The leading trade group representing the brokerage industry is diving anew into the double-brokering issue.
In a white paper recently distributed to its members, the Transportation Intermediaries Association focuses to a large degree on instruction and precaution as well as advocacy.
Double brokering has multiple definitions. But it has a consistent meaning for the TIA, according to Vice President of Government Affairs Chris Burroughs.
“So the TIA definition of double brokering for us is typically a broker selects a trucking company to haul their freight,” Burroughs said in an interview with FreightWaves. “And then unbeknownst to the broker, the trucking company proceeds to re-broker or double broker the load back out to another carrier that ultimately makes the haul.”
That doesn’t always result in the freight being brokered safely and on time. Burroughs said the double brokering may go to a company without proper authority and the original broker doesn’t find out about it “unless something bad happens.”
The issue is not new, though Burroughs said it has flared up again recently to levels he has not seen for a long time.
“It’s getting worse,” he said. “We talked with one of the largest factoring companies in the U.S., and their latest quote is that double brokering is affecting upward of $500 million to $700 million in freight.”
The so-called “Glendale Gang” from Southern California appears to be a key reason for the surge and the concurrent concern. The double-brokering activities of the Glendale Gang involved numerous companies popping up and then disappearing.
It was an issue back in 2012 when TIA worked on the MAP 21 legislation, an Obama-era law that dealt with surface transportation and was more formally known as Moving Ahead for Progress in the 21st Century Act. Burroughs said that legislation requires the brokerage of freight to have legal authority. It also raised the bond requirements for brokerages to $75,000 from $10,000.
“What we’re seeing as middle players are more fraudulent companies masquerading as trucking companies,” Burroughs said. “They are often based outside the U.S. and they might have some operative in the U.S. who gets authority with [the Federal Motor Carrier Safety Administration] until they get shut down.”
The modus operandi for these companies, according to Burroughs, can vary. But one scenario he spelled out involves getting a load, seeking quick-pay services (which does take a “haircut” out of the payment), and then reposting the load on load boards at a wildly inflated price. The middle company gets its quick-pay cash, it does not pay the carrier it dumped the load to that accepted the load at the rich price, and the double brokering “carrier” then disappears.
That obviously is not a long-term business plan. Burroughs said a company that is located offshore can operate like that for about 30 days “until FMCSA figures out what is going on.”
A TIA member recently found that one of their load board accounts was hacked and then used for double brokering 30 to 40 loads, Burroughs said. “So here were 30 to 40 carriers getting screwed.”
There are other problems that come with double brokering, long discussed in the industry and echoed by Burroughs. Safety is near the top of the list, since the carrier moving the freight on to somebody else has little incentive to care about the safety record of the trucking company actually moving the freight.
But if it’s the carriers who are mostly the victims of these scams, what is the TIA’s interest? Burroughs said in many cases the broker that legitimately started the chain will compensate the carrier at the end of the chain that found itself the financial victim of the double brokering. “Many times the fraudulent company is never heard from again, and to save relationships with the carrier, we often pay the one that ultimately delivers,” Burroughs said. But he noted that comes after the scam carrier got paid too.
Burroughs said TIA’s goal with the white paper was to “provide our members with educational potential red flags.”
Some of the steps seem painfully obvious, such as more careful inspection of a company’s email address. While the white paper has not been made public other than to the group’s members, Burroughs listed other red flags to signal a carrier that might be in business just to double broker:
— A carrier’s authority that has just recently been activated.
— Multiple address changes.
— Resistance to adopting technology such as tracking apps or to something as simple as giving out a cell number.
— The request for quick pay. which is legitimate in many transactions but in conjunction with other red flags could be a sign of trouble.
— And a willingness to take a rate for a load that is less than what is being posted because the plan is to cash out quickly anyway before the double broker is detected.
Burroughs said not all double brokering is illegitimate. For example, a carrier that had freight brokered into it might find itself in a capacity squeeze and needs to turn around and re-broker some of that freight into a carrier that has capacity. However, in a situation like that, the shipper is expected to be notified and its permission granted for the re-brokering.
