How Double Brokering Fraud Hurt Carriers and Shippers

In the United States, there was a documented double brokering fraud involving a company named “Global Cargo Logistics” (a fictitious name for privacy). Here’s how the scam unfolded:

Background: Global Cargo Logistics was a fraudulent freight broker that targeted small—to mid-sized trucking companies and shippers. The company primarily conducted its operations online, making it easier to deceive its victims.

The Double Brokering Scam:

1. Initial Contact: Global Cargo Logistics would contact shippers with competitive rates for transporting goods that were often lower than the industry average.

2. Securing Loads: After securing the load from the shipper, Global Cargo Logistics would broker that load to a legitimate carrier, often at a lower rate.

3. Falsified Information: Global Cargo Logistics would present documentation and insurance details that appeared legitimate and listed themselves as the carrier to the shipper.

4. Non-Payment: After the legitimate carrier completed the transportation, Global Cargo Logistics would disappear without paying the carrier, often using fake or stolen identities to direct the shipper’s payments to difficult-to-trace bank accounts.

Discovery and Legal Action: This double brokering fraud was discovered when multiple carriers reported similar experiences. Global Cargo Logistics was found to be using fake addresses and falsified documents, which led to the involvement of the FBI. As a result, some individuals were caught, and charges were filed for wire fraud, identity theft, and other related crimes.

Impact of double brokering fraud: The carriers affected by this scam suffered significant financial losses, and the shippers were left with damaged relationships and potential legal liabilities. This case highlighted the importance of verifying the legitimacy of brokers and maintaining clear communication between all parties in the shipping process.

This case is just one of many in the freight industry where double brokering scams continue to be a serious issue, leading to stricter regulations and more vigilant practices by shippers and carriers.

Protect Against Trucking Fraud

To protect your business from broker or carrier fraud, always verify that brokers or carriers have the proper authority through the FMCSA website. Cross-check contact details on rate confirmations with SAFER and your records, especially if there have been any changes since you last worked with them. Ensure that the insurance certificate is current and active before proceeding. Evaluate the business’s longevity, as well-established companies are generally less likely to be fraudulent. For brokers, investing in a third-party carrier monitoring tool can help track carrier information, safety ratings, and compliance.

To learn more, visit www.getscalefunding.com/how-to-defend-against-trucking-fraud-and-scams/