In a recent article in Overdrive, the Federal Motor Carrier Safety Administration (FMCSA) revealed details of a major enforcement “blitz” called Operation Protect Your Load.
The FMCSA official dubbed it “the first general freight broker initiative” of its kind, focused on violations of FMCSA’s broker regulations. While the Transportation Intermediaries Association appreciates the agency taking action to address fraud in the supply chain, it does want to remind the agency that this fraud is not completely a “broker problem,” and we would implore the agency to focus on fraudulent motor carriers as well.
In the latest TIA “State of Fraud in the Industry” report, TIA members reported an average cost of $400K annually in losses because of fraudulent activity. Some of those funds are equated to added cost of technology and manpower to address the concerns, but many of those incurred costs are associated with claim payments and double payment for unlawful activities.
These situations involve a fraudulent entity masquerading as a motor carrier who takes the load and “re-brokers” it back out to another motor carrier with no intention to pay the motor carrier that delivers the load. In these situations, the fraudulent motor carrier is paid. Additionally, 9 times out of 10, the motor carrier that made the delivery is paid as well to make sure they are whole, as seems to have been the case in an example detailed in the Overdrive report.
We’d remind the agency that that is an added cost on legitimate brokers, not broker fraud in any sense.
The author of this opinion, Chris Burroughs, was named the President & CEO of the Transportation Intermediaries Association in September after serving TIA for many years as government affairs VP.
TIA has been a leader on the issue of fraud for years.
The issue of fraud costs the entire industry roughly $1 billion a year and impacts all segments of the supply chain, and shippers, motor carriers, brokers and the federal government all have roles to play to alleviate and eliminate this pandemic from the industry.
Instead of singling out one part of the supply chain, it would be in FMCSA’s best interest to work to bring the entire supply chain industry together to find a common solution to fraud.
Playing whack-a-mole is not an effective, long-term solution to this issue.
[Related: 'We're hemorrhaging money': Big brokers, shippers feel the heat from double brokers]
