The Broker's Role in Freight Fraud

In this week’s episode of The FreightCaviar Podcast, we sat down with Mikhail Rasner, CEO & President of MiRUnited.  He reveals the surprising truth about private equity and its impact on freight, shares powerful strategies to combat freight fraud, and discusses the realities of training in brokerages. We're also joined by Gord Magill, who has written for Newsweek, The American Conservative, and more. He also hosts his own podcast, Voice of GO(r)D, where he covers topics ranging from trucking to politics.

The Growing Threat of Freight Fraud

We last spoke with Mikhail over a year ago about his entry into the world of logistics. Today, he’s back to share insights on the realities of training at brokerages and the industry’s most pressing issue: freight fraud.

Brokerage fraud, as he calls it, is taking a serious toll on the average driver's pocket–often leaving them out two weeks or even a full month’s worth of pay.

The situation has become so bad, according to Mikhail, that most drivers are one to two weeks away from going out of business. By the time they receive their payment, the double broker is nowhere to be found. 

Mikhail believes that we shouldn’t solely rely on laws that keep fraud out of the industry.

“We should not be looking to laws to keep brokerage fraud out. We are fifty percent responsible for preventing this fraud as much as any law."

The Role of Training in Combating Fraud

He also discusses the industry's evolution over the last decade and its connection to fighting freight fraud.

In Mikhail’s opinion, there’s been a significant deterioration in training. A decade ago, brokers prioritized providing a sales regimen. Despite the significant uptick in fraud in recent years, not much has changed.

“You’re not teaching the new agents any of the art on how to determine whether or not the person on the phone is possibly a double broker. At baseline, you can probably stop 70-75% of all brokerage fraud just by knowing the simplest of art-like trading when it comes to picking up the phone.”

The Impact of Private Equity on the Industry

Mikhail also exposed the surprising truth about private equity’s role in the industry.

Let’s break it down. It all started in 2021 when private equity companies saw an opportunity to enter the market and began investing in businesses, pouring money into the market.

“65% of money that entered the freight market came from private equity. And guess who the number one taker of that private equity was? Freight companies.”

Fast forward nearly three years, and the market is still in bad shape. Today, many of those companies, while still making money, are struggling to pay back the massive loans they’ve taken from private equity firms. Add mismanaged funds to the mix, and you've got a recipe for disaster: companies going out of business.

But it goes deeper than that.

“That VC money came in and the passion stopped. A lot of people also wanted to get out at that time. So these companies got bought out. And they merged sometimes.”

The Path Forward: Fighting Fraud Together

There’s a long way to go in the fight against fraud,  but if we work together, change is possible. However, real progress can only happen when brokers prioritize training and take appropriate steps to make the industry a better place.

Listen to the entire interview on Apple Podcasts, or Spotify, or watch it on our  YouTube Channel.