Freight fraud is a major problem that can be devastating for carriers, especially large organizations. It is estimated that freight fraud costs the industry billions of dollars every year. Fraudsters use a variety of tactics to take advantage of carriers, such as identity theft, double brokering fraud, and other scams. To combat this problem, larger organizations have whole departments dedicated to preventing and detecting freight fraud. In this article, we will discuss what steps carriers can take to avoid getting scammed.
What could happen to you if you become a victim of fraud:
- If you haul a load that is fraudulent and it gets charged back, you may not be able to recoup those funds, and this can halt your business.
- It could mean losses for you as a carrier- not only in finances, but in safety ratings, insurance costs, and reputation
Identity Theft
- Some scammers pretend to be trucking companies Like yours and prey on shippers or brokers by picking up freight and fleeing. Others request fuel advances and vanish.
- Online Identity Theft- some defrauders design fake websites or create fake email addresses that look like legitimate sites or addresses. Shippers assume it’s the real broker's contact information, provide payment details, and lose thousands.
- When a broker gets their identity stolen in this way, it is hard to distinguish which paperwork or emails are “correct” because they are using all of the correct information and logos.
- This can affect You as our clients because the shipper may refuse to pay the carrier directly because they already lost their funds to the fake broker.
- The following is the most challenging type of identity theft.
- Individuals call up trucking companies and pose as employees of brokerages that they are not actually employed by. They go as far as posing as actual employees by creating email addresses and email signatures of the real company with information they find online. The shipment gets booked and serviced before the individual vanishes without a trace. Catching this is nearly impossible.
Double Brokering Fraud
- Double brokering is slightly more complex than run-of-the-mill identity theft.
- This is the most common type of fraud that we see here at Great Plains and Partners Funding. It is hard to catch, and hard to explain to our clients.
- You as our clients have a hard time understanding why we can’t fund on double brokered loads, because it doesn’t necessarily mean that you won’t get paid. It just means that you’re technically being paid by the wrong person.
- The criminal (double brokerer), will accept a load as a carrier – giving their word to the broker who gave them the load that they will be the ones running the freight.
- Instead of running the freight themselves, they turn around and re-broker the freight out to an actual carrier- our client- for a higher price than the original customer agreed to pay, or for a lower price so that they can retain a fee but didn’t actually have to run the load.
- This is possible because the criminal receives actual documents on the load and then alters the documents so they look legitimate.
- If they broker it out for a higher price- Once the load is picked up, the scammer gets the BOL from the actual carrier and then faxes it to the original broker, requesting a fuel advance. He receives the money and then disappears with the money. The actual carrier never gets paid.
- If they broker it out at a lower price- they MAY actually pay our client, but our client is typically not getting the payment they deserve on the load, because the company that double brokered it will pay our client a lower rate, and keep the difference in pay.
- Double brokering violates a number of state and federal laws!!!
- Watch for notations on the rate confirmation sheet or BOL of the double brokering ring with three large brokerages – All State Association, Broadway Brokerage, and Tristar Brokerage (all are headquartered in CA).
- Watch out for any brokers out of Glendale, Tujunga, North Hollywood and Burbank.
- Here is a freight-waves article regarding this: https://www.freightwaves.com/news/freight-fraud-burgeoning-double-brokering-scheme-like-game-of-whack-a-mole
Thieves taking advantage of already double-brokered loads
- Scenario 1 -
- “Broker A” with an otherwise solid carrier-vetting strategy contracts with a legitimate “Carrier A” to haul the load. Yet- there is no prohibition in the broker’s contract with the carrier that prevents the carrier from re-brokering that load. When “Carrier A” does that as “Broker B”, and posts the load to a load board, they are doing so without the same robust vetting process as “Broker A”. Then fraudulent “Carrier B”, a cargo thief posing as a carrier (could even be set up correctly with authority). When “Carrier A/Broker B” now gets scammed and the freight goes missing.
- Scenario 2-
- “Broker A” with a not-so-great vetting process, gets scammed by cargo thieves with a stolen identity or a new authority set up for their purposes as legitimate “carrier A”. The thieves then become “Broker B” to turn around and rebroker the load with a legitimate “carrier B”. “Carrier B” is now involved and they don’t know they’re being scammed. “Broker A” pays original “Carrier A” and the actual “carrier B” never gets paid.
How to avoid getting scammed
- Watch who your emails are coming from
- Names can be slightly different, URL’s can be slightly different
- Watch for grammatical errors on rate confirmation sheets
- Double check phone numbers versus our database or have our credit department do additional research online.
- Urge dispatchers to do credit checks so they are getting the newest information from us regarding brokerages and any fraud issues.
- Always verify financial information such as bank info by phone to trusted numbers and contact.
- Do NOT wire or ACH funds to brokers or customers without verbal and written approval.
- If a deal seems too good to be true….it probably is.
- Watch out for NEW BROKERS – new to business.