What is Double Brokering and How to Combat Fraud in the Trucking Industry

The freight industry is full of challenges and complexities. When not properly managed, these challenges can lead to fraud. One such issue is double brokering—a deceptive practice that has gained significant attention in recent years due to its damaging impact on trust within the industry.

What is Double Brokering?

Double brokering is an illegal practice where a broker, who has already been paid to secure a motor carrier for a shipper’s load, takes those funds and hires another broker to do the job for less, keeping the difference. In this scenario, the original broker secures the carrier but instead of directly assigning the job, they re-broker the load to another broker, who then contracts with the carrier.

Alternatively, a broker might secure a carrier for a load, and that carrier, instead of hauling the freight, assigns it to another carrier without the original broker’s knowledge or consent. This practice is equally deceptive because it bypasses agreed contracts and procedures.

What makes double brokering particularly misleading is that the secondary broker often poses as the actual carrier, conducting business under the carrier’s credentials.

The Different Parties Involved

• The shipper: The company needing goods transported.
• The original broker: The one who contracts a carrier for a load.
• The legitimate carrier: The carrier originally awarded the load, but acts as the broker by assigning the load to a secondary carrier. 
• The secondary carrier: The carrier ultimately transporting the load, usually unknowingly involved in double brokering.

In both scenarios, these actions often break federal laws under the United States Federal Motor Carrier Safety Administration (FMCSA) regulations. Beyond the legal repercussions, double brokering leads to a loss of control over the load, less transparency for the shipper, and opens the door for many potential issues—such as miscommunication, poor service, and even cargo theft.

How the FMCSA is Struggling to Combat Double-Brokering Fraud 

Why Double Brokering is Dangerous: Risks to the Shipper and Industry

Double brokering isn’t just inconvenient; it’s risky. The main issue is that the original contract terms are lost once the load is reassigned. This means:

• Financial Losses: Double brokering often leads to shippers paying more for the delivery of their loads. The secondary broker usually inflates the price to ensure they get their cut, and carriers are left with less than the originally agreed payment. 
• Compromised Service Quality: In a standard agreement, the initial broker ensures a reliable, well-vetted carrier handles the shipper’s freight. In contrast, double brokering often means that the load ends up in the hands of a different motor carrier—one who may not have the proper authority, insurance, or even the right equipment for the job.
• Loss of Control Over the Shipment: Double brokering frequently happens without the shipper’s knowledge, causing a complete loss of control over the freight and shipment process. 
• Insurance Coverage Problems: In the worst-case scenario, insurance claims can be denied if a load has been double-brokered, leaving shippers without compensation for losses or damages.

Common Red Flags and Prevention Techniques

How to Identify Fraudulent Brokers and Double Brokering Scams

Double brokering is often fueled by bad actors looking to profit with malicious intent. Recognizing the signs early can help identify fraudulent broker activity before falling into the double brokering trap.

How do you identify a double brokering scheme? Look for these red flags:

• Lack of Proper Licensing: Always verify the broker’s credentials and ensure they have valid FMCSA registration.
• Unclear Contact Information: Fake phone numbers, no physical address, or unverifiable information should raise concerns.
• Rapid Reassigning of Loads: A legitimate broker would never rush to reassign without a good reason.

How to Combat Double-Brokering Fraud in the Transportation Industry

Due Diligence for Shippers and Brokers

Here’s what freight brokers and carriers can do to combat scams and avoid double-brokered loads in the trucking industry:

• Establish Relationships with Trusted Partners: Building long-term relationships with trusted brokers and carriers helps reduce the risk of falling victim to double brokering freight. Work only with partners that have a strong reputation and track record within the industry. 
• Use Recognized Load Boards: Advanced load boards now offer vetting tools that allow brokers to verify a carrier’s information quickly. These boards add a layer of security that can be crucial in preventing double-brokering scams.
• Regularly Review Procedures: Staying proactive in reviewing and improving fraud detection and prevention procedures helps stay ahead of scams.
• Perform Thorough Background Checks: Always verify the credentials of any carrier or broker before working with them. Check their Federal Motor Carrier Safety Administration (FMCSA) registration, brokerage authority, and insurance coverage. Look for a history of complaints or unresolved issues to identify potential red flags.
• Verify Contact Information and Payment Methods: Fraudulent brokers often use fake or incomplete contact information. Verify physical addresses, phone numbers, and other forms of contact thoroughly. 
• Document Everything: Keep clear documentation of contracts, payments, and communication.
• Educate and Train Employees: Provide regular training sessions on how to detect fraud and identify the red flags of fraudulent activity. When employees are well-educated about the risks, they can be an effective first line of defense.

Value of Working with Mercer Transportation

Working with the right trucking company can be the key to avoiding double brokering and the problems it brings. Mercer Transportation focuses on maintaining transparency and keeping full control over every load it handles. This means that clients always know where their shipment is and who is handling it—without any surprises.

Mercer Transportation’s freight brokerage department and owner-operator model ensure that loads are never reassigned without authorization. Each load is handled with care, and drivers are vetted to meet all compliance standards. This dedication helps Mercer combat freight fraud and deliver efficient, safe, and reliable transportation services.