There are many times I think I've seen a lot of crazy stuff in this industry, but the opportunities that exist for fraudulent activity and scams teach me new things bad actors can do every day.
I go over:
I can guarantee, nobody has gone through this in this fashion and in this much detail to not just protect our customers, but to protect our fellow brokers and carriers we work with. If you see this information anywhere else, it's because someone decided to copy it. If you find this guide useful, link to it and share it. It may save your business and reputation.
On this alert I'm calling up one of the oldest scams. But now more rampant than ever. At the end of this guide, I'll go over what to do to stop this practice in its tracks for both carriers and brokers alike.
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WARNING: If you are anyone you know is running this scam or even thinking the the ridiculous idea to do so, understand because not only is it done with a government license, but you are ALSO committing a crime across state lines! This means this is Federal. Such as Federal Wire Fraud, Financial Fraud, Identity Theft, and Insurance Fraud. You WILL 100% get caught and you WILL face serious jail time! Whether it's $5,000 or $500,000, does not matter. The FMCSA is on the hunt for these people and it's easy pickings. So if you are reading this for an education, know that it will not end well and we are leaving a lot of things out so you cannot try this.
What the FMCSA Says:
Fraud and identity theft occurs when entities use another motor carrier’s assigned USDOT number, when not authorized to do so, or when someone acts as a broker and is not registered with FMCSA. Fraud and identity theft are criminal acts.
https://www.fmcsa.dot.gov/mission/help/broker-and-carrier-fraud-and-identity-theft
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Double brokering is a fraudulent practice in the auto transport industry (and overall in the logistics industry) where a company listed on the dispatch boards accepts a load from a legitimate broker and then re-brokers (or subcontracts) it to another carrier without the original broker and customer's knowledge or consent. In the worst cases, this leads to unpaid carriers and/or higher prices than agreed at delivery for you, even damage that cannot be claimed.
A legitimate broker assigns a car to a carrier that by all things considered, are legitimate. Legitimate company, legitimate insurance, even broker reviews look good. So when the broker does their homework, all looks like it's in good standing. Broker nominates this carrier as the best fit for their customer. But they are wrong.
There are 2 methods for how this takes place.
First is the once-upon-a-time legitimate carrier. However, this is a carrier that is in financial trouble and on the verge of going out of business. There will be no warning of this in many cases outside of their internal issues. The failing business owner, desperate for money will partner with a shady broker to begin the scam or someone with internal knowledge takes over the logins and other credentials (which leads to method 2).
Also, it is possible for some carriers have broker licenses for customers they service for which they cannot move vehicles for directly. In normal circumstances, this broker license allows them to take some loads they cannot take themselves (which is fine as long as they procure the business directly). Unfortunately, they begin to double broker to steal money from customers and carriers before the closing of their company. They also take loads that are "pay at pickup", collect payment, and drop of the cars at a storage nearby. (Another story for another day).
Another common way this works is that the shady broker poses as a carrier company that does not have a profile on the vehicle dispatch boards or is no longer actively on the boards. Since brokers can't accept loads from other brokers, (and carriers can't list vehicles for that matter), they need a conduit to funnel these order to them.
Just because a legitimate company is a licensed car carrier, does not mean they must work for brokers unless they move cars for private individuals. They could have contracts with manufacturers, builders, auctions, and more. The fraudulent person will have figured out how use their existing credentials to log on to dispatch boards or managed to circumvent the failsafes in place to verify the identify of the carrier, and then open an account on these boards. It is likely that it will take several attempts to try to trick the dispatch boards so this type of criminal is patient and will like have tried various times, each stolen company that was rejected dodging a bullet that could ruin their business.
Once they succeed, they use this unknowing company as their "front" for accepting loads, but they do not operate as the carrier company. The account is used just to funnel the information that is copied out of it to the scam broker company.
As mentioned, for this to work, another broker company needs to exist as carriers are not allowed to list cars as brokers unless they have both licensees.
In some cases, the criminal will have a failed broker company that does not make any money. They want a pay day before they close it down. As mentioned they will partner with a failing carrier collegue or use stolen carrier credentials to then funnel loads onto their failed broker company for which they plan on double brokering.
They will then start assigning vehicles to carriers with 5,10,13, or 30 day payment terms. Meanwhile, they are calling you, the customer to let you know they need their payment to deliver. The goal is for you to instant-transfer the funds to them so they can take 100% of the money. The carrier will deliver without a word to you about payment, because their contract says it's post-paid to them after they prove delivery. The time will elapse and no payment will be made. Carriers will rush to file a claim on the broker bond but by the time they notice, it will be already depleted. Both the bond company and various carries are out in the cold. Scammer takes thousands upon thousands.
