Factoring companies and double brokered loads.

@SCAM CHASER have you ever brought litigation against a company for "Double Brokerage"? Or is there a law that covers the "Double Brokerage" situation in order to protect freight brokers?

All of our confirmations state "Double Brokerage will result in non payment", does this actually hold any water if brought to a court of law? Thank you.
 
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I have this issue now. We used a carrier who unbeknownst to us brokered it out and have not paid the final carrier. The carrier we hired was factored so we paid the factoring company. 6+ months later this carrier and their collections company are claiming they're the ones who actually did the work and have not been paid by the carrier we hired. We informed the factoring company we paid and they said they're in default with them too.

Question is, if everyone has paid including the factoring company who purchased the carriers invoice, who is responsible? Doesn't the factoring company assume legal liability over the receivables by purchasing them, so since they accepted payment on behalf of the carrier (their client) are they not legally obligated to return the money/make sure the other carrier gets paid as their client has defaulted and fraudulently claimed to have performed the work ? In theory they are secured creditors for their client, no?
 
You are confusing obligations, and emotions are getting in the way.
1) You have no obligation to the final carrier. Your deal was not with him/her.
2) The factoring company has no obligation to the final carrier. Their deal was not with him/her.
3) The final carrier struck an accord with the carrier you selected to move the freight.
a) The freight was moved (presumably) without issue.
b) You paid the carrier invoice for moving the freight presumably with proof the job was indeed done.
c) Your job is done here. There is nothing more for you to do.

Without question this sucks for the final carrier, but you didn't make the deal with the devil. S/he did. S/he moved a load without recourse. Such is the unregulated Canadian brokerage world ... it's the wild f'ing west out there. Perhaps a more appropriate colloquialism is "It's literally highway robbery.". However, for better or for worse, double brokerage is not illegal.

On the other hand, not paying for freight moved, regardless if it is double or quadrillion brokered, is illegal, especially if it is premeditated. That is called fraud, and lands a convicted perpetrator in prison.

HOWEVER, IT IS HIGHLY UNLIKELY ANY POLICE FORCE IN CANADA WILL INVESTIGATE SUCH CRIMES.
(LEO's are far too busy making sure every Tim Hortons is safe from the common riff-raff)

Just keep in mind, in Canada, under the current judicial system, a person can get away with every crime imaginable, the first time.

The one exception, unless you are ultra-rich, is tax evasion. The government will spend untold millions to collect a couple hundred thousand from middle class and poverty stricken Canadians.
 
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HI Mike

I think the bigger issue in these circumstances is the end carrier ends up going to the shipper and receiver demanding payment - which in turn can cost a broker a good client very quickly
 
Yes,
Usually what happens here is the broker pays the transporting carrier in order to avoid their client being harassed. Even if, when the case is usually the non paying party took the load from Broker #1 at below market rate (a great deal) and sold it to the transporting carrier above market rate (a great deal).
It's easy to do that when you never plan on paying and you factor your invoices.

Here's a thought - be weary of 'new' carriers you are working with that factor.

Keep well,
Mike
 
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Thefriendlybroker1 said:
HI Mike

I think the bigger issue in these circumstances is the end carrier ends up going to the shipper and receiver demanding payment - which in turn can cost a broker a good client very quickly
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I think you have to ask yourself how good @broker really is if they didn't know, or at least suspect, their load would be double brokered. I would suggest, and I would most likely be correct, the original broker made absolutely no effort whatsoever to vet the carrier they gave the load to.
What makes me so certain I am correct? ... @broker came here looking for advice.

Here are two things that piss me off to no end ...
1) Load brokers that come to an internet forum inhabited by pseudonyms looking for advice on to run their business. They are simply after a free ride.
2) Carriers that think that freight from LoadLink and factored finances are the key to financial independence, and the only things they need to be a carrier.
It's a F'ing scam people !!!! ... Do any of you know of anyone that has made that work? Anyone ???
 
