Protect your fleet from double brokering scams

Even a freight recession can bring new opportunities, new markets, new services, and new customers. But no one group is hustling harder right now than the scammers who use load boards to double broker freight.

They take advantage of the urgency, anonymity, and one-off nature of spot market transactions to steal identities, money, freight and reputations. And this April, the load board provider Truckstop told the Wall Street Journal that reports of fraud on its network jumped 400% in the fourth quarter of 2022 compared to the same period in 2021.

In its most common form, double brokering is when one party accepts a load and then brokers it to another carrier without permission.

Masquerading as carriers, crooks get a broker to tender them a shipment for an absurdly low rate. Once secured, they resell the load to an unsuspecting carrier at a higher rate. Relatively speaking, it’s a low-dollar crime that’s not always reported or even detected. At scale, double brokers can make a fortune.

That’s just the start.

The original broker never knows who really hauled the freight. The carrier is working with a broker who has no relationship with the shipper.

When a double-broker takes payment from the original broker and disappears, the carrier probably won’t get paid. In the worst-case scenario, the scammer will reroute the load and steal it, dragging everyone into a legal quagmire.

These crooks are smart, resilient, prolific, and often located overseas. Their risk of prosecution is small. Getting busted and banned from the load board is a cost of doing business. They can shut down and open up under a new alias in the blink of an eye.

If you’re a carrier who uses load boards, it’s a matter of time until your number is up. Here’s how to reduce the risk:

Fear the unknown

Every long-term relationship starts with shipment Number 1. Start by red-flagging unknown brokers or carriers. Assume they’re guilty until proven innocent. A few minutes spent validating a carrier or broker can help you avoid the long-term consequences of fraud.

Follow dispatcher instincts 

Most carriers have brokerage divisions and are exposed to double brokering in both their asset and non-asset businesses.

Dispatchers are the first line of defence. Rock-bottom rates are the bait crooks use to get brokers to bite. A dispatcher’s Spidey senses should tingle when the price from an unknown carrier is too low to be true.

Conversely, watch out for absurdly high rates from an unknown broker. When business is slow, there is a good chance a broker is paying more for the wrong reason.

I don’t know many dispatchers who have the patience to punt good-paying freight or crazy-low rates. That’s why you should take the onboarding of new partners (freight brokers and carriers) out of your dispatchers’ hands. Give it to a qualified administrator who can focus on keeping the bad guys out of your business.

Tighten security

Most double brokering involves identity theft. Scammers use phishing tactics to steal load board login credentials and other identity-related information.

While you tighten your cybersecurity, look for clues in your paperwork. Check the bill of lading and rate confirmation to make sure you’re named as the carrier at the agreed upon rate. Documented procedures that include reference, website, and credit checks are not infallible but will reduce the risk. If the dots don’t connect perfectly, head for the hills. Better to lose a deal of the day than a customer. 

Keep eyes in the sky

Visibility platforms give freight brokers the ability to tap into a driver’s ELD and cell phone to monitor the shipment’s location in real time. Bad guys don’t want any part of “visibility” or location data.

Ultimately, speaking with the driver directly is the most effective way to keep your company from becoming a victim. Insurance policies that protect against all sorts of scams are also worth looking into if you’re concerned about getting stung.

The first step, though, is to educate yourself about the legalities of double brokering, which are easily misunderstood. The Canadian International Freight Forwarders Association has a paper called Double Brokering in the Canadian Trucking Industry. It’s well worth the read.