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Seven Steps to Protect Your Trucking Company from Double Brokering

Seven Steps to Protect Your Trucking Company from Double Brokering

Double brokering continues to plague the transportation industry as an ever-present threat to the financial, liability and reputational state of carriers and brokers. Whether your trucking company intentionally becomes involved in a double broker scheme or is a victim of the crime, the consequences can be devastating to your business. Double brokering violates state and federal laws, jeopardizes the chances of being paid, negates insurance coverage, and can lead to the cancellation of your FMCSA authority.

Double brokering leaves every person in the line of transit at risk in case something goes wrong. With the increasing sophistication and scope of double brokering schemes, trucking companies must be always alert when booking freight from an unknown source. Follow these seven steps to protect your trucking company from double brokering.

7 Steps to Detect and Protect from Double Brokering

The first defense against any problem is awareness. Don’t let your trucking company get trapped by double brokering due to negligence – understand the threat with all its consequences and follow these seven steps to qualifying the broker as legitimate before you manage a load.

Step 1 – Check credit scores

Checking a company’s credit score and days-to-pay information can give you a good idea of a broker’s business reputation. A quality load board will provide this information, as will using a free online credit check tool. Alternatively, the FMSCA website also includes information about brokers that can confirm their good standing.

Step 2 – Verify contact details

Cargo and identity thieves will often pretend to be a reputable business to gain trust. Brokers must be particularly careful not to award a load to a fraudulent broker posing as a carrier. This is a common scheme with the criminal intent to double broker the load. Check the caller ID and compare that number to the company’s identification on the FMSCA website or a reliable third-party website like the DAT Directory. If the numbers don’t match, hang up and call the number listed on the FMSCA website and ask for your new contact by name. If the actual broker can’t verify your new contact, don’t accept the load.

Step 3 – Review the rate confirmation and load instructions

When working with a new broker, it’s essential to check for specific details such as a valid license, current insurance, Unified Carrier Registration, and an active surety bond. Shippers should also beware of red flags that may indicate fraudulent activity, such as:

  • Carriers that operate using a different company name or MC number than recorded on the BOL.
  • Carriers that send proof of delivery to a non-brokerage email address.
  • Any alterations of the load documents.

Step 4 – Watch for unusually high rates

While a high rate is appealing, it may also be a red flag. If a load rate seems too good to be true, it probably is. In cases where an illegitimate broker has no intention of ever paying – offering a super high rate is how they lure in carriers. Additionally, higher-than-average rates often indicate problematic loads in general.

Step 5 – Build relationships

Many carriers only work with brokers they know and trust, and vice versa. Make sure to save the contact information of reputable brokers and carriers you’ve worked with and seek opportunities to work with them again. The more you work with a co-operating industry partner to successfully haul loads, and get paid on time, the more comfortable both sides of the contract will feel about continuing to work together.

Step 6 – Communicate clearly and openly

Effective communication between the shipper, broker, and carrier is essential to successfully transport goods and build mutual trust. When a broker or carrier doesn’t respond quickly, provides vague or incomplete information, or is difficult to contact, it could be a red flag. All parties should be clear about expectations, plus be transparent and responsive during all phases of the haul.

Step 7 – Leverage resources associated with freight factoring to conduct due diligence

Sophisticated trucking companies have learned the extensive benefits of working with a trusted freight factoring company to improve cash flow, save costs, and for protection against fraud:

  • Freight factoring converts invoices into immediate cash.
  • Trained and experienced collection team members work behind the scenes to improve your trucking company’s accounts receivable management, free of charge.
  • Fuel discount programs and other cost saving benefits are available.
  • Extensive due diligence resources and services are provided to mitigate bad debt and spot the red flags that can expose fraud.

Conclusion

Unfortunately, double brokering is all too common, perpetrated by dishonest brokers, carriers, and criminals using it to make fast, easy money. Being aware and reporting violations of fraud to the proper authorities will help to safeguard your business and the transportation industry as a whole.

Understand that double brokering is a criminal offense. Penalties may include fines, licensing suspension, and possibly imprisonment. In worst-case scenarios, if a double brokering scheme leads to someone being killed on the road or a shipment being lost, the legal, liability, and financial damage will likely ruin a trucking company.

Remember, awareness is critical to preventing double brokering and its associated risks. Learn the red flags and other indications that warn of the fraud. The best approach is to have a trusted partner be your eyes and ears to actively monitor for fraud. Partner with a trusted freight factoring company. Trained professionals, tools and resources are available to conduct the due diligence needed to verify your new customer’s legitimacy and ability to pay before you haul.

About eCapital

eCapital is a tech-enabled finance company with specialized services for the trucking industry. Since 2006 our organization has advanced innovations to provide our trucking customers with more control of their capital management.

Our mission is to make the lives of truck company owners easier by providing easy access to working capital, plus tools and advice for running a smarter business. Available resources to trucking clients include:

To learn more about how we can help you grow your trucking business, visit eCapital.com

 


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