Technology drives major increase in double-brokering scams

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Updated Jun 2, 2023
trailer parked at a warehouse dock
Cargo theft is moving from physically pickpocketing trailers to more strategic methods like double-brokering scams.

Melissa Forman said double brokering was not talked about as much before six months ago, but with the freight industry on a downswing, bad actors are getting desperate to make an extra dollar.

Forman, president of TriumphPay, said that extra dollar is resulting in $500 million to $700 million in annual carrier spend, and double-brokering scams are on the rise. Scott Cornell, transportation lead and crime and theft specialist at Travelers, said double-brokering scams were up over 100% coming out of the fourth quarter of 2022 and into the first quarter of 2023.

“What is being reported as double-brokering activity is just the tip of the iceberg; there is a lot more out there than the industry realizes,” Forman said. “The cost to the industry is exponential when considering claims, lost shipments, unsafe carriers, lost customers, etc.”

Historically, the tools for fighting double-brokering have relied on reports from brokers, publicly available information and basic scoring models. These methods, which waste brokers’ time and aren’t scalable, aren’t enough anymore.

[RELATED: Cybersecurity becomes bigger element in protecting cargo]

TriumphPay, a payments provider for the transportation industry, recently partnered with carrier identity management technology provider Highway to combat double-brokering fraud. The partnership combines two industry datasets – TriumphPay’s data on freight spend and Highway’s carrier and equipment information – with a proprietary algorithm to identify who is hauling more freight than their actual equipment would allow.

TriumphPay, which is approximately 20% of the brokered freight market, provides 14 days' worth of “miles traveled” based on the destination in their network, which is now over $35 billion. That information is compared against Highway’s insured equipment data. Highway can provide load limit insights and look at where discrepancies in their capabilities occur, Forman said. If a carrier only has two power units, they cannot run 50,000 billable miles in a week.

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“With TriumphPay and Highway’s data working together, it has been easy to identify which carriers stick out like a sore thumb, which allows brokers to review these exceptions and determine if that carrier is legitimate,” she said.

Freight broker software provider Parade is also working to identify and mitigate double-brokering scams. The company recently introduced its carrier email verifier, Carriers.FYI. The free tool, available for customers and non-customers, is designed to help freight brokers verify carrier emails to drive safer, more secure freight transactions. It works by anonymously identifying if an email has been utilized with a freight brokerage across Parade’s network within the last 30, 60 or 90 days.

“With the Carrier Email Verifier, we aim to contribute a small piece to a much larger puzzle in the quest for a more secure future for freight,” Parade CEO Anthony Sutardja said in a recent blog post. “By providing an additional layer of security and trust, we are better equipping brokers to mitigate risks such as double brokering, carrier identity fraud and cargo theft.”

[RELATED: Double broker who stole carriers' identities sentenced]

Double brokering and carrier identity theft, along with fictitious pickups, are strategic methods of stealing cargo compared to straight theft, where the thief takes cargo directly off a trailer or steals a trailer.

Cornell said bad actors are becoming more sophisticated with their strategic methods, and the driving factor is technology.

“They're actually using the tools the transportation industry has created to help move freight faster and more efficiently to help them trick the transportation industry into giving up the freight,” Cornell said. “(Technology) gives them that arm's length capability. They have a much bigger chance of being caught when they have to show up on site … They can use the very tools that the industry has created to move freight load boards, finance systems – all these different things – to steal the cargo virtually by arranging different parties and arranging different activities to move the freight and then launder it through the system. It allows them to steal any freight, anywhere rather than always having to be near distribution centers or ports.”

Until recently, he said strategic theft was such a smaller portion of overall cargo theft that it wasn’t seen as much of a threat as straight cargo theft. So brokers may have put some internal processes in place to vet carriers and sometimes employ outside services designed to help vet carriers but overall rolled the dice on whether they would fall victim, he said. But he said now the industry will gravitate more toward third-party vendors to provide those services.

“It would be nice to see some uniformity come across the industry on that, meaning that it becomes a best practice for the majority of the industry. Whether we'll see that or not is yet to be seen,” Cornell said. “But I do think when you see these massive increases in that strategic theft, that's going to drive better behaviors and the use of some of these third-party vendors to help with that, and I think that's going to help the industry combat this.”

[RELATED: Double-brokering scams that can result in theft of more than just money]

Travelers has an investigation team to help recover stolen goods but also works to help customers prevent theft. Cornell said the Transport and Asset Protection Association, of which he is a member, is working to create industry best practices for freight broker security. Travelers already employs some of those practices to help customers recognize red flags as they vet carriers and recognize false documentation.

He said carriers fall victim to fake brokers as well and are hired to move laundered freight without knowing it. He said carriers can search online for the freight broker that called them to confirm that it is a legitimate company and also call the number provided to confirm that broker actually made the assignment. But he said the burden lies with brokers.

“If I'm a trucking company, I move hundreds of loads a year, and this never happens to me, I don't go about my normal day thinking that the person assigning the freight is actually a cargo thief,” Cornell said. “To me, that would be like thinking I'm going to hit the lottery tomorrow; I just don't think it's going to happen. So, really, the vetting needs to happen at the freight broker level; the freight broker portion of the industry needs to make sure that who they're giving the freight to is the legitimate carrier.”

Angel Coker Jones is a senior editor of Commercial Carrier Journal, covering the technology, safety and business segments. In her free time, she enjoys hiking and kayaking, horseback riding, foraging for medicinal plants and napping. She also enjoys traveling to new places to try local food, beer and wine. Reach her at [email protected].