Car Hauler Industry Tips, Industry

Double Brokering: Dangers, Consequences, and How to Avoid It

by Ben Price

Working in the auto transport industry can be highly lucrative for both Carriers and Brokers alike, with plenty of money to be made. But like essentially all industries, there are certain fraudulent individuals to be wary of. One common scam that auto transport workers should be aware of is double brokering, which is quite common and easy to fall for if you aren’t careful. Today, we’ll be discussing what double brokering is, the dangers and consequences of it, and how to avoid it.

What is Double Brokering?

Double brokering is when a Carrier accepts a load for a specific MC number but then proceeds to run the load under a different number instead. This is an unauthorized activity, a violation of FMCSA legislation, and is considered illegal.

Even though this practice is common in the auto transport industry, it’s seen as a risky and dangerous practice by Brokers, Shippers, and Carriers alike and is highly frowned upon.

Dangers of Double Brokering

Double brokering is bad for a number of reasons; the biggest is that it can create significant financial and safety risks for both Carriers and Brokers. When a load is brokered, it is accepted usually under very specific insurance policies; when a load is double brokered and pawned off onto another broker, insurance does not cover them, opening them up for insurance liability risks.

Another major danger of double brokering is the originator of the load doesn’t actually know who is even hauling the load. There’s a possibility that the Carrier who is hired through double brokering hasn’t been properly vetted to the standards of the brokers, may not have proper authority, or necessary paperwork to even be legally allowed to move the load.

How Double Brokering Works

While double brokering may sometimes occur completely on accident, like if a trucking company overbooks a load by accidentally posting a load on more than one marketplace, however the majority of the time this is not the case. Typically, double brokering is done by fraudulent shell trucking companies, which are companies posing as car haulers that accept loads and then recontract out loads to other Carriers, with the intention of never paying them.

Shell trucking companies will book a load from a Shipper or brokerage claiming to move it, while simultaneously rebrokering the shipment to another trucking company. The actual trucking company will send the BOL (bill of lading) and invoice to the shell trucking company, with which the fraudulent company sends to the original shipper or broker to receive payment. 

After receiving their payment, the shell trucking company never pays the actual trucking company. Then, usually after 60 days of receiving no payment, the trucking company that delivered the load will contact the original Shipper, requesting the payment that they never received. Legally, the legitimate trucking company has the right to receive payment for their work so this results in the Shipper paying twice for the same load.

Double Brokering vs Co-Brokering

While they may sound similar, double brokering and co-brokering work quite differently from one another. Double brokering involves shell trucking companies that withhold information from both parties in order to scam them both out of money, while co-brokering is where the Carrier and Broker have an understanding beforehand and an agreement is made when outsourcing a load to an outside Carrier. Co-brokering is completely legal and usually acceptable, as long as the first broker’s contract does not specifically forbid the act of co-brokering.

So whereas double brokering is done to maliciously scam one or multiple parties out of money, co-brokering is simply the act of outsourcing a load to another car hauler with the explicit knowledge and permission of all parties involved.

Consequences of Double Brokering

Obviously, there are major consequences of double brokering. The mostly obvious consequence is that one party is scammed out of money. But additionally, double brokering could result in lost or stolen loads, unreported accidents, delayed shipments, or any other number of things that could go wrong during transportation. Double brokering is also very illegal, so it could result in major fines or jail time.

At the end of the day, double brokering is a dangerous practice that should be avoided by everyone. If you’re worried about getting scammed by a shell trucking company, we highly recommend using a load board that pre-vets drivers; for this reason, it might be wise to use Super Loadboard, the advanced load board offered through Super Dispatch’s platform. 

Built straight into our all-in-one platform for moving cars, Super Loadboard vets its users regularly, ensuring that they have all of their paperwork up-to-date and marks said Carriers with a “Verified” badge. This helps to weed out potential scammers in our system. If this sounds like a platform for you, then consider trying it – request a demo today!

Published on November 8, 2022

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