Just days before ITS Logistics announced its sale to Echo Global Logistics, the company finally paid up after a nine-month dispute where the broker fell victim to cargo theft, then tried to "offset" its way out of paying a carrier $85,000.
The clash, between ITS and Indiana-based Illyrian Transport, involved 62 unpaid, claim-free loads and followed the theft of a trailer of Continental tires. It cuts to the heart of trucking's biggest issues in a tough market beset by fraud.
- When a carrier gets hacked and a broker gets duped, does the carrier bear the blame?
- Can big brokers like ITS, TQL and others hold payments on completed loads hostage to "offset" losses after scams and/or cargo theft play out?
- And are brokers' required surety bonds really working as intended? Is the $75,000 minimum required bond amount enough to cover potential claims filed against a broker that does more than $1 billion in revenue a year? Should a broker be allowed to put a thumb on the scale when its surety bond company weighs the decision to pay out?
This particular saga kicked off in January 2025, when 350-truck Illyrian Transport began "quite a big project" hauling a "large amount of USPS dedicated lanes" for ITS, mostly out of Arizona and California, said Mardon Shavkatbekov, head of safety at the fleet.
"It had been all good, we were delivering on time, and ITS was pretty happy," he told Overdrive of the first weeks working with them.
On the USPS loads, Illyrian would drop trailers for preloading and pick them up later, ready to haul. "It did require a pretty large amount of trailers," Shavkatbekov said. "We had to rent or lease about 50 additional trailers."
The big investment was a step toward longevity and growth with ITS as a partner, he said. "We did really believe that it could potentially bring more freight, more work for us, and potentially a partnership for years and years."
Until one day, Illyrian got the news that every carrier, every broker dreads in an industry beset by fraud and theft from organized crime rings.
"We found out through a FreightGuard" report around March last year, Shavkatbekov said of a data breach at Illyrian.
[Related: How to fight a FreightGuard or other negative review of your trucking company]
"Coming up on March of 2025, one of our emails of our dispatcher was hacked, and we didn’t know about the hack. We really don’t know how the ID was stolen or how the hack happened," and only found out from a FreightGuard report from a broker Illyrian had never even worked with, he said.
Illyrian called the broker who'd left the Carrier411 FreightGuard complaint on their profile and said they didn't know anything about the load in question.
The broker explained a dispatcher named Shawn "was very rude and booked a load and started cussing and disrespecting the broker," said Shavkatbekov.
Illyrian does have a dispatcher named Shawn, but there was a problem with the broker's story: By all accounts, Shawn is a very nice and respectful guy, and he was away on vacation that day. That's when Illyrian knew something was up.
The broker showed Illyrian Shawn's supposed phone number and email, and, of course, they were different from those of the Shawn Illyrian knew well.
The broker "was kind enough to remove the FreightGuard" from Illyrian's profile, said Shavkatbekov, and the fleet changed all their passwords and instituted two-factor authentication throughout the organization -- commonsense steps carriers can take to protect against ID theft.
[Related: 'Personal cyber hygiene' for owner-ops to help avoid scammers online]
"We thought everything was good for about a week," he said. That's when the other shoe dropped. "ITS reached out and said, 'Where’s that load you were supposed to deliver a week ago?'"
It's a chilling question too many in trucking have had to answer since the explosion of freight frauds began in 2021: Where's that load you've never heard of?
"Turns out, the hacker booked a load with ITS, ITS didn’t verify the email," and sent out a rate confirmation without verifying the carrier, said Shavkatbekov.
Further investigation showed the shipper had CCTV footage of a truck that didn't have Illyrian's numbers on it, and a photo of a driver's CDL -- also not an Illyrian driver.
Illyrian was working directly with ITS, so it was a verified carrier in ITS' system, but Illyrian hauled mail for ITS. This was a load of Continental tires.
In the end, the load was stolen, never seen again, but that's not the end of the story.
How one load stolen became 62 unpaid
Around the time the load of tires went missing, and for a short period after, Illyrian continued to run USPS loads for ITS. Yet 62 "completely unrelated" loads of mail then went unpaid by ITS, according to allegations made by Freight Recovery Specialists, a freight debt collection firm Illyrian eventually contracted for help.
"Now ITS is illegally offsetting 62 unrelated USPS loads that Illyrian legitimately ran for a separate division of ITS for the loss of the stolen cargo in the amount of $85,190.9," FRS wrote to ITS.
Offsetting refers to the practice of using claims on one load to justify withholding payment on others. Big brokers like ITS and TQL often include this in carrier contracts.
Those USPS loads were entirely "uncontested" by both parties, making ITS now in breach "of the Broker Carrier Agreement, asserting the indemnification clause, and their right to offset the loss due resulting from a claim that Continental Tire, their customer, charged to them due to the stolen freight," FRS wrote.
