What to do if a freight broker doesn't pay you?

If a broker doesn't pay and has violated their agreement, you may be able to sue them for the amount they owe you. In other situations, you can hire a collection agency to collect the money for you. The courts will look at the degree to which the shipper delegated his shipping responsibilities to the broker. If the broker effectively acted as the shipper's transportation department, it's very likely that a court will hold the shipper responsible for the unpaid freight bill.

Another option is to file a claim against a freight agent's bond through the Department of Transportation (DOT). Freight forwarders need bonds to meet DOT requirements aimed at preventing fraud and improving safety. They serve as a type of insurance intended to protect you in situations such as non-payment. What's worse, sometimes brokers go bankrupt and carriers are left waiting for the money, sometimes cents on every dollar, of what they're owed.

Even if the broker is still unwilling to pay the bill after your conversation, you'll have the information you need to determine your next steps. The carrier must ensure that their name appears on the bill of lading to help determine if the shipper is entitled to receive payment should a problem arise with the middleman. If slow broker payments are hurting your cash flow, working with a factoring company like Triumph Business Capital can help you break the cycle of pursuing broker payments. This can help you avoid a payment delay, as the broker will know what to expect on the bill.

In other words, it's quite possible that the bank or factoring company has withheld the money the broker owes you and that you have the right to get it back. You can establish your legal right to receive payment from the sender, unless you have agreed to request payment only from the intermediary. A broker is not responsible for the loss or damage of cargo and therefore most of the time does not have cargo insurance. The importance of this legal distinction is that a carrier transporting cargo can only request payment from the sender or recipient.

Shippers often use an abbreviated shipping document that incorporates as a reference the conditions of the uniform, long-form shipping document published by the National Automotive Cargo Traffic Association. At least one federal appeals court has ruled that a bank to which a broker has pledged its receivables has only a right of retention on the broker's share of the debt. When a carrier completes a shipment in good faith, they expect intermediaries to pay them the full amount when they said they would. Section 7 of the long form states that when the non-recourse provision on the front of the abbreviated version is signed, the shipper is not responsible for paying the freight.

Many carriers have been forced to pay for the cargoes they carried for an intermediary or freight forwarder and that were ruined or, in some exceptional cases, had no intention of paying from the start.

Lynette Cariño
Lynette Cariño

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