One of the worst things that can happen to your trucking company is to get scammed. Whether it’s a vendor, customer, or strategic partner, scams can bite you and your business right where it hurts – in the pocketbook.

What is Double Brokering Freight?

Double brokering is exactly what the phrase implies – a load that has been brokered twice. One of the most common fraudulent activities being perpetrated on truckers today is Fuel Advance Fraud, which is a form of ‘double brokering.’ This is when a fraudulent broker passes themselves off as a legitimate carrier, accepting freight from an unsuspecting broker or agent.

In many cases, the fraudulent broker signs up for a load that another broker has posted on a load board. Then, they re-post that load at a higher amount and hire a carrier to take the load – and take a fuel advance from the original broker. The fraudulent broker never pays the carrier, and the legitimate carrier who signed up to take the load ends up getting ripped off, while the scammer takes off with the fuel advance.

So, how do you avoid being double-crossed by a double broker?

1. Perform due diligence on all brokers. Call to check the credit of brokers. Look for variations in broker name, location, contact information, and billing information. Often these fraudulent brokers alter the documents they receive from actual carriers to convince victims that they are a part of a legitimate company.
2. Verify a carrier’s information with their Department of Transportation registration. If the phone number and address don’t match the information you’re given, that’s a big red flag.
3. Double check the broker’s rate. Use common sense and apply the old adage, “if it sounds too good to be true, it probably is.” A scammer posing as a carrier may accept a load for much less than the going rate to entice a broker into taking the deal. Or, a scammer may offer a carrier more money than originally offered by a broker to take advantage of someone who needs a quick payday.
4. Be aware of timing. Deals posted late in the week or at the end of the day are frequently made by fraudulent brokers. Why? Because they’re preying on truckers’ worries over not being able to schedule a load by a certain time. And anytime a broker seems in a rush to get you to agree, you should also be wary.
5. Check their Authority to Operate. Search FMCSA’s Safer and Fitness Electronic Records system website, https://safer.fmcsa.dot.gov/ to make sure the DOT/MC authority to operate number matches with what the carrier has submitted.

Spending time to validate and research necessary information about a broker is important to ensure that you’re not being scammed. Avoid becoming a victim of swindlers who are just looking to make money off a quick con.

 

‘Low rates!’ ‘Risk-free!’ ‘Fast cash!’ ‘No upfront fees!’ These are just a few of the phrases you see when you search for invoice factoring rates. You might find a number of deals from factoring companies advertising low rates and quick cash flow. This sounds good on the surface, but there are often many details that aren’t disclosed upfront.

All too often, factoring rates and deals that sound great at first end up being too good to be true.  Many recourse factoring contracts come with fine print attached, putting you and your business on the hook for future risks. For example, when you sign a contract for recourse factoring, you assume the credit risk of the broker or shipper you are hauling for. This means you’re essentially gambling on the reliability of the factoring company, with no guarantees they’ll collect on your invoice. But because you’re locked into a contract on their terms, those unpaid invoices will again become your responsibility after the terms of the agreement expire (usually 60 to 90 days).

Low Factoring Company Rates: Understanding the Nitty Gritty Details

A lot of factoring companies advertise super-low rates to get more customers, but they don’t always clarify the details. For example, did you know there are many ways for those ‘lower rates’ to change? Typically, the lower rate is introductory and only good for a certain number of days. After that, the rate will rise incrementally, sometimes even daily – yikes! Also, after an additional number of days, you must use your hard-earned cash and buy the delinquent invoice back from the factoring company. Talk about an unpleasant surprise!

And there’s more. With some of these ‘low rate’ deals, you’re also locked into a contract of one or two years. These contracts are very difficult and sometimes very expensive to get out of. Unfortunately, such long-term agreements are hard to detect up front, because the contracts are so extensive and filled with confusing terms. As a result, you may not realize the full extent of what you’re accountable for.

Knowing the Bottom Line

When it comes to maintaining cash flow, factoring invoices at a good rate is a useful financial tool. However, since your main concern is the long-term health of your business, you want to avoid taking on unnecessary risk. To avoid damaging your business over time, consider non-recourse factoring with clear and reasonable rates, where you don’t become responsible for invoices that go unpaid. While non-recourse rates may be a bit higher upfront, you’ll avoid a lot of headaches, hidden fees and long-standing contracts – and that saves you money and hassle over the long haul.