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Double brokering fraud

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It’s the start of a new year, and with that comes the sense of new beginnings. The start of a fresh new year brings the notion of change and progress, and this extends to the freight industry. Throughout history, fraud and shady business practices has unfortunately not been few and far between, and freight is certainly no exception. Although it has occurred for years and years, fraud in the freight industry has seen an increase over the pandemic. One of the most common practices of fraud is an act called double brokering. This is the unauthorized transfer of loads to another trucking company without notifying the shipper. In a typical (legal) agreement, the freight broker assigns loads to carriers, and those carriers pick up and fulfill the shipments within the agreement. When a shipment is transferred to another freight company, consent from the original shippers is necessary, or else you are committing fraud. This can occur due to oversight and poor communication, in which case the act is still objectively wrong, but if no ill-intent was intended, the situation can be resolved. However, what we have witnessed over the last few years in the industry is conscious and deceitful fraud that hurts shippers, carriers, and brokers alike. The FMCSA (​​Federal Motor Carrier Safety Administration) has been vocal in its efforts to curb this practice by increasing the penalty and making it more difficult for these freight crooks to successfully steal legitimate business’ revenue. Despite this, and until actual legislation is implemented to combat its frequency, the most important step a carrier, shipper, or broker can make is hyper awareness of whom you are doing business with. As smart and savvy as these scammers are, the best tool you can employ to avoid any fraud is knowledge of your operation. For instance, Red Dog Logistics utilizes our proprietary transportation management system in order to provide every shipper and carrier with the detailed analysis of loads they have booked. The hub allows every party involved in the shipment the exact details of a given load. Not only does this arm you with important information regarding the shipment (times, cost, etc.), it ensures transparency into how the freight is managed from beginning to end. If there was an extra carrier or broker involved in a shipment, the fraudulent party would stick out like a sore thumb. The act itself is meant to take a percentage of profit from a given shipment without doing any actual work, but technological hubs such as the aforementioned Red Dog TMS grants all parties the knowledge and awareness of a load’s agreed upon handling. As legislation attempts to catch up and mitigate double brokering, working with a company who provides transparent and unbiased information is paramount.