Illyrian tried to file a cargo claim with their own insurer in hopes of preserving the relationship with ITS, but got denied because the trailer belonged to ITS, according to Shavkatbekov.
Furthermore, Illyrian never touched the load or trailer, never signed a rate con or BOL, and in fact, the BOLs provided listed ITS as the carrier, according to FRS.
In the documented allegations, FRS made the case for how ITS didn't have a leg to stand on.
Overdrive contacted ITS several times, and the broker did not respond to any allegations from Illyrian or FRS, only saying that ITS and Illyrian were "engaged in good faith negotiations" and "arrived at an amicable settlement."
No Broker Carrier Agreement existed on the stolen load of tires between ITS and Illyrian. No agreement in effect "means that there is no indemnity" and "there was no offset trigger," FRS argued.
Among brokers, it's something of an open question as to whether carriers who get double brokered or hacked are liable for losses on fraudulent or stolen loads.
[Related: Do truckers deserve blame for getting double brokered?]
"The two parties that had visibility of this load," ITS and the shipper, "and had the chance to stop this cargo from being stolen did nothing," FRS added, "but instead want the carrier who had no way to know this was happening behind the scenes to pay for the loss that occurred because of the other parties’ negligence. ...
"The brokers’ responsibility is to arrange for the transportation of freight from point A to point B. In doing so they MUST verify and validate that they know who they are doing business with."
As noted above, both the BOL and the shipper's claim, FRS added, "list ITS Logistics as the carrier that was assigned to this load." In addition to its brokerage business, ITS holds motor carrier authority with 54 trucks listed, but the CCTV footage confirmed an ITS truck did not pick up the load.
Illyrian and FRS then sought payment from surety bond holders Great American Insurance Group and Merchant’s Bonding, as the 62 offset loads took place over a period where ITS changed surety bond providers.
[Related: Stiffed carrier feels freight brokers' bond amount should vary according to company size]
"Both bond companies denied the claim simply because ITS disputed the claim stating there was legal offset," FRS wrote.
Great American said that "the claimant must obtain a judgment against the broker and present the judgment to the surety for payment."
That position, that a carrier must go to court and win to make a valid claim on a surety bond when the broker responds but denies the claim, even without a Broker Carrier Agreement in place on the load in question, seemed untenable to the collection service.
Demanding Illyrian secure a judgement "expressly defeats the purpose of the BMC-84 bond," FRS wrote, adding it had filed complaints with the Federal Motor Carrier Safety Administration's registration office as well as the U.S. Treasury's surety bond regulators.
The collection firm asked both agencies to review the bond providers "for improper/nonpayment of BMC-84 bonds, and those complaints are currently under review," FRS wrote.
[Related: FMCSA 'Immediate Suspension' rule for brokers takes effect]
Who should take the financial hit from frauds like these?
Closing out the allegations sent to ITS, FRS Collects made the following case:
"Think for a moment, what if every carrier had to go to these lengths to be paid for the work they legitimately completed? This carrier has 350 trucks and had to take a loan to cover operational costs due to these payments being withheld. It caused considerable financial hardship for this carrier when any other smaller company would have folded and gone out of business. This entire event has cost hours of payroll to investigate this claim as ITS sat by and did nothing because why should they? ITS had the money they would have paid to Illyrian for the unrelated loads, so why would they take the time to actually locate the shipment."
FRS asked ITS to pay for the 62 unrelated loads, the full $85,190.93, and drop the offset claims.
"Brokers should not be rewarded for breaking regulations and bullying carriers," FRS concluded. "This is why our industry is struggling so badly."
In the end, Illyrian and ITS settled the matter out of court, and Overdrive didn't learn the final settlement amount.
The entire saga highlights how brokers and carriers have struggled through the past years' "fraud apocalypse" to come up with an agreed-upon framework for settling disputes that stem from third party bad actors. Remember: Both ITS and Illyrian had long worked together happily.
While in better times, a broker might take a loss like this on the chin, a persistently tough rates environment could have contributed to ITS' response.
Kevin Hill of Brush Pass Research recently wrote that in 2025, the population of broker authorities declined by 448. In 2024, 3,104 exited the market.
While the bleeding has slowed, broker margins have recently hit a low, according to Ken Adamo, Chief of Analytics at DAT.
Average broker gross margins "for December came in at 9.91%, which is well below breakeven at a macro level," Adamo wrote on Linkedin. "The only other time I can remember industry margins falling below 10% was the summer months of 2020 at the foothills of the post-lockdown COVID bull run."
On Wednesday, Echo Global Logistics announced it had reached an agreement to acquire ITS Logistics.
"The combination will create one of the leading transportation and logistics platforms with pro forma 2025 revenue of approximately $5.4 billion," the companies wrote in a press release announcing the acquisition.
What's been your experience of fraud in the markets and/or offsetting practices? Weigh in via the brief survey below.
