Double-brokering scams that can result in theft of more than just money

The Overhaul company's Intelligence and Response Team recently sent out an alert to media and subscribers to its location tracking and security services about yet another double-brokering scam wasn't just a form of skimming a small piece of the load's payment out of what might otherwise be a legitimate freight transaction. Rather, the company noted, "an active cargo theft crew operating out of the Greater Los Angeles and Inland Empire areas" in California has started targeting loads for physical theft through so-called "strategic" methods.

Specifically, the theft starts with either "fraudulent" or "stolen carrier and driver identities" obtaining freight from a legitimate broker on a load "before double- or even triple-brokering through other trucking companies, some legitimate, some not," the company noted, elaborating on an August notice Overhaul had sent out about the ring's methods.

Speaking last week, Scott Cornell of the Special Investigations unit at Travelers Insurance emphasized that one of the reasons thieves are adopting this method is to attempt to put as much distance between themselves and the physical load before ultimately taking control of it through various methods of subterfuge.

Cornell will be familiar to regular Overdrive readers from his contribution this year to feature reporting on cargo theft prevention and his company's sting trailer, used by law enforcement on loan around the country the last decade and more.

He elaborated on three scenarios he's seen and how they play out:

1. Thieves take advantage of an already double-brokered load. In this scenario, Broker A with an otherwise solid carrier-vetting strategy contracts with a legitimate Carrier A to move a load. Yet: There is no prohibition in the broker's contract with the carrier that prevents the carrier from re-brokering that load. When Carrier A does just that as Broker B, and posts the load to a board, he/she's doing so without the same robust vetting process as Broker A. Enter fraudulent Carrier B, a cargo thief posing as a carrier, possibly even set up and federally authorized as one or using a stolen identity. When Carrier A/Broker B now "gets scammed" and the freight goes missing, Cornell said, all parties are "in a bad spot" with the shipper.

Making matters worse, by the time Carrier A/Broker B finds finds out the freight is missing -- probably after a length of time greater than what it might have been had Broker A remained more closely in control of the movement with Carrier A -- "we're now likely outside the window" for a good chance of recovery and arrest of the thieves, Cornell said.

2. Similar methods, but a more direct path to the theft. Broker A, in this scenario with a not-so-great vetting process, gets scammed by cargo thieves with a stolen identity, or a new authority set up for their purposes as legitimate Carrier A. The thieves then become Broker B, whether with IDs they've set up themselves or stolen from an otherwise legit broker to "turn around and rebroker the load with a legitimate carrier," Cornell said. That Carrier B is "not involved, they don't know they're being scammed."

Thieves particularly like this method, as at the point of pickup, they don’t have to be so concerned about getting physically "caught in the act," Cornell said. The point of pickup is a dangerous time for "a cargo thief with ID checks, opportunity to capture and run the company truck numbers and evaluate the real ID of the carrier, ask questions, make a phone call. ... Being on-site puts you at more risk."

With Carrier B none the wiser in this scenario, however, when the operator shows up on-site thinking they're picking up for a California-Texas run for a cool $4,000, say, the thieves tell the operator to get in touch for a check-in when loaded. When he does, they tell him he's getting paid the full rate for a much shorter run, with a different destination than the one intended by the shipper.

Thieves from Broker B often do pay the driver -- Cornell noted they do have a good understanding of the notion of ROI, or "return on investment," particularly when it comes to making an operator happy with payment in order that "he/she then has nothing to complain about," Cornell said. They may never realize they've been involved in this kind of strategic theft, yet plenty operators have in fact been aware enough to report it to authorities at this stage of the theft game, preventing losses.

3. Flat-out broker impersonation aimed straight at a shipper. "We don't typically see a lot of this," Cornell said, but in 2021 there were a few instances where thieves impersonated a legitimate freight broker and "went directly to shippers to scam them out of their loads." This is more of an identity-theft scam than any kind of double-brokering scheme, obviously, and puts the thieves much closer to the physical theft. That could be the reason, Cornell notes, why the few of these he saw in 2021 seem to have been outliers. "They're much more at risk of being caught," he said.

Potential ways to combat come back to knowing just who you're dealing with

As with load payment theft scams by brokers, whether those brokers are duly authorized for the purpose or are thieves operating under stolen broker IDs, for carriers the No. 1 tactic to avoid getting involved with the cargo thieves is to "verify who you’re doing business with" -- don't just take the word of somebody who called you out of the blue that they're legit, Cornell noted. "If you get a call from a freight broker" you haven't worked with before "offering you a load, take that extra step to verify you're being given the load by a legitimate broker."

Find the company's office number using publicly available sources and call to verify your contact in fact works there; if those sources don't turn up a contact number and the broker has only a brief history in business, some advisers suggest steering well clear. When we examined broker authority revocations for years 2015 to 2019, and found that of the more than 8,000 brokerage authorities that were revoked for failure to maintain adequate surety or a BOC3 process agent, the average time in business for them was just around 14 months and two weeks.

Much hay has been made of some brokers' refusal to do business with an owner-op with a short authority history and/or no inspections in the federal system (a way these brokers attempt to ward off double brokering themselves). As longtime independent trucker Joe Rajkovacz (now with the Western States Trucking Association) advised with our early-2020 reporting: “Guys,” Rajkovacz asked owner-operators, “why would you use a broker that doesn’t meet those same requirements?”

Or that doesn’t beat those standards, he suggested at the time. Maybe the 14.5-months' time in business could be a better benchmark for owner-operators to avoid not only payment shorting and double brokering but actual cargo theft via the methods Cornell describes here, too. (Read more about other credit- and authenticity-check resources via factoring-company partners, load board service providers and more via this link.)

For brokers, the tactics are much the same -- do what you can to know truly who you're dealing with on the other end of your freight transactions. As Cornell put it: "have a robust carrier-vetting process in place." A prohibition on double-brokering with any carrier contract won't prevent committed thieves from doing it, but it could prevent the otherwise honest actors, such as the initial carrier in Scenario No. 1 above.

Cornell currently serves as vice chairman for the Transported Asset Protection Association in the Americas (the organization is an international standards body). He "worked with them to design industry standards for freight broker/carrier vetting," he said, whose release are coming soon.

Vetting procedures are all well and good, yet carriers and brokers both can go a long way toward preventing these schemes by building closer relationships with each other that are built on trust. Rather than just reject a broker or carrier out of hand just because they haven't been around for very long or don't have any inspections in the federal system (in a carrier's case), either party might spend the time to have a conversation with anyone they're dealing with, just to get a better sense of the reputability, the legitimacy, of whoever you're dealing with.

Reporting instances of double-brokering to the major load boards, too, can yield results. The broker I mentioned in this story back in August has successfully reported several after catching them in double-brokering attempts. DAT points to its "Report a Bad Player" form to make them aware of any entity using the board for these kinds of schemes. Noted spokesperson Annabel Reeves, "if a DAT customer sees any bad behavior, which includes double brokering, stolen freight, identity theft and fraud, we urge them to contact the police and/or FBI" in addition. "We make our Compliance Department's contact details easily accessible on our site so that customers can call a member of our team on 800-547-5417, or email us at compliance@dat.com."

Truckstop.com encourages reporting instances of nonpayment via a form accessible via the Report Nonpayment link near the bottom of the main website, also accessible via this link. The board also encourages those with information about a scam they're seeing play out on the board to contact the company's Security Department directly via security@truckstop.com.

Like as not, these scams that result in cargo theft are likely to "pick up in the fourth quarter," the usual pattern for cargo theft activity, said Cornell. Stay vigilant.

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