As fraud continues to evolve across the transportation industry, double brokering is the one scheme that is becoming more common by the day. For brokers, motor carriers, and shippers, double brokering can lead to unpaid carriers, delayed shipments, truckload cargo theft, and costly disputes over liability. Understanding how it works and recognizing the warning signs can help significantly reduce your client’s exposure.
What is Double Brokering Versus Co-Brokering?
Double brokering occurs when a freight broker or carrier accepts a load for transport and then transfers responsibility for transport of that load to another carrier or broker without proper disclosure or authorization by the shipper’s or original broker. Double brokering becomes illegal when that transfer, or ‘second brokering’ is done by an entity that does not have valid broker authority, possess required insurance, falsely represent qualifications, or a contractual clause is broken.
Co-brokering is similar in nature but is a legitimate practice where the shipper and brokering entities have arranged for shared brokering activities. The primary differentiation is transparency: the shipper, broker, and carrier all know who is who and fulfills their role in the relationship.
How Does Double Brokering Happen?
Most double brokering schemes follow a similar pattern. A carrier accepts a shipment but, instead of transporting it, passes the load to another carrier without the broker’s or shipper’s knowledge or authorization. That carrier may transfer the load again, creating a chain of unauthorized handoffs. The carrier that ultimately transports the freight often believes they were legitimately hired.
As the shipment changes hands, visibility into who has possession of the freight is lost. Fraudsters may redirect the load, manipulate payment, or use the confusion to facilitate cargo theft. The result can be unpaid carriers, delayed shipments, and disputes over responsibility and liability.
Warning Signs to Watch Out For
Whether a shipment was double brokered by the original carrier because they are unwilling to complete the agreed duties, or as part of a theft in progress, there are multiple warning signs that a shipment has been double brokered.
The broker may:
- Receive requests to change the contract or payment information after the load is assigned.
- Receive calls or emails from the carrier via new phone numbers or email addresses.
- Notice multiple changes in drivers’ names or equipment to be used.
- See that additional participants were added to the email.
The shipper could identify double brokering at the loading dock:
- The name and/or DOT & MC number on the tractor differs from the awarded carrier.
- The tractor arriving for a long-range trip is a ‘day cab’ instead of a sleeper cab.
- The driver does not immediately and accurately name the carrier they work for.
- The delivery address is not correct
No single indicator confirms fraud, but multiple inconsistencies should prompt additional verification and possibly justifies cancellation of shipment all together.
Best Practices to Mitigate Risk
Consider the following practices to prevent double brokering:
- Re-vet every carrier before tendering a load, even if you have worked with them before. Look for changes in ownership, shared contact information with other carriers, or declining safety records. Sudden shifts in safety or out-of-service rates may signal potential fraud or a carrier preparing to shut down.
- Verify carrier tractor counts and observed lanes relative to the shipment origin and destination.
- Carefully verify permanency of names, logos, and numbers on the side of every tractor to ensure it matches the hired entity.
- Photograph or video driver acknowledging the carrier they drive for and ensure they understand they are driving the load to the correct destination.
Key Takeaways
As transportation fraud continues to grow in frequency and severity, the tactics continue to morph. Businesses need proactive risk management guidance as much as they need proper insurance coverage. At Falvey, our Risk Management team works alongside clients to help identify operational risks, strengthen transportation best practices, and provide practical tailored consultation and resources designed to reduce losses before they occur.
