The freight economy has been struggling for the past few quarters, leading to a recession in the industry. As truckers face fewer job opportunities and many leave the business, freight brokers are increasingly encountering fraudulent activities. One common term used to describe these problems is “double-brokering,” but the issue extends beyond that.
In this blog post, we will discuss the various types of fraud affecting freight brokers, including double-brokering, identity fraud, and online security, and explore potential solutions to help brokers protect their businesses.
1. Double-Brokering Fraud:
Double-brokering occurs when a carrier with broker authority (or sometimes no broker authority) takes a load from a broker but uses another trucking company to transport the goods. This type of fraud poses several risks to freight brokers, such as:
– Loss of control over the shipment
– Increased liability due to unauthorized carriers
– Potential payment disputes and delays
To combat double-brokering fraud, brokers can implement the following solutions:
– Thoroughly vet carriers before working with them
– Monitor carriers’ activities and maintain open lines of communication
– Use technology, like MyCarrierPackets and RMIS, to verify the carriers handling the load
2. Identity Fraud:
Identity fraud occurs when bad actors pose as legitimate trucking companies to secure loads. They often exploit weak online verification processes and employ tactics like email spoofing to deceive freight brokers. The risks associated with identity fraud include:
– Financial losses due to stolen loads
– Damaged reputation and loss of trust with shippers
– Legal liabilities
To minimize the risk of identity fraud, freight brokers can:
– Implement stronger online verification processes
– Utilize a verified single sign-on service to confirm carrier identities
3. Online Security:
With the growing reliance on technology in the freight industry, legitimate carrier users and their systems are increasingly at risk of being compromised. This “when, not if” scenario can lead to bad actors stealing loads and causing significant damage. The risks associated with poor online security include:
– Financial losses from stolen shipments
– Reputational damage
– Loss of sensitive data
To bolster their online security, freight brokers should consider the following measures:
– Implement two-factor authentication for system access
– Monitor and log IP addresses for suspicious activity
– Conduct periodic audits of their systems and processes
– Invest in employee training on cybersecurity best practices
The freight industry is currently grappling with various types of fraud, including double-brokering, identity fraud, and online security concerns. By being proactive and implementing the suggested solutions, freight brokers can minimize their risk and better protect their businesses. As the industry continues to evolve, embracing technology and prioritizing security will be crucial in staying ahead of potential threats.
What you can do about it:
Check out Parade’s Carrier Email Verifier, a free tool designed to help verify carrier emails and drive safer, more secure freight transactions. The tool is available for both current customers and non-customers. Learn more about the tool below or access the Carrier Email Verifier by clicking here.