Incidents of freight fraud are ramping up. How can you protect yourself? Supply chains are inherently dependent on shipping and for years, freight brokers have served a valuable role as middleman. By helping companies match loads to trucks, they can eliminate wasted space on trailers and ideally, cut costs for shippers and truckers both. Of late, however, incidents of freight fraud are ramping up, thanks to a migration to online matching. Truckstop.com, an online freight marketplace, reports a 400 percent uptick in fraudulent brokering in the fourth quarter of 2022 compared to the same quarter in 2021. The fraudulent activity is impacting not just freight brokers, but harming everyone involved in the transactions, and logistics as a whole.
How freight fraud scammers operate
Using their tech skills, they impersonate the middleman, pulling thousands of dollars off payments from shippers. The practice is called “double brokering” and imposters use false identities to bid on loads. Shippers pay the imposter, who turns around and posts the load a second time, leaving trucking companies or brokers to handle the actual shipment. The trouble is the funds are then missing—everyone involved in the transaction is left empty-handed. When pulled off at scale, as they have managed lately, the amounts lost are skyrocketing. Freight brokers are alarmed and worried about the ultimate impact on their business, as shippers and carriers alike question the validity of the deals they are making with brokers. Logistics consultants watching the situation say that small carriers and operators are particularly susceptible to the scam, as their margins are already low as freight demand falls.
If your company is a regular user of freight brokering, take the necessary steps to protect yourself from this sophisticated type of freight fraud. While any freight broker can be hacked, having an established relationship with a trusted freight brokerage company is a good starting point.
Spotting freight fraud
If you don’t have that partnership already in place, take some time for due diligence and explore different brokerage firms. Ask pointed, direct questions about their experience with double brokering and ensure your comfort level with the actions they take to prevent it and/or rectify the situation if it occurs. After that, and once you’ve partnered with a broker, review the rate confirmation you receive when your loads are booked. A red flag to watch for is a request to check in and find a trucking partner other than the original match. Double brokers will ask carriers to check in with shippers under a name other than the carrier’s name. Another clue is a bill of lading that shows a different broker or carrier name than the agreed upon partner. To ensure the carrier is legitimate, look up the age of the business, freight-guard reports, consistent records filed with the Federal Motor Carrier Safety Association (FMSCA), and units registered to the motor carrier. Also be aware of what regions are currently serving as hotbeds for double brokering—this will vary. California is an active region for double brokering now, for instance. Freight fraud scams are everywhere these days, and unfortunately for supply chain management, freight brokering is one of the biggest targets.