Some of you may already know of @Tim Bannon, who has been diligently exposing double brokers that come to his attention and keeping his network up to date with the latest tactics double brokers have been using. You may not know, that Tim Bannon (AKA the shadow) was an alias, and Tim had chosen to operate under this alias to protect his family and business from retaliation from the double brokers he was dedicated to exposing.
As Tim’s network grew, including connections to @Carrier Vetting, @DalePrax Freight Validate, @DrewWilder, and 100s more that make a great team of DB hunters, LinkedIn took note. Unfortunately, it is against their policy to operate an account under an alias. Tim’s account was reported (unknown by who, but it’s possible double brokers themselves) and was shut down. Tim has worked around this and is now publishing The Bannon Report which can be found under Christopher Allen. If you have any challenges finding Tim reach out and I will connect you.
As this week’s guest contributor, please welcome Christopher Allen (AKA Tim Bannon).
What is double brokering? It is the unauthorized and illegal re-brokering of freight. If you have been a freight broker for any length of time, you have been double-brokered. Maybe you don’t know it, but I am sure it has happened to you. In some cases, the load reaches its destination, but not without you spending hours on the phone and sending emails. Here is how it goes, and why it is a problem and a wasteful use of time and money for you.
Once the carrier receives your rate confirmation, your load will be re-brokered. Sometimes on the same load board, you posted it originally. At that point, another carrier will take that job, for a fee less than you paid the first carrier. When this happens, you will not know who has your freight, or if the new carrier has the required permits or insurance. It will also make tracing your freight very difficult. There is also the risk that you will be accountable to pay the new carrier, even if you already paid this carrier. What I have said to this point, is the best-case scenario.
Double brokering is not just a way for an otherwise legit carrier to make a few extra dollars. What we deal with these days is criminals. You may only be dealing with somebody in dispatch for a carrier, but there are many companies and people involved in the process. I hate even calling these guys carriers. More often than you can imagine, they do not even own a truck! When I found that out for the first time, I about lost my mind. They set up their authority just like any carrier does. And they get an insurance policy and pay thousands annually just to insure one truck.
Why? Because they need the filings with the FMCSA. So, are insurance companies involved? Yes, maybe they don't know, but they certainly are not taking action to prevent it. And why would they? It's easy money for the insurance company because they never have to pay a claim. Why would a fake carrier pay $20,000 per year to ensure a truck they don't even have? Because they make that money back in week one by double brokering loads.
Here are a few versions of the fake carrier. The first version is the carrier that will get their authority from the FMCSA, usually multiple carrier authorities, but let’s just pretend it’s a single authority. To do this, as I mentioned before, they need insurance filings, and there are many insurance companies that are well known for being double broker friendly. In this version of the double broker, they don't even have a truck or trailer and all they need to get insurance is a VIN number and dirty money from previous scams and other illegal activities. Sometimes they will use a VIN number that is for a truck that is running under a completely different authority. Other times they will get a VIN number from a salvage. The addresses, phone numbers, and emails of these fake carriers are also disposable and easily replaced by acts of fraud. The current version of the FMCSA Is UNABLE OR WILLING to invest in catching these fake companies before they get authorized.
The 2nd version of the double broker is a carrier that actually has a truck. These are a little more deceiving and you may see inspections in the SMS. Here are a couple of messed up scenarios that happen. A legit carrier gets into bed with a DB. The DB gives the carrier money, and in return, the carrier lets the DB book loads under their authority. A spin on this is a struggling O/O that wants out, sells everything to a DB, and now the DB can have an established authority.
A 3rd version of the DB is the one that steals the identity of a carrier, creates a Gmail account that looks like the company, and double brokers loads using their MC. This leaves the real carrier dealing with the fallout from the damage these thieves cause.
Now you can't double broker freight without a fake broker. After the fake carrier has received the rate confirmation from a real broker, the fake broker will repost the load. If you are lucky enough to catch them at this point, you will notice that the rate is different. If it's posted for less than the original rate, that’s a good sign. That means your load is probably going to get delivered and they are going to take a little off the top, as payment, for being a respectable thief. When they post the load for more than the original rate, that’s when you should worry. They have no intention of paying the real carrier, and if the real broker quickly pays the fake carrier, you will probably be on the hook to pay the real carrier also. I won’t even get into the theft or the ransom demands that sometimes go along with double-brokered freight.
Let’s talk about when it all goes south, and there is a cargo claim. Cargo claims are routinely denied because the cargo was not picked up by the MC or the truck on the policy. And there is never an auto liability claim paid, because the truck on the policy, is not on the road under the insured MC. The previous guest writer on this program was @Drew Wilder, and he knows insurance as well as anyone. He and I have gone back and forth about commercial truck insurance. It’s usually after I rant about "worthless insurance." I think we are both in agreement that you cannot properly vet a carrier without a current certificate of insurance, sent directly from the insurance agency. There is less chance of fraudulent documents that way... sometimes. Drew hates when I pull out a 3-month-old COI for reference. But it's faster than waiting for a response from an insurance company, and I believe if there are lies on an old COI, there will be lies on a current COI. If the carrier passes inspection, then you can get a current COI and a list of exclusions.
So how do we catch them before they get our loads? I don’t believe this is a one size fits all approach. My best answer is to take as many steps to spot a double broker as you can. Trust me when I say the time you spend vetting is going to be less than the time you spend trying to track down the real carrier or get a response from whoever you tendered the load. Everyone has a different process for vetting, they all have merits and are all better than not doing any vetting, so use tools you trust or know work.
The first tool you have is your gut. Instincts are worth so much. If it does not pass your litmus test and gut feel, better to move to another carrier.
Next is carrier setup and vetting platforms. I think Carrier 411 is the standard. It’s no frills, has lots of information, and a huge user base, which means lots of reports. Brokers should be using this in addition to other great platforms that give predictive value and help you make smart choices.
I am comfortable vetting a carrier, with nothing more than the FMCSA Safer website, splashed with a little Google.com, Dcontrol.com, and OpenCorporates.com
There are free sources that are also helpful, and did I mention they are free? No reason not to take advantage of that. These include Freight Validate @DalePrax, and my personal favorite for a quick check, Carrier-ok.com.
I have been working on a tool that will help me vet a carrier. It wasn’t long after I started building this tool, that I realized this could be something that everyone can use. The hardest part about introducing a new protocol is getting people to adopt the process, so I want it to be easy, and I want it to help people recognize a troubled carrier before it’s too late. I believe that this tool needs to point out areas of concern, based on the information that is available. And I believe that any process people use to vet carriers requires a certificate of insurance. That is the most valuable piece of information that gets overlooked so often and sometimes is not even part of the carrier vetting process.
The bad apples keep changing the game, and we must change. If we keep doing things the same way, we are going to lose this fight, so new tools and processes have to be utilized. I encourage everyone that is involved in carrier setup to add something new to your process.
There are many in this industry that want to educate and help, including myself and the Wellington Group of Companies, who I can’t thank enough for letting me share my thoughts with you.
We hope you enjoyed reading this week’s article, and a big thank you to Chris for so neatly describing the sheer complexity of the double brokering criminal activity we’re seeing in today’s markets.
See you next week!
Bill Robinson
