Freight Fraud, Double Brokering, and Protecting Your Carrier Authority with Dale Prax

There are 326ish thousand carriers out there. Less than 1/10th of 1% have bad information within FMCSA's database, like a telephone number, 8675309 or 11111. Now if you look on the broker side, because they've never been vetted, 29.3% have bad information within FMCSA's database. Hello and welcome on location from the Mid American Truck show. Matt's we are here today, the largest annual gathering in the trucking industry where carriers, brokers and industry leaders come together to connect, learn and find real solutions. We're joined by Dale Prax, founder of freight validate and strategic fraud advisor at truck Stop. Dale is on the front lines fighting freight fraud, helping carriers, brokers, shippers, identify threats, improve the verification process and protect their business. With a background in leadership from the Marine corps and a deep focus on integrity and accountability, Dale brings a practical nonsense perspective to one of the fastest growing risks in the industry. Today we're going to talk about freight fraud, protecting your authority and what's really breaking down in the system and how carriers can take control with better processes and awareness. Welcome, Dale. We're glad to have you, man. I'm glad to be here. I love the love, you know, I love drivestock. So it's glad to be here with you guys. All right, so question number one for you, sir. So I hear you're a father of seven, you have grandchildren, you have a couple businesses you're running, you're in the military, everything else, you have a very busy life. So I'm curious, do you have any hobbies? What do you do in your spare time, if you have any? I ride my motorcycle on the beach, near the beach, whenever I'm not doing this or I'm spending time with my grandkids or my wife, I'm on a motorcycle somewhere. That's great. So for listeners meeting you for the first time, how do you describe what you do in the trucking industry? Well, I've been in this game for about, I'm going in my 34th year. I spent Marine Corps career about 20 years. Last six years was in the reserve. So I started as a freight forwarder, then I became a broker. It was funny when I was with an air freight company, they talked about moving freight by air, right? So I said, we should put this on a truck. We can make a lot more money, right? And I'll never forget I was in Minneapolis, Minnesota. Young kid, you know, just came out of the military, didn't know Anything really about trucking other than my dad was an owner operator, but the air freight side. And we had £4,000 going from Minneapolis to Chicago and they said to put on American Airlines, which American it was. It was actually Northwest Orient at that time. And I said we could make so much more money. It's a dollar a pound on Northwest Air. That's 4,500 bucks. So I got a hold of Freight Masters and move that thing down there for $300. I'm going. There's profit in saying the owner of the company that time said, that doesn't make any sense. It'll never happen. It's the last time that'll ever happen. I started my first expedited trucking company two weeks later. So. So fast forward today. I was planning on retiring three years ago, so. But there's never been a vetting platform, a real push for vetting carriers, drivers and brokers. Since 2001 or so, when one company came about, there's really been nothing. And as a broker, I developed my own platform called Freight Validate to validate carriers that we're using and to make sure that we could detect and prevent fraud. When I was going to retire from my brokerage, friends of mine said, why don't you make that available to us because it obviously works for your company. And so that's kind of where I'm at now and transition to more of an advocacy. I've made some good friends at the Federal Motor Carrier Safety Administration. They listened to the industry for the first time in a long time. I think we got some good leadership there. I think everybody will agree. It used to be listening to the big trade organizations and while they're important, we're seeing more and more of Secretary Duffy and administrator boroughs getting their information from Twitter. I mean, I talked to the director of registration today and he told me that he gets emails almost daily from Secretary Duffy with screenshots off Twitter, says check into this carrier. Which is kind of. That's how things are supposed to be. Well, yeah. Was there any specific moment that you can recall off the top of your head that made you realize that fraud was actually a serious problem in the freight industry? Not a specific reason, but it just all accumulated over time, especially after Covid, because I think Covid was really the real start to it. People say that fraud's grown tremendously over the last five years. I think that telling people about fraud has increased tremendously. It used to be that brokers are afraid to tell somebody that they were double brokered or a load was stolen because they'll lose their customer. I don't trust you. You must not pick the right people. So I think the problem's been there, but it's really been on more podcasts, and those kind of things have really evolved more. So the awareness has come out more. But again, the fraud has increased a lot, too, because what happened during after Covid is we couldn't hire anybody because we were on a government shutdown, right? So. So you have people sitting at home playing video games and, you know, watching scooby doo for $60,000 a year. And we're hiring people from other countries, right, for very cheap labor. And so they started learning the craft really well. There's some brokers from Ukraine and Colombia that were maybe better brokers than I was because we trained them so well and they're such hard workers. What happened, though, is we started bringing people back to work. Now those people started losing their jobs, but then they realized how easy it is to get an operating authority. $300 on a stolen visa gift