Load Board Players Must Address Fraudulent Practices

In a recent article, Craig Fuller, CEO at FreightWaves, highlighted the urgent need for major load board players to take responsibility for addressing load board fraud. The rise of double brokering and load phishing has become a crisis within the trucking industry, causing significant harm and inefficiencies.

The Wall Street Journal recently reported a staggering 400% increase in load board fraud from the fourth quarter of 2021 to the fourth quarter of 2022, the highest level ever recorded since 2004. While this revelation may not surprise industry insiders who have experienced fraud firsthand, it sheds light on a pervasive problem that undermines efficiency and results in wasteful practices.

Load boards are intended to connect brokers with carriers, facilitating the movement of loads. However, they often function more like Craigslist than streamlined digital marketplaces. Negotiations and transactions occur outside the load board platform, leaving room for fraudulent activities.

Double brokering, a long-standing issue, involves a fake carrier posing as a legitimate trucking company. This impostor secures the load from a broker on the load board and then brokers it out to a genuine trucking company without the knowledge of the original broker. The fraudster profits from the transaction without paying the carrier who actually handles the load, leaving them uncompensated.

Cargo theft poses an even greater risk in double-brokered loads. Since the original broker lacks information about the carrier, they are unaware of the cargo's whereabouts. This opens the door for fraudsters to redirect the trucker to a compromised warehouse where the cargo is stolen, resulting in significant financial losses.

Load phishing, a newer form of fraud, resembles wire transfer phishing. Fraudsters masquerade as carriers, using look-alike email addresses or impersonating legitimate trucking companies. They engage in negotiations with brokers, secure the load, and subsequently vanish with the cargo. This not only causes financial harm but also contributes to the proliferation of stolen goods on the black market.

Unfortunately, load board fraudsters are becoming increasingly sophisticated, making it difficult to distinguish between legitimate and fraudulent offshore brokerage or carrier staffing centers. Moreover, federal agencies and police departments offer limited support in investigating these crimes, as load board fraud is often committed online, involves multiple jurisdictions, and deals with relatively low individual transaction amounts.

To combat load board fraud and safeguard their business models, load board players must prioritize the regulation of their marketplaces and invest in robust fraud prevention tools. Additionally, industry-wide efforts should focus on shifting towards private 3PL networks with pre-vetted parties to mitigate the risk of cargo theft.

It is high time for load board players to acknowledge their role in combating load board fraud. By taking responsibility, implementing stricter regulations, and embracing fraud prevention measures, they can protect the integrity of the industry and foster a more secure and efficient environment for all stakeholders involved.