is on the increase in the maritime sector.

Having previously issued a warning about the fraudulent diversion of port expenses, ITIC says it is now seeing evidence of similar frauds being perpetrated across the wider marine industry. In a typical such fraud, the party due to make a payment will receive a bogus message altering the recipient’s bank details. Examples have included the diversion of ship agents’ disbursements accounts. Ship managers are also among those who have been targeted.

The email addresses used by the fraudsters are only very slightly different to the genuine ones – perhaps a single letter being omitted. ITIC, noting that it is very difficult to spot these differences, says, “Any message changing account details should be regarded with suspicion, and steps taken to secure independent verification of instructions.

“By way of example, one shipbroker managed to frustrate an attempt to divert monthly hire payments by telephoning an owner’s accounts department to verify whether or not a request to forward funds was genuine. It wasn’t. The check should not involve replying to the suspect email, but rather using a different channel of communication or, at the very least, re-entering the email address copied from a message known to be genuine.”

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

ITIC says broker follow-up is vital in fluctuating markets

ITIC says that the failure of shipbrokers to follow up on time-sensitive messages can have serious financial consequences, particularly in fluctuating spot markets.

In its latest Claims Review, ITIC cites the case of a ship fixed for a trip time charter for two voyages, with an option for a third. The option was to be declared by the charterers on completion of loading for the second voyage. The fixture had been negotiated through brokers in two different offices of the same company. The third trip option was exercised by charterers on a Friday afternoon, and the broker who received the message forwarded it to his colleague in the other office. Unfortunately, that broker did not immediately pass it on to the owners.

The ship completed the second voyage on the Sunday, but it was not until Monday that the message declaring the option was passed on to the owners. On the following Wednesday, the owners argued that, because they had not received the notice until the day after loading had been completed, the declaration was invalid. They therefore expected redelivery of the ship on completion of the second voyage.

The spot market at the time was extremely volatile, but rising. Therefore the owners wanted the ship redelivered. The charterers, on the other hand, clearly wanted to retain the ship to maximise the profit from the final voyage. The market changed again, however, and after a week the owners confirmed that they would allow the third voyage. But the business available to the charterers was by this stage less profitable than at the time they had declared the option, and they subsequently claimed lost profits against both the owners and the brokers.

The brokers argued that the majority of the delay was caused by the unreasonable conduct of the owners in refusing to agree to the third voyage. A settlement was ultimately agreed, with the brokers’ contribution reflecting their delay in passing on the message, but not the subsequent fall in the market.

In another case handled by ITIC, a shipbroker fixed an extension of a charter in direct continuation, but forgot to include the charterer’s ‘subject to 24 hours reconfirmation’ in the negotiation. The owners subsequently claimed that the subject was not part of the negotiations they had seen and considered themselves fully fixed. The charterers failed to perform the extension and redelivered the ship to the owners, who then fixed the ship to a different charterer for a shorter period and at a lower rate. The owners brought a damages claim against the charterers, who in turn brought a claim against the shipbroker. ITIC settled the claim for $140,000.

ITIC says, “Time-sensitive messages should always be followed up with a telephone conversation to ensure that they have been received and acted upon.”

Copies of the ITIC Claim Review can be requested from: chris@merlinco.com

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com