Illegal pallet trading is emerging as a sophisticated fraud chain in global e-commerce — our new report reveals how merchants are being lured into selling counterfeit goods and offers practical steps to defend your business.

01 Background:

Cross-Border E-commerce & Fraudulent Pallet Schemes

The global rise of cross-border e-commerce has made cargo trading a vital link in supply chains. The pallet trading model aims to help merchants save costs and enable direct shipping by linking them to existing overseas inventory. However, certain illicit pallet intermediaries are exploiting this model. They specifically buy clearance goods and then resell these items to new, often inexperienced, merchants for profit. As these operations grow and their methods become more complex, the fraud within pallet trading is becoming more diverse, hidden, and specialized.

This report will dive into recent cases of illegal cargo pallet trading fraud. We aim to expose the main risks involved and offer practical advice for businesses. Our goal is to help secure the cargo trading ecosystem for everyone.

02 Analysis of the Illegal Pallet Trading Fraud Chain & Tactics

Illegal freight transaction fraud has evolved into a sophisticated, mature criminal enterprise. Threat actors exploit information gaps, platform weaknesses, and human vulnerabilities. They cause significant financial losses and reputational damage to businesses and individuals through fake shipments, counterfeit products, and illegal deliveries. Below, we will break down their specific fraud methods and how their criminal network operates.

2.1 The Illegal Pallet Trading Fraud Chain: A Structured Overview

The fraud in illegal pallet trading is run by a well-organized and tightly connected underground network. It generally consists of these parts:

All parts of this criminal chain work together, forming a complex network. The threat actors use this structure to spread out their risks, pushing them onto the downstream merchants. They also constantly update their fraud methods and use new platforms to avoid getting caught. To effectively fight illegal cargo trading fraud, we must target every link in this criminal chain with full-scale monitoring and enforcement.

2.2 Core Fraud Methodologies: Illicit Pallet Trading Tactics

Fraud within illegal pallet trading is highly sophisticated and covert. Threat actors often combine various tactics to form an interconnected fraud chain. Their core strategy exploits information asymmetry, business model vulnerabilities, and victims' desire for high profits. Here are the primary fraud methods observed:

2.2.1 Deceptive Cargo Offerings (False Pallet Listings)

Methodology: Fraud groups meticulously create fabricated cargo lot information (e.g., "European & American inventory," "global excess stock"). They lure merchants with unrealistically low prices and high-profit promises, broadcasting these fake offers across various online channels.

Impact: The promised goods are actually substandard, incomplete, or entirely nonexistent. Once payment is secured, the threat actors disappear, leading to abrupt financial ruin and severe economic losses for the victim.

2.2.2 Counterfeiting & Intellectual Property (IP) Infringement

Methodology: The underground industry provides counterfeit versions of international brands. They falsely claim "complete qualifications and guaranteed authorization for listing" and distribute these fakes via drop-shipping models.

Impact: Merchants unknowingly become complicit in the infringement chain. This exposes them to legal action from brand owners and significant compliance risks.

2.2.3 Exploitation of the Drop-Shipping Model

Methodology: Capitalizing on drop-shipping's lack of inventory or direct delivery, threat actors fail to ship goods, send counterfeits, or dispatch items that don't match the order after receiving the merchant's payment and order.

Impact: Because merchants never handle the physical goods, fraud is detected much later, making post-incident tracing and recovery extremely challenging.

2.2.4 Cross-Platform Criminal Operations

Methodology: Fraud groups are no longer confined to selling on a single platform. They use social media to attract victims, then funnel them into private channels or third-party platforms for transactions, completing fraud across multiple online environments.

Impact: This strategy helps them evade single-platform oversight and significantly complicates victims' efforts to seek recourse.

03 Recent Case Studies: Illicit Pallet Trading in Action

We've recently captured specific instances of fraudulent transactions in both fake and legitimate cargo trading. These cases highlight the common fraud methods and distribution channels favored by the underground industry in cargo operations:

Counterfeit Inventory & Overseas Drop-Shipping Operations

There's a deep and complex link between illicit cargo pallet trading and the cross-border counterfeit brand supply chain. Pallet trading often serves as a key "distribution channel" for a large volume of counterfeit goods.

For example, in June 2025, the Threat Hunter Intelligence Operations Team uncovered threat actors actively posting information about counterfeit goods on social media. Their goal: lure merchants into selling these items. The counterfeit products, including numerous well-known brand shoes, clothing, headphones, and watches, were supposedly available in the UK, Poland, France, Spain, Ireland, and other countries. The threat actors provided detailed links and pricing via a document collaboration platform and used a chat tool to communicate with merchants, leveraging a drop-shipping model.

04 Impact & Strategic Recommendations

Fraudulent pallet trading doesn't just cause direct financial losses; it has a far wider impact, eroding business trust, damaging brand reputation, and potentially triggering significant compliance risks. Traditional risk management often lags behind the rapid evolution of the underground industry, struggling to provide effective countermeasures. Therefore, adopting professional risk intelligence products and building a proactive defense system is crucial for securing business operations.

4.1 Impact Analysis

Illegal pallet trading fraud leads directly to economic losses. But its impact goes deeper, eroding business trust, harming brand reputation, and potentially triggering severe compliance and legal risks for enterprises.

4.2 Proactive Defense Recommendations

Facing the complex and ever-changing landscape of illicit pallet trading fraud, businesses can't afford to be passive. They must actively build a proactive defense system driven by robust risk intelligence. We recommend the following:

Strengthen Intelligence Collection & Analysis: By integrating Threat Hunter's specialized risk intelligence capabilities, you can cover diverse channels like social media, private groups, forums, and the dark web. This ensures prompt acquisition and deep analysis of fraud indicators related to illicit cargo trading, providing insights into the underground industry's latest tactics and supply chain dynamics.

Enhance Risk Identification & Early Warning: Leveraging intelligence analysis, Threat Hunter can help build precise risk identification models. These models enable early warning for various fraud types, including fake cargo offers, counterfeit transactions, and illegal drop-shipping. This allows businesses to take effective action before or at the onset of fraud, significantly preventing or reducing losses.

In summary, in today's complex pallet trading environment, actively acquiring and using high-quality business fraud risk intelligence is essential for enterprises to ensure their security and achieve sustainable growth. We look forward to partnering with you to build an impenetrable business security defense line.

Learning more about fraud risks relevant to your business? Let's talk.