Preventing Double Brokering
Chariot Logistics provides tips on how to identify and prevent a double brokering situation.
In our last blog, Chariot Logistics talked about what a double broker scheme is, how they go down, and the consequences of what can happen when a load is doubled brokered. These scams put the victims in a terrible situation that oftentimes results in financial damages to both parties while the scammers seemingly ride off into the sunset with the cash.
While double brokering is a terrible thing, it is unfortunately a reality in the trucking industry. Like the old adage goes ... the best offense is a good defense. The best way to effectively combat and prevent double brokering is to know how to spot it and to keep it from happening. After moving tens of thousands of loads and effectively handling multiple double broker situations, Chariot Logistics has developed a strategy on how to identify and ultimately prevent double broker events from happening.
There are multiple ways to catch a double broker in the act, but the first line of defense will be the initial carrier screening that happens before carrier setup and vetting. There are a few simple, yet helpful, tricks that a broker or shipper can use that can help spot a double broker scheme within seconds.
Correctly Qualify the Carrier
Most double broker schemes happen either with a new carrier who is trying to get set up with your company or by a legit trucking company's Motor Carrier (MC) number being stolen and used fraudulently. Both things can quickly be identified by a simple Carrier 411 lookup or a similar process. Upon looking up the carrier you need to look for these five things: age of business, freight-guard reports, consistent information in the Federal Motor Carrier Safety Association (FMSCA) records, units registered to the MC and know the hotbed regions for double brokering activity.
See how long the carrier has been in business, a good rule of thumb is 90 days, but as these schemes are becoming more rampant, carriers from hotbed regions should require a longer time frame to be in business. Double broker schemes are always discovered, it's just a matter of time.
Does the business have any freight-guard reports for double brokering? One of the main defenses against double broker schemes is when you catch it, report it so other brokers do not fall victim. Together, we can shut down the scheme.
Does the phone number or email address match what is showing in the carriers FMSCA record? If it’s different, ask why. If they can’t tell you and you can't verify they are legitimate, don’t use them. Call the number listed on the FMCSA and ask if the person who is wanting your load is legitimate, you would be surprised on how many schemes get busted this way and it is a critical form of defense in preventing double brokering from happening.
Check the number of units registered to the MC and the amount of Department of Transportation (DOT) safety inspections for the carrier. If they have one truck and zero inspections, chances are they are not moving your freight with their own truck.
Know the hotbed regions for double broker activity. This is critical for effective defense. California is a known hotbed region for double broker activity, so communicate that with your brokers and coordinators to make sure they are double checking and thoroughly vetting any carrier from these regions. This ensures you are dealing with legitimate carriers.
These quick screens, if used correctly, can help prevent double brokering from happening and can act as the front line of defense to make sure scammers don’t get through to getting setup or being put on a load.
Scammers are more tech savvy these days and have come up with some pretty sophisticated schemes that can sometimes get them through to the setup process. Nonetheless, there are still ways we can catch them even if they breach our first wall of defense.
Onboarding New Carriers
If the carrier is a new setup, your onboarding process should be set up to weed out any illegitimate companies. Part of your onboarding process should include getting a Certificate of Insurance (COI) from the carrier’s insurance company directly. You should never allow a copy from the carrier or a generic COI to be used. If the carrier says they will get it to you from their provider, this is a red flag and needs to be investigated further. When getting the COI from the insurance provider, ask to get a schedule of the carrier’s vin numbers, and make sure they have the trucks they say they do.
Also, your Broker Carrier Agreement and Rate Confirmation should contain language that specifically prevents double brokering. It should include a clause that states double brokering of loads will result in nonpayment to the carrier and that double brokering of loads is explicitly prohibited. These documents must be signed and on file with all carrier setups. (We will talk more in depth about Contractual and Insurance Protection for double broker situations in a later blog.)
If the carrier is stealing an MC number, or if they get through the setup process another way, to spot a double broker situation is by talking with the driver directly. It's very simple, you must talk to the actual driver who is hauling your load. If the dispatcher refuses to give you their number, do not book it with them. If they say the driver doesn't speak English, have them communicate with you regardless. It is imperative that you talk to the driver to ask him one thing: Who do you drive for? This needs to be part of your company's load booking process and needs to be confirmed on every load.
Create Open Lines of Communication
It is very important that brokers have open lines of communication with their customers about double brokering so they understand it and can help prevent it. For shippers, having your brokers tell you the name of the carrier you booked and having their dock workers confirm that the correct carrier is picking up the load is also a very effective way to prevent double brokering. This process is one that Chariot Logistics has used not too long ago to prevent a double broker scheme at Chariot. Another shipper form of defense is to have language on the Bill of Lading that states the carrier is the broker and that any load moved not directly by the named broker will result in nonpayment to the carrier. Ultimately, the language on the BOL is what will govern the case if it goes to court. This is an excellent way for shippers to protect themselves from a double broker situation.
The most effective way to prevent your loads from being double brokered is to know how to spot them and by knowing how to protect yourself in case it happens. For customers, making sure they are working with brokers who are proactive about protecting their shipment from double brokering is the best way to insulate yourself from the risks and liabilities. At Chariot Logistics, we have seen every form of double brokering imaginable and we have the defenses to prevent it from happening. If you need a broker that has your back and will protect you from double broker situations, Chariot is that broker.
Stay tuned for more upcoming blogs where we cover what to do if your load does get double brokered and contractual and insurance protection that can cover you in the event you are double brokered.