Rocketing credit card fraud in the shipping industry is causing some major US retailers to bypass freight forwarding firms, leaving Bermudians unable to order directly from a host of popular brands.

Retailers such as Abercrombie, Sephora, Best Buy, Hollister and Nike do not ship to freight forwarders such as Bermuda’s Mailboxes or ZipX, which use a Delaware address to forward packages to the island.

Mailboxes chief executive Bricen Hakeman said the decision to say no to freight forwarders is being made by some firms, but Mailboxes was not seeing this as a broad trend.

“By prohibiting the use of freight forwarders, retailers reduce the risk of fraudulent transactions,” he explained. “For example, a fraudster might obtain someone’s credit card information, purchase $5,000 worth of Patagonia clothing and ship it to a freight forwarder. From the retailer’s perspective, the goods are shipped to an unknown party in another country, leaving the retailer to absorb the $5,000 loss.”

According to credit ratings agency Moody’s overall consumer fraud surged in the United States last year, with a 25 per cent increase in total fraud losses to $12.5 billion.

Artificial intelligence is a double-edged sword making these scams easier to detect, but also easier to carry out.

Mr Hakeman said international trade compliance was another reason some American businesses were refusing customers with freight forwarder addresses.

“Retailers have a legal responsibility to ensure that their freight forwarders uphold international trade compliance,” he said. “While Mailboxes strictly adheres to international trade laws, many US-based freight forwarders knowingly bypass certain legal requirements. In such cases, retailers may opt to eliminate this risk by avoiding international trade altogether.”

One local consumer this month received a letter from Patagonia brand clothing stating her purchase with them had been cancelled.

The letter said: “Patagonia is not able to ship to freight forwarders, due to agreements with our international dealers. We are expanding our international market, so please visit the following links depending on your needs and location.”

The message supplied a link to an international page with a list of countries that did not include Bermuda.

Mr Hakeman said retailers sometimes restrict freight forwarding to protect profit margins.

“American retailers might purchase large quantities of products at a lower domestic price and use freight forwarders to ship them internationally, where the manufacturer’s suggested retail price is much higher,” he said. “This can erode the retailer’s profit margin.”

However, freight forwarding is still booming in the US with more than 17,000 such firms. The industry generated $25.75 billion in revenue in 2023 and is projected to grow to $35 billion in the next five years.