Double brokering has been a concern for brokers, carriers, and shippers alike for years. The term double broker is relatively self-explanatory: It often refers to a brokered or shipper tendered load being sent to a known carrier, and from there the load is then tendered to a carrier unbeknownst to the original parties. Now there are several issues with fraudulent activities like this but for time’s sake let’s go over the top 3 in my book…
One: Brokers/Shippers are responsible for vetting carriers and making sure they meet industry compliant requirements.
While these requirements can be drastically different from broker-to-broker, more than likely there is little or no vetting that takes place the second time the load gets brokered out. This can open the original broker and/or shipper up to litigation if the load goes missing or worse, if the carrier that was re-brokered on the load doesn’t meet certain operating authority standards and is involved in an accident. Now while the word “double” commonly means two, in the world of double brokering it is not uncommon for one load to be re-brokered 2, 3, 4 or more times before reaching its final destination; especially in markets with heavy freight flows such as Chicago, Los Angeles, and Atlanta.
Two: Double brokering can become costly to all parties as legitimate carriers that have been defrauded have been known to engage shippers for payment when they’re unable to track down the fraudulent broker who originally tendered them the load.
Legitimate brokers who have been defrauded are also commonly on the hook for multiple payments, as unknowingly double brokered carriers seek payment for their services after bad actors have already received compensation. Payments to double brokered carriers are typically at a much higher rate than the legit broker originally negotiates, as fraudulent carriers tend to have little intention of paying the victimized carriers. Attracting genuine providers with too good to be true rates, especially in bear or bust markets, is common bait used by these bad actors that add up over time. So much so that according to Carrier411’s CEO Darren Brewer, double brokering scams “cost the transportation industry more than $100 million per year.”
Three: IT’S ILLEGAL!
Yes, double brokering, not to be confused with co-brokering, is an illegal practice! In most circumstances, both strategic theft and cyber-attacks on valid carriers, brokers, and even shippers will involve some level of double brokering. That could look like a carrier’s identity being stolen through phishing campaigns, leading to that bad actor then posting a fictitious truck on a load board under the stolen motor carriers’ identity. The bad actor then accepting a load from a shipper or broker, turning around and brokering the load out to a carrier who believes the transaction to not only be legitimate, but very well paying. From there, the legitimate carrier would be given instructions once loaded to take the shipment to an unbeknownst location. In most circumstances the product is then transloaded to yet another victimized carrier with a new BOL, allowing the bad actor to have the load delivered at their own convenience once they feel confident the product isn’t being tracked or monitored, never to be seen again by any of the legitimate parties involved.
Silver Lining…
Now is all of this scary? Sure. Does it happen commonly? Yes. Is it preventable? Absolutely. Education when it comes to fraud prevention is essential. Keep an eye out for our next release in the coming week where we talk about preventive measures you can take and how to spot fraudulent behaviors early on.
This post has been research and presented by Bridge Logistics, Inc. Sales Director, Chris Seeds.