In the most advanced cases, this even involves identity theft of an individual. The con artist will open a new broker company with stolen personal information. They will put up the bond and even pay the license fee under the unknowing victim's name.
The result is the same. In the end the bond company has a $75,000.00 loss. Drivers will not be paid after the claims period and money is depleted. They will then start assigning vehicles to carriers with 5,10,13, or 30 day payment terms. The time will elapse and no payment will be made. Carriers will rush to file a claim on the broker bond but by the time they notice, it will be already depleted. Scammer takes thousands upon thousands.
The end customer (if you) will likely be forced to pay a higher fee than expected if the order is C.O.D. and carrier who is not a party to this will not deliver unless he collects what is on his contract and in there is an inflated broker fee. The scam broker gets their broker fee paid by the legitimate carrier because they are abiding by their contract and do not want to be reported for nonpayment to a broker.
Or..
The actual carrier taking it will have a contract that thinks they will be paid after proof of delivery. The fraudulent middle broker never intended to pay. Meanwhile middle broker called to collect the COD via Zelle or instant transfer before the carrier arrives. In this case, you may not have noticed. It will only be weeks later when the driver calls and asks you if you have contact information for the broker that hired you. Once they see it's different, they will realize they have to accept the loss.
With some extra steps, this can be done easily. A smart car shipping company will educate their customer.
When the carrier calls to verify pickup, customer must ask carrier company's name. Make sure it's the same name that is on your dispatch email. When they show up, check the info on the truck. Check the MC and DOT numbers. Do they match what was sent to you? For example, In that email our company sends to customers, we ask this to be done for your protection.
If the company picking up is NOT the same one REFUSE pickup, and contact your broker immediately.
When the carrier calls to verify pickup, customer must ask also ask who hired them. For example, if it's us here at NX, then that is exactly what the carrier will say. If not, stop the pick up and call.
If the broker named on the order is not the one you are working with, REFUSE pickup, and contact the company you are working immediately. In this case there is little doubt it's double brokered, especially if even more does not add up. Read on.
If the order is C.O.D., ask the carrier what they are collecting at delivery. If they say they are being paid by the broker this is a huge indicator. Especially if another party is calling asking for an instant transfer prior to delivery. When a carrier is being paid by the broker, it means they already collected the money BEFORE the truck went out there, as the broker is on the hook for the money to the carrier. There's no reason that makes any sense where the carrier will call for payment by phone and the driver not know about it.
If the order is C.O.D., and a higher amount is given, absolutely REFUSE pick up. Customer is on the hook for those funds and carrier is allowed to hold vehicles based on the fees stipulated on the contract. If you ask the carrier, there will certainly be a broker fee included in the collected amount and it will not be to anyone you have ever heard of.
Check Carrier ratings! Everyone has the right to start a new business, but be careful of new carriers.
Check their reviews from other brokers. Go the FMCSA check and verify their insurance. Here's an example of a brand new carrier calling to accept loads, but they already have a pending insurance cancellation. Likely a scam carrier.
Brokers, inform your customer. Tell them that they must verify the carrier you assigned them. Give them the contact phone numbers, MC number and DOT number. Insist the customer inform the pick up contact who is getting the vehicle to do this, if it is not the person booking the order. There is no reason the truck should belong to anyone else.
Doing this by phone is not useful, as a phone call can be made to your customer by anyone. However, when the carrier arrives, customer is to ask driver what company they are and what broker hired them. In a double brokering scam, either one or both company names will be totally different. If any of the information does not match your dispatch you gave to customer, have your customer call you immediately to clear the details.
Inform your customer of the payment breakdown. For example, "Your total price is $1,000.00. We have charged a deposit of $250.00. Your balance due at delivery in the form of cash, cashier's check, money order or Zelle is $750.00." In this example, you will encourage your customer to verify BEFORE pickup, the amount due and form of payment you have provided.
Customer should be held responsible for who they release the vehicle to. This helps not only for double brokering scams, but if the customer booked with multiple companies without realizing it. Known as double booking.
Carriers suffer the biggest loss in double brokering scams so I will be very detailed here. In a double broker scam, the elicit party collects all the funds, and leaves the carrier with a huge loss of time and money.
Use two-step verification, text verification, passkeys, or whatever higher security options are available on your board credentials so they are not stolen and used to funnel loads to scammers. Try to use an email you only work with for administrative functions, not your common email you hand over to everyone.
