Highway pitches shared standards as freight fraud shifts

The model starts from who touches a load. For years, Caney said, he thought a load had two parties, the broker and the carrier. He now counts five. The other three are the insurance agent and insurer, the factoring company and the telematics provider.

“All of these parties provide data and introduce risk, yet none is accountable when a theft occurs,” Caney said in an interview with FreightWaves. “There’s no incentive alignment.”

Gaps in insurance and factoring data

In insurance, a carrier takes a truck off its scheduled auto policy, and the change never makes it from the insurer to the agent to Highway. The broker learns the truck isn’t covered after an accident or cargo damage.

“How many insurance agents have come forward and said, ‘I’m sorry. That’s on me. Let me help you, Mr. Freight Broker’?” Caney said. “Zero.”

Many factoring companies, which buy carriers’ freight bills, care only whether the broker on the other end will pay.

“As long as the debtor is creditworthy and the factoring company can collect what it’s owed, it has little incentive to care if its customer steals freight. There’s no accountability,” he said.

Providers that vouch for their data

Highway’s answer is a certified network of providers that agree to stand behind their data. The first phase, Highway Certified Insurance Agencies, launched June 1 with 10 founding agencies. They commit to accurate certificates of insurance, coverage detail down to the VIN and timely notice of policy changes, cancellations and nonrenewals. Highway plans to extend the certification to other service providers in brokered freight.

Customers asked Highway to build the network, Caney said. The data reaching brokers had accuracy problems, he added, including bad policy dates and VIN data.

Caney argued in an Oct. 7 FreightWaves commentary that ELD data needs an enforceable standard too, and that Highway sets integration requirements beyond FMCSA registration.

“There are FMCSA-certified ELD providers that we won’t integrate with,” Caney said.

The certification pitch split the providers Highway approached.

“We heard from people who said, ‘This is exactly what the industry needs. I’m tired of competing against those who cut corners,’'” he said. “But not everyone welcomed that level of accountability.”

Fraud moves from rules to process

The push for standards follows where fraud has gone. Caney said social engineering is now a major threat, including voice AI used to call brokers and ask them to send load information to a new email address or by text.

“What is happening with fraud is a direct attack on process,” he said. “It’s no longer just about a set of rules.”

Caney calls fraud a choice. Highway tells brokers that emailing a rate confirmation as an attachment makes a stolen load very likely. A carrier with a limited-term CDL won’t necessarily steal the load, he said, but the broker has to take two or three more steps to make sure.

The trouble sits in a narrow slice of the market. More than 82% of the carriers that move brokered freight qualify for the performance guarantee, Highway told FreightWaves in September. In most broker networks, Caney said, 6% of carriers are ones brokers shouldn’t be talking to, and some brokers load them anyway.

“If you’re shopping on the day-old bread aisle, you shouldn’t be surprised when the bread is stale” he said.

Loads on that 6% fall outside the guarantee.

Accountability after Montgomery

The stakes for brokers rose in May, when the Supreme Court ruled unanimously in Montgomery v. Caribe Transport II that brokers can face state negligent-hiring claims over the carriers they select.

Brokers should be wary of anyone who claims to have the answer, Caney said, himself included.

“You’re dealing with people’s livelihoods, including the broker’s. After Montgomery, that’s a serious responsibility,” he said.

Caney points to Visa in payments and the Buttonwood Agreement among early stock traders as the kind of standards freight never set. The industry won’t change, he said, until every participant plays by the same rules.

“We have to come together and agree on some ground rules if we want to be part of the rising tide that lifts all boats,'” Caney said. “Highway is trying to help set and steward those standards, but the industry has to decide what it’s willing to tolerate.”