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Don’t Pay Twice

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  • Don’t Pay Twice

    3 variations of the double payment problem

    There are three variations of the double-payment problem. The first is that of the “going-out-of-business broker.” The problem arises when, in the last weeks or months of its business life, a broker continues to book loads, collects payment for the carrier’s charges (as well as the broker’s commission), and then fails to pay the carrier.

    In this variation, there is little, if any, notice of a problem until a shipper calls a broker to find the phone disconnected or when a shipper receives an invoice from the carrier that provided the underlying transportation services.

    The second variation is something we’ll call the “double-brokering carrier.” This situation arises when a load is tendered to a carrier with the understanding that the carrier will be providing the actual transportation. However, instead of providing the transportation itself, the carrier uses its broker authority and tenders the load to another carrier.

    The shipper or broker who tendered the load to the original carrier pays the original carrier, but that carrier—i.e. the “double-brokering carrier”—fails to pay the actual carrier. Again, the first time the shipper or broker who tendered the load may learn of the problem is when a bill for freight charges arrives from the carrier that provided the actual transportation.

    The third variation is the “fraudulent broker.” This is a relatively new phenomenon involving a criminal element in the transportation industry. The gist of this variation is that the fraudulent broker solicits loads that it then tenders to carriers with every intention of collecting from the shipper but with no intention whatsoever of paying the carrier.