It happened again. This time, it was a dispatch provider or someone pretending to be a dispatch provider (as was initially thought) for one among insurance agent, past owner-operator and Overdrive Extra contributor W. Joel Baker's client trucking business owners.
The provider or pretend provider called Baker asking for the owner's certificate of insurance (COI). The request itself from anyone other than the insured always raises red flags for him -- he wrote about that reality here back in May. Those certificates can be one among many potential vectors for business identity thieves who might then fairly easily do one of many things to eventually ruin your credit rating -- and credibility as a carrier.
"The whole thing’s wide open what they can do once they have that info," Baker said, as he also wrote about the rash of identity thieves at the seedy margins of the business booking loads posing as carriers, taking a fuel advance or worse, posing as a broker to then double-broker the load to a real carrier, making off with the entire load payment before disappearing into the online ether.
In this case, though, the provider that requested the COI turned out not to be someone posing as a dispatch provider, but the owner-operator's actual partner, who'd been previously duly instructed by the owner-op that all COI requests had to go directly through him as the insured. "They were given specific instructions by the owner-operator not to contact me for a COI," Baker said. Talking to the owner-op further, later, Baker also learned that the dispatcher had "requested to be named on the policy as someone with the ability to make changes" to the policy, "so they could do whatever they wanted to his insurance."
[Related: Safeguard your trucking business' certificate of insurance to avoid becoming ID theft victim]
Why would they do that? Baker offered a hypothetical that it might give the dispatcher the ability to adjust things on the fly to cover a $2 million policy limit requirement for a given load, when his client otherwise carried only $1 million. If the dispatcher could make changes, then the "owner-operator would have no recourse there not to [almost] double his own premium."
In this case, after further discussion, the fairly new-to-trucking owner-op made the decision to "kick them to the curb immediately," Baker said, referencing the dispatch provider. In further conversation with Baker, the owner-operator customer also relayed that he'd found himself on the business end recently of what turned out to be a triple-brokered load, triple brokered without the knowledge of the shipper or receiver. There's a happy ending to that story, fortunately -- the customer party responsible for payment of the freight in this case was so upset with the original broker on the load that "I'm going to pay you direct," he/she told the owner-op. "Those [brokers] are all out."
Perhaps it's an object lesson for brokers and carriers both about conducting due diligence on parties you're doing business with. There's some evidence fraudulent double brokering is well on the rise, and harder to quickly detect, with otherwise legitimate-seeming carriers and brokers working load boards and booking loads to be actually moved, but with a scheme aimed at double-brokering the load to pocket the difference between what the original load was booked for from a legitimate broker and what another "broker" can get an unsuspecting real carrier to take it for.
[Related: 'You just lose' when middlemen don't pay: Broker reform eight years in the waiting]
A broker I'll not name here showed me a clear example of this just last week, where a load he contracted a duly authorized carrier to move then near immediately appeared on the load board again, with details changed just slightly, posted by a duly authorized broker. He then worked with a small carrier he knows well in his area to re-book the load back, at an offer price $400 below what he'd originally offered to the first "carrier." When the double-brokered load was rebooked, the second broker spit back to the carrier the same shipper pickup number the legit broker had given to the first "carrier."
He says he runs across these scenarios with increasing frequency, and in the end, though his relationship with the shippers involved might be negatively affected in a basic reputational sense, it's the carriers that suffer the brunt of the skewing of the market downward with more and more money siphoned out by these actors.
Common theme among them: The carriers he's identified in this scheme have nary an inspection in the federal system despite authorized existence for, in one case, well more than a year and with an MCS-150 filing that claims the company operates six trucks with seven drivers to the tune of almost 500,000 annual miles. (At once, as most owner-operators will know, it's not exactly uncommon for a one-truck carrier to go a year and much more without an inspection, as more than one has pointed out since the initial publication of this story; it's just one data point that this broker noticed was shared by carriers he suspects were double-brokering his loads in concert with an affiliate, strange with multi-truck over-the-road companies.)
For carriers, the scheme seems equally if not more difficult to spot as just considering a load from a broker. Due diligence conducted on the broker offering the load itself like as not won't send up red flags but for, perhaps, a less-than-desirable rate. Hold the line in the sand on your business's profitability such as you can. At once, one might be suspicious of a broker of size doing business solely with a gmail address -- that could be kosher, but take the extra steps to contact the company directly via its main number to verify identities and contacts. (Find plenty more tips on vetting a broker's credibility via this link.)
In environments like the current one, with more freight shifting from spot to contract markets, the ability for these schemes to survive is likely enhanced, given more carriers willing to contract with unfamiliar brokers at less-than-stellar rates. If you've found yourself, like Baker's customer, on the wrong end of a double- or triple-brokered load, how did you discover it? Get in touch: [email protected].
[Related: A 'hit it and move on' broker scam, and more loopholes]
