One June 29, two California residents, both Russian citizens, were sentenced on charges related to a double-brokering scheme that yielded $2.9 million over three years.

Beginning in 2005, Nicholas Lakes and Viacheslav Berkovich of Los Angeles hacked into the FMCSA SAFER database and substituted their own contact information for the records of real trucking companies. Posing as carriers, they found loads on internet load boards. (They did not use TransCore's 3sixty Freight Match!) Then they posed as brokers and subcontracted the loads to legitimate carriers.

When the original brokers paid Lakes and Berkovich, the criminals did not pay the actual carriers. Then the two men would go back to SAFER, falsify another carrier’s contact information, and double-broker more loads. Defrauded carriers complained to the Department of Transportation (DOT), who investigated and eventually indicted the two men in October 2008 for computer fraud, mail fraud, and wire fraud.

On June 29, Lakes and Berkovich were sentenced to 70 months in prison and $4.3 million in restitution.  (For details, see the original article from Wired Magazine or the sentencing summary from DOT.)

Sadly, fraud is a serious problem in the transportation industry. And in today’s difficult economic climate, even law-abiding companies have been known to renege on payment terms or file bankruptcy without meeting their commitments. Here are five ways to keep from becoming a victim:

1. Monitor credit changes, for your company and your carriers. Use TransCore’s new Credit Patrol service to monitor changes in carriers’ credit and your own, so you’ll know if your favorite carrier is having problems. Equally important, you’ll be alerted immediately of any changes to your profile, which could be a warning sign that someone is using your company ID fraudulently.
 
2. Choose a secure load board. Search for loads on TransCore’s freight matching systems, where our employees check the credentials of all participants to be sure they are real companies. We also follow up on complaints, mediate payment disputes and offer a payment guarantee to carriers. Companies that are guilty of non-payment or double brokering are barred from posting.

3. Qualify carriers thoroughly, every time you load them. Don’t assume that your favorite carriers still have full insurance coverage and current authority. CarrierWatch® insurance certificate service enables you to check the carrier’s records in the integrated DOT files against an image of the actual insurance certificate, provided by the insurance agent. Verify that names, addresses and phone numbers match, in case the DOT and FMCSA records have been altered.

4. Use a good transportation management system (TMS) to control credit and monitor payments. With the right TMS, you can determine how much credit to extend to customers, and compel all your employees and agents to play by your rules. Plus, a good TMS enables you to review a customer's rate history, payment record and credit profile, so you can respond quickly if anything changes. One excellent option: TransCore's Logistics Software.

5. Check customers’ credit records regularly, and collect receivables promptly.  According to TransCredit, 78% of bad debt for both brokers and carriers is generated by customers who have been on the books for two or more years. So it may be time to update credit reports on your repeat customers. TransCredit has stepped forward to offer collection advice to all TIA members. TransCredit provides transportation industry-specific credit scores and days-to-pay information for 31,000 corporate customers, including 97% of the freight factoring companies in the U.S. and Canada. TransCredit can be reached at 800-215-8448, or customerservice@transcredit.com.