Protecting Your Company Against Load Board Scams
Online load board scams have plagued the trucking industry for the past few years. Unfortunately, the lethargic economy means the problem will get worse before it gets better. Con artists are taking advantage of the fact that law enforcement has not made this issue a priority. Most scammers, in fact, are never prosecuted.
On average, load board scam victims stand to lose thousands of dollars. If companies take the time to research their transportation providers, they will better protect themselves against being scammed.
Do Your Homework
Because of the cost involved, shippers and brokers often fail to complete background checks on the transportation providers they find on load boards. A company that does not pay for a yearly subscription to a credit agency can be charged up to $50 per inquiry.
When weighing the cost of completing due diligence against the cost of being scammed, however, you will always come out ahead by running a simple credit check. Also confirm the carrier’s address and phone number, safety record, and insurance policy.
Verifying active operating authority—which permits carriers to haul commodities for other businesses—is the simplest way to determine a carrier’s legitimacy because many scammers don’t bother to obtain it. If a company’s authority has been active for more than one year, it is probably legitimate.
The Electronic Toolbox
Shippers and brokers can use several online resources to help verify carrier legitimacy. Joining online monitoring services and the Transportation Intermediaries Association gives companies insight into their business partners and provides access to carrier watchdog services that report poor performance.
It is important to remember, however, that not all online sources are reliable. Shippers should follow up on all online research by directly contacting the company’s office and its insurance representative to ensure the information is accurate.
In June 2011, the Fighting Fraud in Transportation Act of 2011 was introduced. This bill outlines several policies to make transportation regulation more effective, including increasing the surety bond for brokers and freight forwarders from $10,000 to $100,000.
With the increased bond amount comes increased bond liability, which makes sureties stricter and raises the bar for freight brokers. This will help weed out scammers who are obtaining active authority, which will protect shippers, brokers, and carriers.
One of the best ways for shippers, brokers, and carriers to protect themselves against load board scams is to partner with a third-party logistics (3PL) firm. This partnership gives shippers and brokers the advantage of using the 3PL’s trusted carrier base, and provides carriers the security of being associated with a financially sound organization.