How to Avoid Double-Brokering and Freight Fraud Scams
Double-brokering scams have been reported across the nation, from California to New York and everywhere in between.
Brokering scams violate state and federal laws. They may also end with drivers and carriers not getting paid. Many of these cases of fraud occur via public load boards and cost the industry over $100 million each year.
There are ways definitive ways to avoid fraudulent loads. Below we’ll cover some information that will help you avoid double-brokering and other freight fraud scams.
What is the Difference Between Co-Brokering and Double-Brokering?
First off, we need to understand the difference between two difference methodologies. Co-brokering, and double-brokering.
Co-brokering is a legal practice that allows a freight broker or carrier to work with another broker or carrier to get a load moved.
Fraudulent double-brokering is when someone is pretending to co-broker a real load from a legitimate broker or carrier.
What Are the Risks of Hauling a Double-Brokered Load?
As a carrier, you assume the most risk out of anyone involved in a double brokering fraud scam. If you accept and haul a double brokered load, you could experience:
- Denial of insurance claims if there is loss or damage to the load
- Lack of or extreme delay in payment
- Cancellation of FMCSA authority or blacklisting of your company if you’re deemed involved
Avoid Using Public Load Boards
Load boards also aren’t populated in real-time, which means that even if the load is legitimate, it may already have been taken by another driver or carrier already. This makes it exponentially harder to track.
A lot of fraud happens on public load boards, so one of the easiest ways to avoid double-brokering scams and other types of freight fraud is to avoid using them altogether. Anyone can post loads without any real verification that the freight is actually available with the company posting the load.
Verify the MC/USDOT Number with the FMCSA
Always verify the broker or trucking company’s MC number or USDOT number. You can look up USDOT and MC/MX numbers on the FMCSA’s website, which you can also search by company name as well to find these numbers.
If there is any doubt at all, call the phone number for the company that is listed with the FMSCA and ask for your new contact by name, verify their information. If the company itself has never heard of the person who claims to have the load, do not accept it, as it could potentially be fraudulent.
Watch for Unusually High or Low Rates
Rates that fall well outside of market averages signify larger problems with the load and could be indicative of false intention to pay.
Thoroughly review the rate and load instructions. When you receive the rate confirmation, make sure to watch for predatory instructions such as checking in under a different carrier’s name, emailing the proof of delivery to a non-brokerage address or altering the load documents.
Build Long-Term Relationships with Brokers
Building relationships with brokers is one of the better ways to avoid all kinds of freight fraud. When you have worked with a broker previously, you already know whether or not they are legitimate and if you’ll get paid. This greatly reduces the chance that you’ll run into a scam.
Uninsured Shipments
When freight fraud happens, the shipment is potentially uninsured. Insurance policies are very specific about what is insured to the policyholder. When a shipment is double brokered, the primary or initial party the shipment is tendered to may have insurance. However, the insurance policy is not applicable when the freight is rebooked with another provider outside the policy guidelines.
Victim of Freight Fraud?
If you suspect your company has been the victim of fraud or identity theft, the FMCSA recommends that you take the following steps:
- Report the incident to your local law enforcement agency.
- You may also report the incident to the U. S. Department of Transportation’s (USDOT) Office of the Inspector General (OIG) Hotline at (800) 424-9071 or online at https://www.oig.dot.gov/hotline.
- You are also encouraged to file a complaint with the FMCSA National Consumer Complaint Database (NCCDB) at https://nccdb.fmcsa.dot.gov/nccdb/home.aspx
- Contact your insurance company, all load boards and factoring companies to let them know your company’s information is being fraudulently used.
- Make social media and website posts to inform your customers.
- Make sure your company’s phone number(s) displayed in FMCSA’s Safety and Fitness Records System (SAFER)are visible and correct by going to https://safer.fmcsa.dot.gov and scrolling down to “FMCSA Searches” and clicking on “Company Snapshot”.
- Treat your company information like your banking and credit card information. Conduct frequent checks of your FMCSA Carrier Profile. If you find incorrect information, go to https://www.fmcsa.dot.gov/registration and follow the instructions on that page. This page also provides a phone number you can call to receive assistance.
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