Double Brokering and Fuel Advance Fraud: The Unethical Practices Plaguing the Trucking Industry!
We've talked about double brokering before, but one of the most fraudulent activities that are happening is Fuel Advance Fraud.
Let's explain what double brokering is. Double brokering is the unlawful practice of re-brokering a shipment to another broker or carrier without proper authorization. Although it is not illegal in every case, it is an unethical practice and a VIOLATION of the FMCSA (Map-21, section 32919: Unlawful Brokerage Activities.) When double brokering occurs, it usually represents a breach of contract between parties.
Examples of Double Brokering:
A. Carrier A sees a load posted by Broker A and accepts. Carrier A then takes the job and sells it to Carrier B. Carrier B delivers. The broker and shipper are unaware of the arrangement. Carrier A collects the money and doesn't pay Carrier B. Broker and the shipper is unaware of the arrangement.
B. Carrier A sees a load posted by Broker A and accepts. Carrier A then takes the job and sells it to Carrier B. Carrier B delivers. The broker and shipper are unaware of the arrangement. Carrier A collects the money, pays Carrier B a smaller amount, and pockets the extra.
C. Fuel Advance Fraud. Broker A posts load. Broker B presents itself as a Carrier, accepting the load from Broker A. Broker B re-posts the load at a higher amount and takes fuel advance from Broker A. Carrier A accepts and delivers the load. Carrier A never gets paid.
D. Broker A sells the load to Broker B for less amount. Broker B and Carrier A get the load delivered. Broker A doesn't Pay Broker B, and in return, Broker B is unable to pay Carrier A.
When Double Brokering occurs, there is a lack of authorization and transparency, resulting in the Shipper and the Broker not knowing where the freight is.
Double Brokering can happen for the following reasons:
Carriers Taking On Too Much Work
Brokers not having a comprehensive network
Illegitimate Brokers
Risks Associated with Double Brokering:
Financial Loss
Damage to Reputation
Liability Risks
Doing it the right way is called Co-Brokering. This is when a partnership is made between companies, and there is full transparency between Shipper, Broker, and Carrier. Expectations have been set, and everyone is on the same page.
Need more help navigating the trucking industry? Need tips on how to avoid being a victim of double brokering? Looking for ways to grow your business? Contact us today! We offer mentorship and coaching.
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