Senate Bill Targets Broker Fraud

[OntarioVanMan]

Thomas Gallagher | Jun 16, 2010 5:06PM GMT
The Journal of Commerce Online - News Story

Independent truckers, brokerage industry back bill raising bond requirement

A bipartisan Senate bill aimed at defending businesses from fraudulent freight brokering schemes is being backed by independent truckers and freight brokers.

The Motor Carrier Protection Act of 2010 would help the Department of Transportation crack down on fraud affecting both groups, industry officials said.

The law would prevent “bad brokers” from not paying truckers, said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association.

It would also prevent carriers from brokering freight without the proper authority, said Robert Voltmann, president and CEO of the Transportation Intermediaries Association.

Significantly, the bill would raise the federally mandated broker bond from $10,000 to $100,000 and establish significant penalties for violations of broker regulations.

Sen. Olympia Snowe, R-Maine, and Sen. Amy Kobuchar, D-Minn., introduced the bill last week. TIA and OOIDA are working to get similar legislation in the House.

“This isn’t about re-regulating brokers and carriers, it’s about fighting creeps, about fighting fraud,” said Voltmann, who says brokerage scams are increasing.

Beyond raising the broker bond, the bill would establish strict guidelines for companies that provide brokers with surety bonds and on how they administer bonds.

Trucking companies would be required to have a broker or freight forwarder license and bond in addition to their motor carrier operating authority to broker freight.

Brokers and freight forwarders would have to renew their operating authority annually with the DOT’s Federal Motor Carrier Safety Administration.

Revenue from operating authority fees would help FMCSA enforce the rules.

 

[Jefferson3000]

Thomas Gallagher | Jun 16, 2010 5:06PM GMT
The Journal of Commerce Online - News Story

Independent truckers, brokerage industry back bill raising bond requirement

A bipartisan Senate bill aimed at defending businesses from fraudulent freight brokering schemes is being backed by independent truckers and freight brokers.

The Motor Carrier Protection Act of 2010 would help the Department of Transportation crack down on fraud affecting both groups, industry officials said.

The law would prevent “bad brokers” from not paying truckers, said Todd Spencer, executive vice president of the Owner-Operator Independent Drivers Association.

It would also prevent carriers from brokering freight without the proper authority, said Robert Voltmann, president and CEO of the Transportation Intermediaries Association.

Significantly, the bill would raise the federally mandated broker bond from $10,000 to $100,000 and establish significant penalties for violations of broker regulations.

Sen. Olympia Snowe, R-Maine, and Sen. Amy Kobuchar, D-Minn., introduced the bill last week. TIA and OOIDA are working to get similar legislation in the House.

“This isn’t about re-regulating brokers and carriers, it’s about fighting creeps, about fighting fraud,” said Voltmann, who says brokerage scams are increasing.

Beyond raising the broker bond, the bill would establish strict guidelines for companies that provide brokers with surety bonds and on how they administer bonds.

Trucking companies would be required to have a broker or freight forwarder license and bond in addition to their motor carrier operating authority to broker freight.

Brokers and freight forwarders would have to renew their operating authority annually with the DOT’s Federal Motor Carrier Safety Administration.

Revenue from operating authority fees would help FMCSA enforce the rules.

Talk about sticking it to the little guy. $100k? Sheesh.

Next question: How much for renewal each year? $300 to set it up. Do they want another $300 each year? The big clearing houses don't mind. They don't want competition.

How about if an owner operator's base plate renewal jumped 10 times the normal amount? That's what this is.

 

[Turtle]

"Revenue from operating authority fees would help FMCSA enforce the rules."

That pretty much sums it up.

 

[cheri1122]

If the FMCSA enforced the current laws against fraud, the fines against the scam artists would pay for enforcement, without charging the honest folks.
Just another money grab by the government that's incompetent to budget and/or incapable of fiscal sanity.
There will NEVER be enough money coming in to satisfy them!

 

[Jefferson3000]

If the FMCSA enforced the current laws against fraud, the fines against the scam artists would pay for enforcement, without charging the honest folks.
Just another money grab by the government that's incompetent to budget and/or incapable of fiscal sanity.
There will NEVER be enough money coming in to satisfy them!