On the dispatch board, just as carriers like you have a rating, so does the broker. Be mindful of companies with very little rating history or that have just opened. Everyone has a right to start a business, but be cautious about taking broker payment terms. Check their ratings and carrier comments. Trusting a new business with thousands of dollars in carrier pays is risky.
The BMC-85 broker bond protects you if the carrier does not pay. They fund up to $75,000.00 in delinquent driver pays. However, that can fill up quickly because there are many times that claims take time to start. Carriers can be too patient and brokers can be too good at providing excuses for delaying payment. By the time everyone realizes what is going on , there could over $100,000 in payables to carriers. This can happen in just weeks depending on how much business the broker is doing illicitly.
Call the bond company on file. Not the one on the central dispatch board, which could be out of date. Check the FMCSA, pull the MC. FInd the bond company. Call them. Ask them if there are claims coming in. Although this can mean claims have not started, you'd be surprised how fast they do when it begins.
If you are concerned that you may not get paid by the carrier, gut instinct, or whatever you reason, do not call the listing or ask if they can change it to C.O.D. Sometimes it is broker pay because customers insist on using a credit card. If you as a carrier accepts credit cards, you can tell the broker that you allow credit card payments so they don't need to collect it.
Since the illicit broker has zero intention of paying you, they will offer the moon and the stars as far as pricing. So if you have a load that normally pays $1,000 is paying $1200, $1500, or even a lot more, ask yourself why. Is the customer in a hurry? What's the broker making if the driver pay is so high? Are they moving cars hardly worth the price paid? If you accept the dispatch, call the customer, ask them about their move. It's not too late until you are on your way.
Questions go a long way. Before going out there, ask the broker's customer if they are aware of the payment terms. Ask them what they are. If the pick up does not know, the delivery person will. If the customer tells you it's C.O.D. and your order says paid by broker, ask the amount due at delivery. If your order says you get $1500 after delivery and they tell you they paid $800 for the whole thing, for sure it's a double broker scam.
When you arrive at pick up, verify the phone numbers on your load. Does the pick up and delivery contact know the people listed and their phone numbers? Sometimes with double broker scams, the scammer will put fake contact phone numbers and then call pretending to be you to relay information.
If you are being paid by the broker and the customer tells you they had to instant transfer the balance to the broker or another company before delivery, or the day of delivery for you to "be allowed to drop off" then for certain they would be no reason for the broker to pay you later if you could have easily taken that instant transfer directly in same fashion.
Why would the broker need to take a payment after they guaranteed your payment to you on the dispatch contract? What if the customer fails to pay? Your contract says you must deliver and get paid in "x" days. There should be no reason you need to stop while you wait for another payment to the broker that you could have taken yourself. The broker is either trying to pay old invoices with your money, or they are double brokering. If the customer is paying far less to them at delivery and have only been charged a small deposit so far, the math tells you that you will likely not see a dime. Cancel and don't pick up!
If the broker is NX Auto Transport as per customer and you have another broker on your dispatch, the customer either double booked with more than one broker or it's a double broker scam. Especially if the numbers and payment terms do not add up.
Ask the customer if they ever talked to the other company. A lot of times brokers drop their fees make at least something on the order and try to force the pick up even if the customer cancelled while the customer starts shopping around again. In the end, the customer got their car picked up and that is what they wanted and probably got it for less than who they now contracted with. Swooped in at the las minute with you as the carrier. Call the broker the customer thinks they are working with and call the broker that sent you the order.
If you are nearby, return the vehicles. If you cannot return them logistically, call the payment contact and ask them to not pay anyone else but you as you are not authorizing anyone besides yourself, the carrier to collect the C.O.D. If the customer shows you a contract for a small deposit and a C.O.D. less than your funds promised, it's likely the rate being paid by the customer is closer to the amount that is the real amount for your load. But, if it's not. It is best to cut losses and get something instead of nothing. Have the real broker re-dispatch it to you as COD for the amount they sent it to the fake company for so you can collect what you can.
What the FMCSA says:
If you picked-up or hauled a fraudulently brokered load, identify who is paying the freight on the load and ask to be put in contact with their brokerage service. In many cases, the real broker of the load is also a victim of fraud or theft and is not involved in the illegal transaction. Holding loads hostage until you get paid is illegal.
https://www.fmcsa.dot.gov/mission/help/broker-and-carrier-fraud-and-identity-theft
Not only are you armed with how this works, you know that regardless if you are the end customer, a broker, or the carrier, you will stop this dead in its tracks. If everyone does their part of checking and verifying information, there is no way the scam can work. The extra unaauthorized party will be easily exposed. Even if the scam did not succeed, do you part and report the fraud to the FMCSA!
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