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I agree that the final carrier should've done a better job vetting who gave them the load, as well as paying attention to what name is/was indicated on the BOL because it was not either of their names. But I also think the factoring company who received payment on behalf of the carrier we contractually hired should be held liable here as well.

At the end of the day the carrier scammed us all, but unfortunately it's my client they're going after.

Does anyone know what legal recourse (if any) we have against the factoring company?
 
broker said:
I agree that the final carrier should've done a better job vetting who gave them the load, as well as paying attention to what name is/was indicated on the BOL because it was not either of their names. But I also think the factoring company who received payment on behalf of the carrier we contractually hired should be held liable here as well.

At the end of the day the carrier scammed us all, but unfortunately it's my client they're going after.

Does anyone know what legal recourse (if any) we have against the factoring company?
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Name names...
 
Hi Mike!
Hoping you are well and rocking it! Missing our semi-annual chats. :)

I 100% agree with you that it's frustrating to no end that if someone were cutting corners on vetting a supplier and then they cry when they get stung it's like, what did you think was going to happen. I had some pretty hard rules for adding new carriers and was victim of this kind of thing three times that I remember. In 15 years. Not a bad ratio, but can happen to the best of us.

Your #2 - spot on.

Keep well sir!
Mike
 
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broker said:
I agree that the final carrier should've done a better job vetting who gave them the load, as well as paying attention to what name is/was indicated on the BOL because it was not either of their names. But I also think the factoring company who received payment on behalf of the carrier we contractually hired should be held liable here as well.

At the end of the day the carrier scammed us all, but unfortunately it's my client they're going after.

Does anyone know what legal recourse (if any) we have against the factoring company?
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You should engage with a para legal experienced in transportation. As previously mentioned, there is nothing illegal going on here, just some bad business decisions. The final carrier who performed the work is entitled to payment, provided all of the paperwork (bill of Lading) lines up. There are numerous court cases where the final carrier, after making their case, were successful in getting payment. There are an equal number ( I assume) where they weren’t. The final carrier made his deal with the double broker, not the shipper nor the original broker. In spite of what many believe, there is nothing written in stone here. Again, speak to an experienced para legal, or a lawyer to get some current, factual information and base your decision on that.
 
There is no doubt it can happen to the best, but if you have taken all the precautions, done all of your reasonable due diligence, then for those 3 times in 15 years you can honestly say that was criminal enterprise.

However, anymore these pages are filled with this kind of thing day after day after day.

At one point in time in this industry if you called every load broker in North America an apple, and put them all in one barrel, you would have a few that were just plain rotten. A few more that were kind of bruised and ratty looking. Some that had a few blemishes, and the overwhelming majority that were good apples.
These days, it is the exact opposite, and for the few good apples that are left ... if they don't hurry up and get the "eff" out of that barrel, they will go rotten too.

Load brokerage is all but finished. Closed loops of a very limited number of brokers, in concert with a finite number of trustworthy carriers are the future.

(@loaders ... excellent advice)
 
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We typically have a pretty decent onboarding for new carriers, including checking their insurance, checking their mc/dot # and standings and we have them sign an agreement that states we don't allow for double brokering. Other than personally showing up at pickup and delivery to make sure it's the same company we hired not too sure what else could've been done, however I know that's a chance we take in the industry, but obviously we didn't see this one coming.

I didn't study law so I'm not sure, but the confusion is that as per the NOA, receipt of payment to the factoring company would constitute "valid discharge" of that debt, so payment has been received at all levels except for the final carrier. Should they not be going after the factoring company as their client appears to have factored under fraudulent pretenses? If we're legally responsible to pay any invoices from the non-paying party to the factoring company as they purchased "their right, title and interest in and to all present and future accounts", then they should also be legally responsible to return funds they received for their non-paying, fraudulent client, no?

Again, not a legal expert here but that doesn't sit right.
 
