Your load got double brokered. What do you do next?

Know what to do when your load gets double brokered and how to calmly handle the dreaded double payment and freight collection agencies.

With the increasing sophistication and scope of double brokering schemes, some incidences do get through the cracks. However, not all shippers are prepared to handle a double brokering situation. Chariot Logistics aims to change that.

If a brokers operations team is well trained, simply talking to a driver and verifying who they work for can save shippers from being double brokered. At Chariot, part of our dispatch procedure is asking the driver who he works for. If the driver says he doesn’t work for the carrier the load is booked with, we intercede. If they meet our carrier qualifications, the load is booked with the actual company, if not we find another carrier. Unfortunately, the perpetrators of these schemes are getting very sneaky. One can not always catch them in the act, but there are ways to still spot and prevent a double payment situation.

Key Indicators of Double Brokering

The double payment situation, after safety risks, is the biggest form of risk associated with double brokering. There are some key indicators that you can look out for that indicate your load has been double brokered. 

First, carriers requesting Quick Pay (QP) are an immediate red flag. Oftentimes scammers use QP to try and get paid upon delivery quickly before their scheme is discovered. Making sure the carrier requesting QP is properly vetted will oftentimes stop a double brokering situation in its tracks. 

Second, it’s important to have a strict BOL audit of every load. Some scammers will alter the BOL, which can make it look blurry or have things marked out or edited on them. Some shippers will also put the name of the actual carrier on the BOL, so making sure those names match up can also expose a double brokering situation. It is a good rule that if a BOL looks suspicious, it probably is and needs to be investigated further.

Handling Double Payments and Freight Collection Agencies

All of the above steps are great, but what do you do if you get a notice from a debt collector or your customer is telling you a carrier is claiming they didn’t get paid for a load? At Chariot Logistics, we have learned that the key to resolving this situation is open lines of communication with your customers and the carriers that hauled the load. The first step, if not already done, would be to talk with your customer. Shippers usually have indemnity clauses in their contracts that protect them from double payment, but the law does say that shippers, not brokers, are liable for the payment. So, at Chariot, we always send our customers a statement reaffirming our acknowledgment of our right to indemnify them and that they can ignore further contact from the carrier or debt collectors and that we will keep them informed. 

Now that your customer knows you are taking care of the situation, the next step is to establish communication with the actual carrier and/or the collections agency representing them. Ultimately, all parties involved are victims that suffered physical damages because of fraud. All parties involved had a breakdown in due diligence and properly vetting the carrier and broker they were contracting out and consequently both carry liability for the loss. Legally speaking, the contract language on the BOL is what will govern the transaction as there is no formal agreement between the parties. Historically, courts don’t have much sympathy for shippers/brokers and double payments have been awarded. Every situation is different, and you need to consult a legal representative, but the actual carrier does have the right to be paid by the shipper. That is not to say that shippers and brokers do not have rights and you can’t fight these situations. You need to request to see all the documents and contracts that were used during the fraudulent transaction, make sure they are legit, and then decide to settle or contest the demand for payment. 

Oftentimes carriers will hire collection agencies to handle double brokering situations. The best course of action is to reach out to the actual carrier and attempt to deal with them directly. However, that sometimes doesn’t always work. These collection companies will contact you and demand payment with threats that failure to pay will result in them contacting your customer and filing suite. That is why it is so important to have good communication and documentation with your customer of your knowledge of and obligation to indemnify them, because they will contact your customer to get paid. 

They are very good at their jobs, and they will go straight to the executive level of a corporation in attempts to get paid. They will throw a lot of legal talk at you and be very loud about the situation with your customer. These are tactics to get paid. The best way to handle them is to tell them your customer is aware of the situation and your obligation to indemnify them. Tell the agency that if they keep contacting your customer you will send them a cease and desist and take further action. The collection company will then tell you they will file suit against your customer, but oftentimes the collection agency isn’t actually a legal entity so actually filing suit will be a process for them. Every situation is different and you need to evaluate the situation with your legal team and decide to fight or settle, which is usually for 25-50% of the demand amount.  

Unfortunately, double brokering is part of what we do and hopefully you can catch it before it hits your bottom line. At Chariot, we know good processes, effective communication, and a strong customer relationship will hopefully prevent double brokering. And if it happens, mitigate the risks associated with double broking. We are proud of our preventative processes and proven record of standing by our customers in double brokering situations. We are experts when it comes to double brokering, and we are experts at resolving the problems they create.