Recognizing the risks associated with double brokering is a challenging aspect of the freight brokering process. It is important to understand what double brokering is to recognize double-brokered loads. In simple terms, double brokering is the unauthorized re-brokering of a shipping load to an alternative trucking company. Double brokered loads are illegal, with a possible penalty for double brokering.
What Is Double Brokering?
Double brokering occurs when a freight broker offers a load to a specific carrier and that carrier assigns the load to another carrier. Double brokering loads is a questionable practice and is different than the brokerage process of co-brokering. An important distinction is that double brokering is not done with the consent of the company doing the shipping. In double brokering, the shipping company is unaware of the double-brokered load status. There are many risk factors associated with double brokering and also laws on double brokering freight. Understanding the double brokering process can help a person avoid the potential consequences of double-brokered loads.
The Double Brokering Process Explained
The process of double brokering is multilayered and prevalent throughout the United States. Double brokering begins when a freight broker books a load with a specific brokerage company; understanding the company will move the brokered loads with their truck and driver. Instead, the brokerage company will negotiate the brokered loads out to another trucking company, representing it as their load. The actual trucking company will complete the pickup and delivery of the brokered loads; believing they hauled the load for the brokerage company they negotiated with – the secondary brokerage company.
The actual trucking company that completed the transport of the brokered loads, will send the invoice to the brokerage company that hired them. The secondary broker will invoice the original freight broker for payment. The original freight broker will pay the brokerage company they booked with, believing the company hauled their brokered loads.
The nefarious part of the double brokering scheme happens when the secondary brokerage firm receives payment, however, it does not pay the actual trucking company which hauled the brokered loads. Regardless, the freight broker is obligated to pay the actual trucking company or double pay. Double brokering loads is unethical and there are laws on double brokering freight.
Is Double Brokering Illegal?
The question “is double brokering illegal?” is complicated. While there are laws on double brokering, and a possible penalty for double brokering in some instances, other times double brokering is considered unscrupulous rather than illegal. The answer to when is double brokering illegal is when a broker receives payment for brokered loads and fails to pay the carrier after the freight is shipped. This type of double brokering is considered theft of services or fraud and can result in a jail sentence or fines for restitution per laws on double brokering freight. It is important to avoid double-brokered loads.
What to Do to Avoid Double Brokering?
There are different ways freight brokers can avoid a double-brokered load. Avoiding double brokering begins with some important preventative steps as noted below.
Investigate the Broker
To avoid double brokering, it is important to investigate the broker. This includes completing a background check on the potential broker against the Federal Motor Carrier Safety Administration registration for any reported concerns regarding shady dealings or unethical actions. Also, check the brokers’ credit scores and safety ratings.
Work with Trusted Brokers
To reduce double-brokered loads, develop relationships with brokers you trust to be ethical. Interact with brokers who are transparent and known to be honest. While tempting to broker an inexpensive load, to avoid the risk of getting caught in a double brokering scheme, it’s safer to use trusted brokers.
Mind the Freight Rate
One way to avoid double brokering by an unscrupulous broker is to review the rate confirmation after brokered loads have been booked. One clue that double brokering occurred is if the rate confirmation requires you to check in as someone other than the actual carrier in which brokered loads was booked. Confirm that the bill of lading matches the rate confirmation at pick up. Another sign that double brokering loads have happened is when brokered loads have an unreasonably high rate and the broker insists proof of delivery be forwarded to a random email address immediately after delivery.
Double brokering complicates the already complex process of arranging brokered loads. Understanding what is double brokering is important to avoid being the victim of double-brokered loads. Protecting your business from double brokering is crucial, as double-brokered loads can be financially devastating. Trusting your freight broker is important as double brokering schemes evolve. After learning about the many illegal double brokering schemes, it is imperative to work with a trustworthy freight brokerage company with an upstanding reputation. Contact Cowtown Express to get your freight shipping quote today and know you are working with a reliable and reputable company.