The freight industry is constantly evolving, and unfortunately, so are fraudulent schemes designed to exploit hard-working carriers. One of the latest fraud tactics involves fake lease-on carriers, and it’s crucial that you remain vigilant to protect your business from financial loss.
The Scheme:
-The Broker and Agent: A fraudulent agent working under a legitimate freight broker approaches a well-established motor carrier (MC), offering an opportunity to lease on another carrier to haul freight under their authority.
-The Fake Carrier: The agent presents a leased-on carrier that supposedly has a contract with the broker but has recently lost insurance, preventing them from moving loads directly.
-False Paperwork: The leased-on carrier provides fabricated documents, including agreements, insurance certificates, and identification, making them appear legitimate.
-Fake Loads and Payments: The agent fraudulently enters loads into the broker’s system, marking them as delivered. These false loads are then invoiced and approved for payment to the leased-on carrier.
-Financial Fallout: Once payments are made, the fraud is uncovered when the broker investigates, often leading to payment clawbacks from the legitimate MCs that unknowingly participated.
The Warning Signs:
Everything about this scheme looked legitimate to the owner, the broker, and third parties, which is why it’s so crucial that everyone in the industry knows how to spot shady business as it becomes more prevalent. Here’s what to look out for:
-Too-Good-To-Be-True Offers: If an agent presents an opportunity that guarantees easy money without much effort, proceed with caution.
-Unverified Leased-On Carriers: Always check FMCSA records and conduct thorough background checks before leasing on a carrier. Considering FaceTiming with the lease-on to also view their equipment.
-Lack of Direct Broker Communication: If a broker is unwilling to verify contract details directly, it’s a major red flag.
-Insurance Gaps: Be wary of any lease-on carrier that has had recent insurance lapses.
-Inconsistent Documentation: Cross-check all agreements, licenses, and insurance certificates for authenticity.
How to Protect Your Business
With so much uncertainty arising in the industry, remember that your business’ success is top priority. Are you already doing these things to protect its future?
-Perform Due Diligence: Always verify a leased-on carrier’s history, insurance, and FMCSA records.
-Communicate Directly with Brokers: Never rely solely on an agent’s word—always confirm agreements with the brokerage directly.
-Use Highway and Other Verification Tools: Services like Highway can alert you to potential fraud risks associated with certain MCs.
-Be Cautious with Payment Handling: If a deal involves you receiving funds and then passing them along to another carrier, it could be a sign of a scam.
-Trust Your Instincts: If something doesn’t feel right, don’t proceed without further investigation.
OTR’s Commitment to Your Protection
At OTR Solutions, we are committed to keeping our clients informed and protected from emerging threats in the freight industry. If you suspect fraudulent activity or need guidance on a potential lease-on arrangement, contact your OTR representative immediately, and we will look into it for you! We want to help protect our clients – that’s part of our partnership.
Fraud is evolving, but together, we can stay ahead of the schemes and safeguard your business. Stay informed, stay protected, and always verify before you trust.
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