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FTL Brokerage Scams and What You Can do to Avoid Them

December 16, 2022
5 min read
Partial Truckload
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In the full (and partial) truckload industry, freight fraud isn’t new, but scammers are now more sophisticated than ever. They are costing shippers and carriers millions in stolen freight each year through an illegal practice called double brokering.

Double brokering is often confused with the legal practice of co-brokering. During a co-brokering arrangement, the freight broker works with the shipping client, (sometimes) multiple other brokers, and the carrier to ensure freight delivery. The shipping client knows all parties involved and has received written verification of the delivery. Additionally, the shipper knows how the brokers involved will be compensated.

Double brokering, on the other hand, keeps the original shipping client in the dark. The client’s freight is essentially stolen during the shipping process.

How the Double Brokering Scam Works

Normal brokerage process:

    1. The shipper contacts the broker to tender a shipment, and the client is committed to a rate.
    2. The broker will typically post the shipment in search of a carrier to move the freight.
    3. A carrier will contact the broker with an offer to move the cargo.
    4. The broker uses the MC number provided by the carrier to tender the load.

Now, in a typical transaction, the carrier would deliver the freight, and the broker would pay the carrier upon receipt of the POD, but in a fraud scenario, here’s what happens:

    1. The shipper contacts the broker to tender a shipment, and the client is committed to a rate. In rare cases, the shipper may deal with the broker or the “carrier” (double-broker/scammer) directly.
    2. The broker will typically post the shipment in search of a carrier to move the freight.
    3. A scammer will contact the broker identifying themselves as a legitimate carrier.
    4. The broker uses the MC number provided by the scammer to tender the load.
    5. The scammer then uses another broker’s MC number to re-broker the load with a legitimate carrier. It is, in essence, corporate identity theft.
    6. From there, one of three scenarios will most likely play out
  • The legitimate carrier delivers the load. The scammer bills the original broker. The original broker pays the scammer. The legitimate carrier never gets paid, and the cost often ends up in collections, forcing the original broker to pay for the same load twice. Additionally, insurance will likely be involved as the carrier can file against the bond of the broker
  • The carrier holds the load on suspicion of fraudulent activity. In this scenario, the original broker locates the carrier after the load goes undelivered and works to resolve the issue
  • The scammer steals the freight. While possible, this scenario is not typical and highly unlikely

For 3PLs (like Amware,) the carriers that are being double-brokered are not actually hauling the 3PL client’s freight. As the result, the 3PL will receive invoices from carriers hauling freight that the 3PL has no obligation to pay. In that scenario, the 3PL has to expend resources to understand what happened.

What Shippers Can Do to Help

While the double brokerage scam happens after a customer has placed an order with a broker, there are a few things the shipper can do to avoid becoming the victim of a double brokerage scam.

  • Communication is key. Ask your broker which carrier will be transporting your cargo. Once verified with the broker, the shipper can then communicate with their loading dock manager (or add to the outgoing shipping instructions), so the truck loading dock workers can rest assured knowing they have the correct carrier
  • Ask your broker what practices they have in place to avoid double brokerage scams

The Amware Difference

While it’s not 100% avoidable, the Amware team takes every proactive measure available to ensure that legitimate carriers are transporting brokerage shipments.

Amware brokers use a multi-point process to verify carriers, including

  • Verifying MC numbers using software (RMIS) – This software can scan IP and email addresses to validate that the carrier is who they claim to be
  • Talking with drivers directly
  • Checking carrier information against a red flag list (foreign/unfamiliar person representing the carrier, carrier rep unfamiliar with industry terms, unwilling to cooperate with requests for company identification and verification, etc.)

Our clients and their satisfaction is our number one priority. Understanding the problems and issues that exist in the industry will hopefully create awareness and help foster an open and transparent line of communication. For more information on this topic or to inquire about FTL services, CONTACT us today.

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