Common Freight Factoring Mistakes that can Bankrupt You
Costly Unethical Trucking Tactics
The global invoice or Accounts Receivable Factoring market is a $3 trillion market. Companies seeking cash flow from slow-paying customers with extended payment terms need alternative financing solutions. Bankers Factoring is proud to be the premier Invoice Factoring Company for Transportation companies seeking working capital. If your transportation company has any of the following problems, we can help:
- Slow Paying customer
- Commercial clients with extended terms
- Cannot meet payroll
- Turning away new business or hauls
- Owner-operators struggling to pay your bills
In this article, we want to expose some of the risks associated with transportation companies due to unethical practices in the industry. Here at Bankers Factoring, we have years of expertise in helping trucking and transportation companies grow their book of business. Our process is unique as we take the credit risk with our non-recourse accounts receivable factoring for freight haulers.
Be Wary of Chameleon Carriers, also called Reincarnated Carriers
Truckers and other motorists are protected on the road by regulations. Unfortunately, some dishonest freight operators, trucking companies, and transporters have discovered ways to circumvent these laws in saving time and money by operating unsafely.
What is a Chameleon Carrier?
A reincarnated carrier is a transportation service that was ordered inoperable because of safety concerns that endangered drivers and the public. Within a short amount of time, these carriers reopen under a new identity and begin operations. In most reincarnation carrier cases; the company reopens with the same dangerous drivers and equipment. Changing the appearance of the business or operations to comply with safety rules is usually ignored. Carriers continue to operate in an unsafe, illegal manner.
How do Chameleon Carriers Get Away with New Operations?
The Federal Motor Carrier Safety Administration (FMCSA) makes every attempt to keep dangerous carriers off the road; however, not all carriers or transporters ordered to stop operating by FMCSA do so. Because the FMCSA is unable to track all commercial drivers at all times, carriers ordered to cease operations may be able to run hauls successfully for some time before being detected.
If a chameleon carrier is apprehended, significant fines could be imposed for each day the carrier works after issuing the order to stop. These fines levied from the Department of Transportation, and other regulated agencies will not come down easy for carriers. Many dangerous carriers will continue to operate until they are caught for the second time utilizing unsafe practices.
The Impact of Reincarnated Carriers on Trucking
Other trucks and vehicles on the road are at risk from chameleon carriers and unsafe habits. Companies that diligently confirm a carrier is permitted to operate are one way to protect the trucking sector. Companies should ensure carriers and transportation providers are appropriately registered before selecting a carrier. Setting policies for specifying and hiring freight forwarders and trucking companies keeps the roads safer and each party’s overall risk.
Truckers who drive for carriers that do not follow FMCSA laws could be reluctant to report infractions for fear of losing their jobs but reporting rogue carriers can benefit individual truckers. Chameleon firms frequently force truckers to travel for long periods without stopping to save time and money. Drivers who are cognizant of infractions must report them as soon as they become aware of them.
Identity Theft and Broker and Carrier Fraud
When businesses utilize another motor carrier’s issued USDOT number when they are not permitted to do so, or when someone works as a broker and is not registered with FMCSA, fraud and identity theft occur. Identity theft and fraud are both illegal.
If you believe your business has been a target of fraud or identity theft, the FMCSA advises you to take the following steps:
- Notify your local law enforcement agency about the occurrence.
- One can also contact the Office of the Inspector General (OIG) of the United States Department of Transportation (USDOT) Hotline at (800) 424-9071 or report the incident online at https://www.oig.dot.gov/hotline.
- You can also report a problem to the FMCSA’s National Consumer Complaint Database (NCCDB) at https://nccdb.fmcsa.dot.gov/nccdb/home.aspx.
- Notify your insurance company, along with all load boards and factoring companies, that your company’s data is being misused.
- Make posts on social media and your webpage to keep your consumers informed.
- By navigating to https://safer.fmcsa.dot.gov and scrolling down to “FMCSA Searches” and clicking on “Company Snapshot,” you may ensure that your business’s phone number(s) displayed in FMCSA’s Safety and Fitness Records System (SAFER) is available and accurate.
- Handle your business information the same way you handle your banking and credit card details. Check your FMCSA Carrier Profile regularly. If you discover any errors, go to https://www.fmcsa.dot.gov/registration and follow the steps there. You can also get support by contacting the phone number listed on this page.
Carriers: Establish who is paying the freight on the load and ask to speak with their brokerage provider if you came in contact with or handled a fraudulently brokered load. The actual load broker is frequently a victim of fraud or theft and is not participating in the illicit operation. It is against the law to hold loads hostage until you are paid.
Brokers: The carrier who has your load could be a victim of the theft and is not intentionally complicit. You might be able to have the items delivered safely if you work together.
Prevention: You can try and protect yourself from becoming a victim by following these guidelines:
- Using SAFER at https://safer.fmcsa.dot.gov to confirm the phone numbers of brokers and carriers. If the carrier/broker’s number does not match what is listed in SAFER, call the company’s phone number to address the load. It is feasible that the identity of a company employee you are contacting has been stolen as well.
- Consider not contracting for the job until you can prove it is a legitimate business deal if your SAFER search discovers a carrier or broker without a phone number visible.
- When utilizing a search engine to verify contact information such as phone numbers, emails, and websites, be aware that the top search results may be scammers’ bogus profiles. If you did not verify the information on numerous sites, do not believe it.
- Evaluating documents is crucial. Insurance certificates, too, can be forged. If you have a suspicion that something is not quite right, look up the numbers and contact the companies.
STOP the transaction if:
- your broker starts asking you to introduce yourself as a different carrier or asks your driver to hide the truth about whom they work for;
- you delve deeper about the load’s destination and are told it is a “blind load”;
- the broker is prompt to agree to pay you more;
- the rate is significantly higher than the current market rate.
- Remind your customers to keep track of their drivers and vehicles. Verify that the truck that arrives to load has the same name and number as the one you negotiated. It will be easier to recognize the actual carrier if your customer records the tractor and trailer plate information. Request photos of the truck and trailer and compare and verify the information on the carrier packets. This would be vital information for law enforcement officials if you were involved in a fraudulent load.
We hope this guide to fraudulent and unethical trucking practices saves you from terrible business grief.
For your freight factoring needs, reach out to us at Bankers Factoring, and we can discuss your funding needs.