As far as a potential revived role for FMCSA, Burroughs said MAP 21 includes penalties for double brokering of up to $10,000 per incident. “That was put in there as a deterrent,” he said.
“We know the agency is strapped and doesn’t have a lot of investigators,” Burroughs said of FMCSA. So during the writing of MAP 21 back in 2012, Burroughs, who was involved in the discussions, said the goal was, “Let’s give them this civil penalty provision to financially go after bad actors in the space.”
But Burroughs said FMCSA believes it has been restricted by an administrative law judge decision from 2019 that bars the agency from enforcing civil penalties for commercial violations. FMCSA needs to stick to its mandate to govern safety, according to its interpretation of the decision, Burroughs said.
The TIA did manage to get legislation into the omnibus spending bill at the end of 2022 that, as Burroughs put it, reiterated that Congress “meant what we said back in 2012 [about double brokering] and we need to figure out how to address this.”
TIA does not believe FMCSA is without recourse even if the administrative law judge decision does limit its powers. “There are other avenues they can take,” he said. “They can put people out of service but there seems to be no appetite to do that.”
In its prepared statement on the release of the white paper, TIA said the problem has “remained unchecked” by FMCSA.
FMCSA had not provided responses to FreightWaves questions about the TIA white paper by publication time.
More articles by John Kingston
Former employees shed light on sophisticated double-brokering network
Supply Chain AI Symposium
Past the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
Future of Rail Symposium
Reshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
F3: Future of Freight Festival
Industry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
Past the hype. Join operators, founders, and enterprise leaders figuring out how to deploy AI in supply chain.
The Old Post • Chicago, IL Register NowReshoring is rewriting freight demand. Join shippers, rail executives, and government officials to shape the next decade.
The Signal at Chattanooga Choo Choo • Chattanooga TN Register NowIndustry-defining keynotes, rapid-fire technology demos, and industry leaders networking in experiences across Chattanooga - plus the inaugural F3 Awards Dinner featuring the FreightTech and Shipper of Choice reveals.
The Signal at Chattanooga Choo Choo • Chattanooga, TN Register Now
Concerned Trucker
I am currently going through a similar situation with a load that I accepted from Landstar (supposedly) and it turned out to be a fraudulent load. What I don’t understand is that all information regarding Landstar Ranger was correct on the DAT posting. Once AMAZON load was dropped off and I did my billing through my factoring company is when I found out that the load was not being handled by Landstar Ranger but by a different carrier out of Lauderhill Fl. I also find out that this carrier has multiple complaints regarding drivers not getting paid and yet, AMAZON is still allowing them to keep on doing business as usual?🤔. The worst part is that this carrier has only 1 truck and 2 drivers and already have 66 loads completed in the month of February (as of the 10th). And yet no one is batting an eye? If anyone knows of a Bad Ass Attorney that is looking for a possible major case that can potentially turn into a criminal case against inside players of these Big Name Companies? Please send them my way. Thanks in Advance.
Marvin
I am currently going through a similar situation with a load that I accepted from Landstar (supposedly) and it turned out to be a fraudulent load. What I don’t understand is that all information regarding Landstar Ranger was correct on the DAT posting. Once AMAZON load was dropped off and I did my billing through my factoring company is when I found out that the load was not being handled by Landstar Ranger but by a different carrier out of Lauderhill Fl. I also find out that this carrier has multiple complaints regarding drivers not getting paid and yet, AMAZON is still allowing them to keep on doing business as usual?🤔. The worst part is that this carrier has only 1 truck and 2 drivers and already have 66 loads completed in the month of February (as of the 10th). And yet no one is batting an eye? If anyone knows of a Bad Ass Attorney that is looking for a possible major case that can potentially turn into a criminal case against inside players of these. Big Name Companies? Please send them my way. Thanks in Advance.