SCAM CHASER said:
In the last week, I have found 2 large carriers (B***n, Chal*******er) with logistics departments who did not vet who they gave their clients' valuable freight to, and sold the loads to................................Red and White
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I believe it. But they don't care about double brokerage either. Their only concern is to get the freight from point A to Point B, and as long as that happens, that's all that matters.

Broker A has a load worth $2,000, and sells it to Carrier B for $1,500. However, Carrier B sells it to Carrier C for $1,000, and Carrier C does the job without any issues.
Here's the only place that double brokerage matters ... Broker A is pissed off beyond belief at Carrier B because Carrier B got an extra $500 that could have been Broker A's if Broker A had worked just a little bit harder.
 
broker said:
We typically have a pretty decent onboarding for new carriers, including checking their insurance, checking their mc/dot # and standings and we have them sign an agreement that states we don't allow for double brokering. Other than personally showing up at pickup and delivery to make sure it's the same company we hired not too sure what else could've been done, however I know that's a chance we take in the industry, but obviously we didn't see this one coming.

I didn't study law so I'm not sure, but the confusion is that as per the NOA, receipt of payment to the factoring company would constitute "valid discharge" of that debt, so payment has been received at all levels except for the final carrier. Should they not be going after the factoring company as their client appears to have factored under fraudulent pretenses? If we're legally responsible to pay any invoices from the non-paying party to the factoring company as they purchased "their right, title and interest in and to all present and future accounts", then they should also be legally responsible to return funds they received for their non-paying, fraudulent client, no?

Again, not a legal expert here but that doesn't sit right.
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You're still mixing obligations and emotions.
Your obligation was to pay the invoice presented to you by the carrier you chose to do the work. The invoice was presented. You paid it. Your obligation is fulfilled. Stop here. You are done. Nothing else is your concern.

What happens between the final carrier and the carrier you paid is none of your business.
What happens between the final carrier and the shipper is none of your business.
What happens between the final carrier and the factoring company is none of your business.
Stop over thinking this.

Now, is any of this right and just ... absolutely not.
 
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Michael Ludwig said:
I believe it. But they don't care about double brokerage either. Their only concern is to get the freight from point A to Point B, and as long as that happens, that's all that matters.

Broker A has a load worth $2,000, and sells it to Carrier B for $1,500. However, Carrier B sells it to Carrier C for $1,000, and Carrier C does the job without any issues.
Here's the only place that double brokerage matters ... Broker A is pissed off beyond belief at Carrier B because Carrier B got an extra $500 that could have been Broker A's if Broker A had worked just a little bit harder.
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The legality of factoring companies advancing payment to brokers or carriers who broker freight has never been tested in Ontario courts. Using part of Michael Ludwig's example:
Broker A has a load worth $2,000, and sells it to Carrier B for $1,500. Carrier A assigns the invoice to ABC Factoring for $2000; however, $1500 of it is subject to the trust account provisions of the HTA, so only $500 legally could be sold to ABC Factoring. Could ABC be held liable for "knowingly" purchasing funds impressed with a trust?
 
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SCAM CHASER said:
The legality of factoring companies advancing payment to brokers or carriers who broker freight has never been tested in Ontario courts. Using part of Michael Ludwig's example:
Broker A has a load worth $2,000, and sells it to Carrier B for $1,500. Carrier A assigns the invoice to ABC Factoring for $2000; however, $1500 of it is subject to the trust account provisions of the HTA, so only $500 legally could be sold to ABC Factoring. Could ABC be held liable for "knowingly" purchasing funds impressed with a trust?
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OH SHIT ... You are BRILLIANT !!!!!
That appears to be technically correct and I would expect that a competent lawyer could indeed make a very valid case out of that theory.
The fly in the ointment will be that the trust account provisions in the HTA have never been enforced, however, that should not negate the validity of the provision.

So, that begs the question ... of what value is the factoring company to the transportation industry?
 
Ahhhh…..the trust account. Hmmm, hadn’t thought of the implications that it brings to this scenario. Again…..engage the services of an experienced para legal, such as Scam Chaser, it will be the best money you have ever spent!
 
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