card. Somebody give me a VOC 3. I get somebody to give me a surety bond. I'm in business now. I'm not making 500 bucks a month that that broker is giving me. I'm making 20 grand a month because I own this company now. The word got out. Now all of a sudden, we're giving out 6,000 MC numbers a month to people that shouldn't have them. So integrity, accountability is a common refrain for you, Something you focus on. How has your experience in the Marine Corps really informed or drive how you approach this issue and what's happening in the industry? Well, because we're at war, these bad guys are the enemy to our trucking industry. They're an enemy to our good truck drivers. It's really sad that we hear all these stories about this bad truck driver did this, the bad truck driver did this. We don't see any press about this great truck driver who was the first responder before the first responders got there. We never hear those stories, and that's because we got so many of those enemies taking that away from them. They deserve that. We need to put that back on the front burner. And as far as integrity, I spent my last six years or so on the inspector general team. I worked for a commanding general. My job is to go out and inspect things, find out problems, and fix that. And you had to be. You had to be on it, and you had to. Some of your friends in the Marine Corps, you had to say, dude, you're going to jail or something. We had to point those things out. So I wasn't afraid to do that to my friends. I'm surely not afraid to do somebody that's ruining our community. Yeah, yeah, absolutely. So is there a shift that happens when it comes to fraud or theft? Or is this still largely falling on carriers to protect themselves? That's a great question because a lot of times we've been saying that it's the carrier's fault. We've been blaming carriers for 26 years. Carriers are the most vetted of anybody. Have you ever heard of a broker getting a new entrant Audit doesn't happen. There's not a requirement for it. We don't hear about roadside inspections. Brokers don't get any of that. A broker could be in business and I was a broker, so I'm not saying anything bad about brokers. Yeah, but they can spend 20 years in this thing and never have been seen by anybody from the federal government. Or do they get vetted by any vetting company? Because owner operators generally have enough things to pay for. They can't afford another vetting company to vet the brokers. And to prove that that's right is when I first started Freight validated, I went to and started looking at US government details. There are 326ish thousand carriers out there. Less than 1/10 of 1% have bad information with an FMCSA database. Like a telephone number. 8675309. Right. Or 11111. Now, if you look on the broker side, because they've never been vetted, 29.3% have bad information within FMCSA's database. No idea. You know, there are 250 companies that have the email address wtf fmcsa@aol.com. well, that's kind of weird, right? Yeah. Wow. In terms of the fraud, where's the biggest breakdown? Is it the people, the processes, the technology? I mean, where is the breakout really happening? When it comes to the problem, everybody's at fault. I mean, from the shipper who is not checking the credentials of the drivers coming in because they'll say, well, you know, my son's got a basketball game, I'm loading this truck. Anyway, no matter what the broker told, or checking English language proficiency or, you know, just drilling down the shipper, the driver has a responsibility too. You know, they have to ask questions. They've been drilled with questions for 25 years. Well, you have the ability and the responsibility to start asking questions yourself. The first question I Would ask if I was an owner, robber or a driver at a shipper, who did you broker this load to? Because if it doesn't match who the broker gave my load to, then we have a problem here. This thing being double brokered. Ask some serious questions. They should know what's the pieces and weight without looking and make sure your name is on the bill of lading. The drivers have a lot of responsibility and ability to do that. And of course, brokers have a blame too because they're given the tools. We have plenty of tools for them to use, but sometimes they side seven because they're in a hurry. And the one thing I can say about the brokerage industry, they have the biggest gambling problem of anybody. They're going to go all in on that load. And if it doesn't, I lost the hand. They're going to go all in. Yeah, absolutely. I think I know what your answer is going to be here. But what is really the most common way that carriers are maybe getting caught with fraud? One of the most common lately is the buying and selling of MC numbers. That's become a big issue. We got a truck stop back in November and we sent in proposed rulemaking to really clarify and prohibit buying and selling of MC numbers. Well, the agency listened to that rulemaking we sent in in November and Last Friday, on Friday 13th you saw a big bulletin that came off the federal motor carry safety administration is do not sell your well. Yep. That's where industry and agency needs to work together. And we're starting to see that happen with this administration. They're listening to truck stop and we're listening to the ot. Yeah. So if we could drill down and get practical. The things that really hit home for drivers. So you said drivers don't ask enough questions at the dock. What kinds of questions should they be asking before they start any other process? Yeah, they should ask information on the bill of lading. The shepherd should be able to know everything about that load. If something doesn't match or if your brake confirmation from your dispatcher says this is going to a place in Idaho and your bill of lading, so it's going to a warehouse in California, there's something wrong, ask them why that's happening. Don't just take a load from somebody because they're offering you a great rate. You should check