Rob Hoffman’s experience in the freight business had taught him to be wary of dubious brokers and carriers, making him an unlikely target for their scams. As the chief operating officer of Dedicated Carriers, a reputable freight company in Tampa, Florida, Hoffman had always been careful and methodical in his dealings.

However, even he couldn’t have anticipated the unsettling turn of events that would soon unfold. It started when Dedicated posted a load on a loadboard and a seemingly legitimate carrier with a valid motor carrier number submitted a winning bid for the shipment of yogurt from Virginia to Ft. Lauderdale, Florida.

Little did Hoffman know, this innocent transaction would lead to a cargo theft fiasco that would potentially cost his company a major customer. Despite his experience and precautions, it seemed that even the most seasoned players in the freight business were not immune to the deceitful tactics of unscrupulous individuals.

While the load was in transit, Hoffmann, the owner of Dedicated Carriers, received a call from a confused driver. The driver had been assigned the load from the initial trucking carrier, but upon checking the bill of lading, saw that Dedicated Carriers’ information was listed on it.

The broker who had supplied the load had asked the driver to reroute it to Dallas, Penn., without replacing the bill of lading. This raised concerns for Hoffmann, who immediately contacted the original carrier that had taken the load. To their surprise, they found out that the original carrier was holding the load hostage and demanding a ransom that was twice the value of the load itself.

However, Dedicated Carriers refused to pay and the driver, unsure of who to follow, abandoned the load. Hoffman sympathized with the driver, knowing it would have been difficult for them to determine which side was legitimate.

Meanwhile, the company holding the load under the fictitious name of GCB Logistics became aggressive in demanding the ransom. In response, Hoffmann reported the situation to the original shipper, knowing that it would most likely become an insurance claim.

Despite the pressure, Hoffman stood firm and refused to give into the demands, determined to not let his company be swindled.

When Dedicated Carriers discovered that one of their trucks and trailers had been stolen, they immediately turned to law enforcement for assistance. The FBI, Federal Motor Carrier Safety Administration, and various police departments were all contacted, but unfortunately, they were met with little help.

Dedicated Carriers was continuously given the jurisdictional runaround, with no agency taking responsibility for the theft. Out of frustration, Dedicated Carriers even reached out to their local police department in Tampa, who admitted that their hands were tied as the truck could be anywhere. To make matters worse, the thieves later returned under a different identity, using fake Gmail addresses and a stolen motor carrier number to steal another load from Dedicated Carriers.

This time, they even demanded a ransom for the trailer. Looking back, Dedicated Carriers realizes that they should have done more due diligence, especially when the thieves were using fake Gmail accounts. Sadly, this wasn’t the end of their troubles as they lost another load and eventually lost a significant customer due to the impact of these thefts.

The entire situation has been a nightmare for Dedicated Carriers, proving just how important it is to have strong security measures in place.

Double brokering on steroids

Double brokering has been a long-standing practice in the freight industry, in which a carrier or broker would accept a load and then pass it on to a third party without the original shipper’s knowledge. In the past, this was not considered a serious offense and was even legal in Canada.

However, with the rise of online freight transactions and a soft market for carriers, there has been an increase in fraudulent activities in the form of double brokering. According to Anne Reinke, president and CEO of the Transportation Intermediaries Association, these crimes have escalated in the last few years.

The easy access to digital technology has made it easier for criminals to deceive and with the influx of new players in the market, many are resorting to these illegal activities for financial gain.

To make matters worse, there is little to no enforcement in place to prevent or punish these actions. U.S. FMCSA regulations have made it illegal to broker loads without proper authority, but their complaint database has received over 80,000 reports of double brokering with no investigation or action taken.

The chief relationship officer of U.S. loadboard Truckstop, Brent Hutto, also believes that the current weak freight market has made it easier for carriers to fall victim to such fraudulent activities. With carriers desperate for high-paying loads, they may overlook the warning signs and precautions they would normally take.

Not in Canada?

Loadboards, such as the popular Truckstop in the U.S., have been implementing stricter screening processes for brokers and carriers within their networks. This is a positive step in the fight against freight fraud, which is reported to be less prevalent in Canada compared to the U.S. However, double brokering remains a major concern in the Canadian trucking industry.

A recent white paper by the Canadian International Freight Forwarders Association has highlighted the widespread practice of double brokering and its potential risks. These risks include diverted deliveries, involvement of carriers in accidents, and delayed or missing payments. Co-brokering, on the other hand, is a commonly accepted practice in both countries and involves collaboration between carriers or brokers to manage excess capacity.

In this process, all parties are aware and informed of the financial aspects of the transaction. While there may be risks involved in co-brokering, the structured approach and transparency make it a preferable alternative to the unpredictable and unethical practice of double brokering.

Fighting back

To begin with, Hutto suggested being extra vigilant when a load pays an abnormal amount. “If it’s a $2,500 lane and somebody advertises a $4,000 load, it’s probably too good to be true,” he reasoned. He also suggested looking into a broker’s history.

Normally, longevity is a sign of stability. If they’ve been in business for less than a year, Hutto advised affording them some additional scrutiny. (An FMCSA database will reveal when a brokerage was formed).

The rise of digital freight platforms has made it easier for bad actors to manipulate and take advantage of carriers and brokers in the industry. However, Hutto, an industry expert, suggests that the best defense against digital freight fraud is to know who you are dealing with. It is essential to take the necessary steps to validate the identity of a broker or carrier, but in the midst of tough times or busy schedules, these steps are often overlooked.

Bad actors will often target these vulnerable moments, when people are not paying close attention or are desperate for profitable freight. Therefore, it is crucial to change standard operating procedures and be extra cautious when booking carriers. Hutto recommends paying attention to abnormal payment amounts and doing research into a broker’s history for longevity, as it is an indicator of stability.

For those brokers that have been in business for less than a year, additional scrutiny is advised, and the FMCSA database can reveal when a brokerage was formed. These precautions may seem time-consuming, but they are necessary measures to protect against digital freight fraud.

Tools such as two-factor authentication are now being offered by some loadboards, and Hutto recommends taking advantage of them.

Lessons learned

In light of experiencing two stolen loads, Dedicated Carriers has implemented stricter theft prevention measures. This has been a blessing in disguise, according to company representative Hoffman.

They have revamped their standard operating procedures for booking carriers and now conduct thorough verifications, such as checking carrier email addresses and consulting carrier monitoring services and publicly available databases.

Drivers are also required to submit pictures of their trucks, trailers, and license plates for verification. Communication with drivers has been increased, with phone calls being made before pickup and throughout the transportation of the load.

Dedicated Carriers also prefers to work with trusted partners and incentivizes their brokers for utilizing carriers multiple times a month.

The Transportation Intermediaries Association (TIA) has also set up a Fraud Task Force to assist members in avoiding these types of crimes and advises to be cautious of carriers with limited information in their records. Similar precautions are advised in Canada, where the The TIA and the National Association of Small Trucking Companies are working to create a fraud task force to combat this ongoing issue.

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