Freight Fraud. Double Brokering. The issue has many names, and many unknown faces. It’s catapulted itself into the national spotlight in the past 12 months. The fraudsters are popping up everywhere. But just why is it such an issue, and is it really that prevalent?
The Dangers:
Why is Double brokering an issue that could be dangerous to a business? Think about it like this:
You want your grass mowed, and landscaping updated. You’re not sure you have time to do it yourself, so you do lots of research. You find a good, professional, upstanding grounds company that you like, and reach out to them. You agree on a price and timeline.
The next day, when you get home early from work, you find a couple of young teenagers doing your yardwork with personal equipment. No uniformity, no leader, nothing. No sign of the grounds company you hired. Upon further interrogation, you find the company you hired then hired these young teenagers to do the work, paid them out of the money you paid them, and pocketed a portion of the money. Now think if you hadn’t come home early and found out about this. Maybe the work would’ve been done well, and you would’ve never known. But maybe you would’ve come home to your yard and landscaping wrecked.
Compare that to shipping. It’s the same situation. A double broker will portray themselves as a shiny, professional, upstanding company. Then they will turn around and sell the load to the lowest bidder to make themselves money. The problem is instead of a yard, it’s freight on a truck. Said freight is probably traveling hundreds of miles, and could easily be damaged, ditched, or stolen. And the shipper wouldn’t know until it’s too late.
Is It Really Prevalent?
Is fraud in the freight market really that much of a problem? I mean chances are you haven’t heard much about it. So, can it really be THAT bad? The TIA (Transportation Intermediaries Association) estimates that the fraud very well might currently be at the worst it’s EVER been. They also estimate the amount it’s happening has gone up several hundred percentage points in the last 3 months alone.
Triumph Pay (a major handler of payments for companies and truckers) has said that up to $500 million to $700 million of payments per year are going to ‘what could be considered Double Brokers.” In over a $100 Billion Industry, it doesn’t sound like a lot, but that still makes a considerable dent.
But those are just numbers from huge companies, right? This problem wouldn’t affect smaller companies. Well, you would be mistaken. PFL Logistics has blacklisted nearly 3,000 (!) carriers this year alone. The reasons are anywhere from giving fake information on applications, portraying themselves as another company, suspected previous suspicious activity, proven previous suspicious activity, and others. The issue is hitting all companies, big and small. It’s important to be aware of the issue, what to look for, and how to keep yourself safe.