a truck stop and there's plenty of place to look. What's this load should be paying? If somebody's offering me $6,000 to go from Miami to Atlanta, you know, a truck driver might Say, wow, new tires. Well, the reality is no paycheck. Yeah. Because you're not going to get paid. Yep, absolutely. So what happens if someone at the dock or the specific person you're talking to can't answer the questions for you? Then what do you do? That's a red flag. You call the broker, you call your dispatcher, you call the ownership in your company, the safety folks there, and say, hey, I've run into a red flag here. I need you to investigate this thing because I'm telling you now, I'm telling you this a problem. So you have to depend on people that put you in that. Behind that wheel to back you up. Yeah. And they better back you up. Yeah, absolutely. Yeah. From a little bit, from the broker's lens here, is there anything a broker could or should be doing that would help the process and make things easier for carriers to ensure that. Yes, what I'm hauling is actually legit? I think the biggest thing a broker can do is have the same relationship with the carrier as they do with their customer. Because a carrier is your customer. You treat him like that. He's got everything you have in that load is on him. We've got to get rid of the days where we fight about paying a carrier or a driver detention time or allowing them to use the restroom. These are people that are the backbone of everything you do. I mean, we can't have a world where there's a broker without a motor carrier. There's just no such thing. So I think the biggest thing we can do is start treating people like people, treat them like customers. The driver's the backbone, and I'm tired of people using that as a cliche and they're writing on their website, but then they won't pay him attention. They're not the backbone if you treat them like that. I love that. Yep, agreed. And you think it's time for lightning round? I'll. I'll shoot the first lightning round question, then I'll pass it over. Go for it. All right, this is my go to question, and I hope you haven't listened to any other podcasts because I don't want you prepped for this. All right, if an animal was to jump behind the wheel with one of these big trucks and start driving around, what animal do you think would be the best driver? It would have to be a pretty big cabin because I'm going to say an elephant. And why do I say that? Because an elephant has the best memory. Right. Let's remember to do your pre trip in the morning. Let's remember to look at the bill of lading. Let's remember to vet the guy. Let's remember that this is a truck. Let's remember to watch out and get out and look. Let's remember to use your mirrors. An elephant will do that. So that's why I say love it. Great answer, great answer. Yes, the freight industry would look meaningfully better if or when. What? Two things. If the FMCSA enforces all the regulations on the floor right now, we don't need to make a bunch of new ones. Enforce the ones that are there. We'll be way better off. The second thing is I've been preaching this now for about three years. I think the FMCSA's middle name is safety. Let them be in charge of safety. Transportation Security Administration is security. That's who should issue operating authorities. You should have a transportation workers identification credential as a prerequisite for getting your operating authority. And that way you're in person, you're putting your fingerprints down, you're doing a background check. You're not going to be in Pakistan saying you're in Pittsburgh. And so that's what you get the authority. Yeah. What's one red flag drivers should never ignore even if it costs them the load. You're getting this load from my sister company. If somebody's trying to give you a load from somebody else, it's not them. Or telling you to divert to a warehouse, it's not worth it. Or offering way too much money. I just have a bunch of that offer too much money. But I say anytime that that guy's not truthful to you, don't give him a second chance. All right, last one. Who is someone in the trucking industry that if you had to take advice from. Listen to your go to person for advice in this industry. Who's that person? I would say, and I, I don't want to talk specific, it was fraud. It'd be one person if it was something else to be somebody else. But an all around for. If I were an owner, operator, somebody I want to listen to today and follow today, it would be Adam Wingfield. Adam Wingfield is a. One of the smartest guys that I've met as far as teaching a driver that hey, just, just because you own a truck doesn't mean you're a businessman. And so if you listen to a guy like Adam Wingfield, you're going to get that loud and clear. Yeah. And he's very good about it. Damn, I thought it was going to be Todd and I, but I just want to do that because they say you bought me. It's that integrity part. I can have my check back twice. His Adam has been mentioned and we're actually having him on the podcast tomorrow. I said who's your best podcast? Joe yeah. Dale, it has been an absolute honor to get to know you, to work with you, to spend time with you, to learn from you. The amount of knowledge that I've gained and just knowing you for the months we have, it's been an honor and it's been great to have you on the show today. Thank you for being here and wish you the best of luck. Yeah. Thank you guys again. I love Truck Stop. Absolutely. If today's episode helped you think differently about your operation, share it with someone in your network who needs to hear it. And if you're looking for tools to help keep keep your truck rolling from finding quality loads getting paid quicker, well, truckstop.com is here to help. Go visit truckstop.com to explore the load board rate insights and risk management solutions built specifically for carriers and brokers. Thanks for listening to us at behind the Freight. Until next time, keep the wheels turning and the bad loads burning.