A load board, sometimes known as a freight board or freight matching service, connects shippers and carriers. Shippers and freight brokers post available loads and truckers find loads that are convenient to them. Load boards list potential jobs for carriers, but the actual transaction takes place via email or phone.
When the carrier responds to the load board, negotiations take place between the broker and carrier. Often, the broker will talk to several carriers about the same load to find the cheapest way to carry the freight.
According to a recent Wall Street Journal article, load board provider Truckstop reports that load board fraud and double brokering increased by 400% between the end of 2021 and the end of 2022. The problem is currently under investigation by the Department of Transportation’s Office of Inspector General.
Double Brokering
In a legitimate negotiation between carrier and broker, a price is set, and a rate confirmation sheet is sent to the carrier, along with shipment details. The carrier will then transport the load to its destination and then notify the broker that the load has been handled with a signed proof of delivery. Afterward, the carrier bills the broker, and the broker pays the carrier.
In a double-brokered load, however, the entire process is fraudulent because of the presence of a third party that pretends to be a carrier. This third party negotiates with a broker and then finds a legitimate carrier to do the job.
Once the freight has been moved, the third-party fraudster is paid by the shipper, but since it is not a real company, it ignores the request for payment from the legitimate carrier. By the time the carrier and original broker realize the fraud, the double broker disappears. The carrier has hauled the load and performed the service but never gets paid.
Another issue with this scenario is that because the original broker doesn’t know who is actually moving a load, instances of theft are rampant. The carrier could be told by the double broker to deliver the load to an illegitimate destination where it is stolen and sold on the black market.
Load Phishing
A new type of fraud has emerged in recent years and its goal is to simply steal cargo. It starts when a broker posts a loaded opportunity and an email address. The broker receives an email from a carrier who wants to do the job. A negotiation occurs and the broker awards the load to the carrier.
Unfortunately, the email isn’t legitimate. The fraudster is using a look-alike email address claiming to be a legitimate carrier. They use a real company’s information and credentials but are not really part of that company. The email may appear legitimate, but the address may be slightly different or may come from a generic address pretending to be a carrier. Once the transaction is made, the cargo is loaded, never to be seen again.
Because these fraudsters have become so sophisticated in ripping off real businesses, the chance for prosecution is almost non-existent. Often, criminals work from computers overseas, and with the increase in offshore brokerages and call centers, it is difficult to pick out the ones who intend on committing fraud.
Obviously, more regulation is needed with one solution being to move freight brokering off of public load boards and onto private networks and servers.