Eric Lisciandrello
Even when you do report these companies with all of the supporting evidence, nothing happens….. They shut down the MC#, and the guy moves onto the next one. The penalty for double-brokering isn’t something that concerns these people, and certainly they only care about their own pockets because they don’t care about ruining small businesses.
There’s definitely ways that can be fixed but the government certainly doesn’t want to build additional money into the budget for that.
precaution
I have found that the best way to handle the issue is to tell them that you must have the trucking company name on your door. if not, they will not load you. If they tell you, it is an owner operator. then we ask what name is on the door and what is the MC number. we pass this info to our shipper. we ask the shipper to give the driver our number to call (if we feel uneasy) before being loaded. I know that there are cases where this may not work. but it has cut down a lot on double brokering issues.
Bill Ivey
The people saying they see CH broker JB’s loads, that is Co-Brokering. Someone from JB Hunt will have no issue finding out who CH hired, not the same at all.
As for what the article is about,
MAP 21 would work, if the owners of the fake carrier sides were fined the $10K per load the law allows for. If the fake carrier sides(meaning, they don’t have trucks, its either insurance for a truck in a junk yard, or they have tow trucks or limos, etc.) can’t get the load, the broker side of the scam, can’t rip off the carrier. Additionally, we have laws set in place so that you have to give your physical address to set up a business account, that should be required for carriers and brokers…but the broker side of the scam, never gets paid, its the carrier side. So the carrier side is in a real location, and the brokers are in virtual offices. Simple Freight Brokerage apparently didn’t even pay to use the virtual office they claimed to be using, as Regus called me to find out why they were getting calls and people walking into their location.
I have been at work for an hour and 9 minutes, and have received 6 calls on double brokered loads already, not to mention the 50 voicemails from over the weekend. I have been selling collection services to carriers for 13 years, and this specific scam has exploded the last 12 months. And it isn’t all the “Glendale Gang” anymore either. I believe that others have learned from them, but then the Glendale people copied the South West Georgia people from 10-15 years ago…that ended in jail time for a lady, and that ended the problem in Southwest Georgia.
Creative
What is left out of this article is the skyrocketing amount of identity theft. It is the new double broker scam as the Glendale gang rings are noticing brokers are tightening down on new set ups and unfamiliar carriers. I know for a fact that a well known carrier monitoring company can be easily scammed by an impersonator with just a few key pieces of info about that carrier. Everyone needs to work together in the industry as a community to weed out these scammers. It is costing carriers and brokers a lot of money paid in double jeopardy and cargo theft that is uninsurable. The scammers are going to continue to get more creative as the overall market declines.
Reimagined
Last week I uncovered a double brokering ring located in southern CA.. had names, addresses, phone numbers, email’s, and bank account information. Provided everything to local law enforcement, FMCSA, and DOT – No one cared or pursued it. Waste of my time gathering all the information for them. Double Brokers are the black eye of the industry.
TheMoreYouKnow
LOL,
We have all caught multiple Big brokerages double brokering each others loads.
I’ve seen C.H double broker JB loads. I’ve seen JB double broker Eshipping loads.
Ive seen Eshipping double broker everyones loads.
I’ve seen Landstar and those “Freight Forwarders” all double brokerage all their loads.
The worst part for instance is Someone in JB hunt will have a connection with Landstar. Knowingly they will sell the load to landstar for lets say $2000, Than that double broker will sell the load for $1000. in the end that double broker made $1000 for pencil pushing. all while J.B hunt oriiginally got the load for $2600… $1600 goes only to the paper pushers.
Other fraud we have had, was a broker booked a load with j.b hunt, than double brokered said load to us.
We delivered the load, and we never received payment from the fraudster broker.
28 days later we found out the load was originally J.B hunts load. To this day J.B hunt paid out the fraudsters, but did not pay us out.
We requested J.B hunt to go to their bank and get the money back. I believe J.B hunt did exactly so, getting their money back, than claiming they never did. in the end J.B hunt got someone to do their load for FREE.
ALL of these brokers are fraudsters.