It’s complicated.
This was a common answer among many transportation professionals asked about the legality of double brokering as part of a FreightWaves investigative series on a burgeoning double-brokering scheme.
Brokers said that double brokering has been around since shippers started relying on brokerages to find trucks to haul their freight. Most agree that it’s legal as long as the shipper consents to the arrangement and the carrier hired to haul the load is also privy to the details and is paid.
However, freight brokers also agree that double brokering is fraught with risk and becomes illegal when a shipper specifies that its loads are not to be re-brokered.
Double-brokering scams cost industry over $100M annually
For more than two years, Joe Howard, who works for a Midwestern logistics company, has been tracking an alleged sophisticated network of load-board scammers posing as legitimate companies.
He said the elaborate network has created hundreds of fake motor carrier numbers, pretending to have trucks to get the loads from other brokers. Another entity involved in the alleged scheme re-brokers the freight to legitimate carriers that often have no idea the freight has been illegally double-brokered.
Once the legitimate carrier picks up the load, Howard said the alleged scammers often seek payment from the broker they booked the load with for transportation services or request fuel advances from the brokers before their scheme is discovered.
Frequently, the legitimate trucking companies that transport the freight have little or no communication with the shippers that didn’t authorize the double brokering and sometimes have to fight to be paid, if they are paid at all.
Dale Lenz, owner of Story Express of Ames, Iowa, a small trucking company and freight brokerage, said he mainly has dedicated accounts. But on occasion, Lenz said when he posts a load on one of the load boards, he is hammered with phone calls from Southern California area codes that have a connection to Howard’s growing list.
“Double brokering in one aspect or another has always been around, but this is much more organized than anything I’ve ever seen before and I’ve been in business for more than 20 years,” Lenz told FreightWaves. “There is a widespread fraud going on of shell carriers booking loads from brokers and then double brokering them.”
Carrier411 CEO Darren Brewer told FreightWaves recently that he estimates double-brokering scams, including fraudulent fuel advances, cost the transportation industry more than $100 million per year.
Brewer’s company, which allows brokers and shippers to research and monitor trucking companies based on safety, compliance, performance and transportation metrics, diligently monitors its site to prevent double-brokering fraud.
Oregon-based DAT is one of the largest on-demand truckload marketplace, with more than 249 million loads and trucks posted annually, according to its website.
DAT spokesperson Annabel Reeves said the company is aware that fraudulent double brokering occurs within the industry and “DAT takes this very seriously.”
“Double brokering violates a number of state and federal laws, and if we became aware of such behavior and were provided sufficient information, we would contact the appropriate law enforcement authorities or encourage those who brought it to our attention to contact the appropriate authorities if they were more comfortable doing so,” Reeves told FreightWaves.
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Bill
Double brokering is definitely illegal, indirectly. Map 21 laws that were passed in 2012 and implemented in 2016 clearly say that if you broker a load, without brokerage authority, you are subject of up to a $10,000 fine per load. If you get a load as a carrier, and then broker it out through a brokerage(like all double brokering works) you are technically brokering the load from your carrier authority to your brokerage authority…
Additionally, there are wire fraud issues going on with many of these.
Johnny Irish
Can you say “COMMON SENSE” sure guess that was not something of which is needed in the movement of Motor Truck Cargo! So you own and Truck or a Trucking Company? So turn your operations staff or yourself from a “ROCK HEAD” to a “ROCK STAR”. Did you know while your driver and your asset was making a shipper pick-up at said customer you can have your driver along with the PICK-UP NUMBER ask the said shipper this- WHO IS THE FREIGHT BROKER OF RECORD ON THIS LOAD? If the answer does not match your load tender or rate conformation “RED FLAG”!!!! However maybe your running your company the stuck on stupid way and do not realize your ability of said fleet to ask this simple question. Trust me the shipper wants no later phone calls that you were not paid for said transportation service. I know your telling yourself I have so much more to worry about such as “FREAKING OUT” that your not getting paid for a load of which would be prevented before your driver allowed 1 pound of goods onto your “EQUIPMENT” not a mystery freight broker! Remember “COMMON SENSE not such a COMMON thing”.
Witt
Ok I have to sound off this, 1 . Shipper specifying has nothing to do with it, most shippers think , and treat the broker as a carrier 2. The above scam doses happen, but that is not the biggest drain on the industry. The biggest drain is the systematic re-brokering of freight from the top big 3pls, who may or may not do this legally, it is legal if they have freight forwarding authority. This where they take freight and systematically double broker to other brokers to keep rates rates down on the spot market, sometimes this happens to when the the other broker poses as a carrier, trust me nobody looks very hard. 3 Companies who double broker it to their sister shell-organizations to get all the rent they can before putting it on the spot market 4 Brokers who act as carrier- these are broker who get just 99% of their freight off the load board and dispatch it to a bunch of truck they run, truck who have their own authority, not leaser’s, ALL the big super duper top100 3pls are in to this up their neck , that how they make so much money ! there dirty little secrets out! You actually think they make it on meager -6-8 returns they claim ? OH one reason there is driver shortage too ! that another story.
Bill
The big boys are using the term “co-brokering” instead of “double” but every carrier knows it, and every one here at the collection agency knows it. BUT the biggest issue isn’t this DB scam, its the other brokerage scam, that this year alone, has had these brokerages close doors not paying carriers…
Total Transport Logistics LLC
Fast Forward Express LLC
Cargo Pro Logistics LLc
Coast to Coast Freightlines LLC(the always mispell Freight Lines as Freightlines)
Nationwide Transportation LLC
All of these were started by the same family. And there are close to 100 other brokerages they have opened and closed within months.
They get the loads from Truckstop, Uship or Shiply and under bid them, then offer carriers an actual reasonable rate, even though they are getting less, then they go back to the shippers and offer discounts if they pay in 24 hours, because they know they have very little time to scam with each brokerage.
In my opinion, Uship(who has brokerage authority) is technically giving loads from their brokerage to other brokers.
Mark Kochanski
Total Transport Logistics LLC
Fast Forward Express LLC
Cargo Pro Logistics LLc
Coast to Coast Freightlines LLC(the always mispell Freight Lines as Freightlines)
Nationwide Transportation LLC
You stated in your posting that “All of these were started by the same family”. What do you mean by “family”? If you have names or contact information about these scammers, please share. Thank you.