Double Brokering Scams Cost Industry Over $100M Annually

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Double brokering, the illegal practice of a carrier accepting a load and then rebrokering it to another motor carrier, is a major issue costing the transportation industry over $100 million per year. This practice allows for fraud, puts shippers and brokers at risk, and often leaves the second carrier unpaid. Despite regulations prohibiting double brokering, the practice continues due to lack of enforcement.

Why it matters

Double brokering creates significant liability and risk for shippers and brokers, who may not know the qualifications or safety record of the carrier actually transporting their goods. It also opens the door to fraud, as the initial carrier may keep the payment and leave the second carrier unpaid. This practice undermines trust and transparency in the transportation industry.

The details

When a carrier accepts a load and then rebrokers it to another motor carrier, it is considered an illegal practice known as double brokering. This allows for easy fraud, as the initial carrier can keep the payment and leave the second carrier responsible for shipping expenses. Brokers also do not know who is actually hauling the load, as the carrier they vetted may then hand it off to an unqualified friend's company. This exposes the broker and shipper to liability, loss, or claims from the actions of an unfit carrier. Transportation agreements often prohibit double brokering, but the practice continues due to lack of enforcement by regulators.

• In 2012, MAP-21 laws were passed that prohibit double brokering without proper FMCSA authority, with fines up to $10,000.
• As of 2022, the FMCSA has not enforced this section of the regulation.

What’s next

The FMCSA is expected to increase enforcement of the MAP-21 laws prohibiting double brokering without proper authority in the coming years, which could lead to significant fines for violators.