You hit the nail on the head. It's a reactive solution to the problem. Rather than getting criminals off the street, let's mandate special burglar bars for the whole neighborhood.

 

[Vinnie T]

This is the trucking industry..who has that kind of money laying around?

With this new bill, CSA 2010, reclassification of owner operators, potential tax on owner operators etc etc etc. Talk about causing the prices of goods and services to skyrocket!!


Over Regulation!

 

[OntarioVanMan]

This is the trucking industry..who has that kind of money laying around?

With this new bill, CSA 2010, reclassification of owner operators, potential tax on owner operators etc etc etc. Talk about causing the prices of goods and services to skyrocket!!


Over Regulation!

Kind of ironic....over regulated in a de-regulated business...

 

[Scuba]

Talk about sticking it to the little guy. $100k? Sheesh.

Next question: How much for renewal each year? $300 to set it up. Do they want another $300 each year? The big clearing houses don't mind. They don't want competition.

How about if an owner operator's base plate renewal jumped 10 times the normal amount? That's what this is.

So many of those "little guys" have ripped off drivers for years if you can't pony up then maybe you shouldn't be in the business in the first place. $10,000.00 only a few drivers get paid and it the broker aka bottom feeder owes too many drivers then they only get pennies on the dollar. I see it all the time a broker gets a good price for a load and screws drivers because they know that some idiot will take that load for nothing saying well it will get me to a better location or it covered my fuel. No way should a broker make more off of a load then the guy doing the work. I for one hate brokers and believe there is a special place in he*l just for them.

 

[Jefferson3000]

So many of those "little guys" have ripped off drivers for years if you can't pony up then maybe you shouldn't be in the business in the first place. $10,000.00 only a few drivers get paid and it the broker aka bottom feeder owes too many drivers then they only get pennies on the dollar. I see it all the time a broker gets a good price for a load and screws drivers because they know that some idiot will take that load for nothing saying well it will get me to a better location or it covered my fuel. No way should a broker make more off of a load then the guy doing the work. I for one hate brokers and believe there is a special place in he*l just for them.

If that unsaid driver is overly worried about getting screwed, then maybe they shouldn't be driving. Small businesses are the backbone of this country. If the FMCSA won't prosecute fraudulent brokers now, they won't when the fees are raised. This is a big government, reactionary solution to the problem. By that line of thinking, let's up the CDL renewal to $1000, let's multiply your base plate fee by 10, place a 40% fee on commercial insurance, and a 10% federal tax on all commercial truck sales. This way, only the safe and SERIOUS owner ops will be on the road

Tell me, how does deep pockets make one a safe, legitimate brokerage, much less a legitimate carrier or owner op?

 

[Scuba]

“Unsaid driver” wow are you out of touch while I didn’t name a driver by name unless you live under a rock you would know that thousands of drivers have been ripped off over the years by scumbag brokers. And to equate higher driver’s lic fee would make someone a better driver is also foolish. The higher bond will mean if the dirt bag broker takes the money that a driver earned the driver is more likely to get at least some if not all of his money. Heck if a broker has $60,000 out there in loads and folds up his bond only covers $10,000 that = $50,000 in unpaid money to the drivers that did their job. Now with $60,000out there in loads if they take the money and run every driver gets paid. Plain and simple if it wasn’t for the broker scams this law wouldn’t be needed but there are thieves everywhere.

 

[greg334]

Kind of ironic....over regulated in a de-regulated business...

Just maybe we need to return back to 1979 style regulations.

The last time I looked, some things for the owner/driver has improved while other things haven't. We still log, we still have DOT physicals and inspections so... what deregulation?

 

[OntarioVanMan]

While I don't run brokered loads directly....I think it is a good idea....Just like a bank that has to belly up with FDIC insurance...to protect the consumer....unfortunately this has/will hurt a select few of our members that are dabbling in brokered loads....Just because brokering was always done a certain way...as in another piece of the pie taken doesn't mean the rules can not change...I'd prefer less brokers and better pay.

 

[Jefferson3000]

“Unsaid driver” wow are you out of touch while I didn’t name a driver by name unless you live under a rock you would know that thousands of drivers have been ripped off over the years by scumbag brokers. And to equate higher driver’s lic fee would make someone a better driver is also foolish. The higher bond will mean if the dirt bag broker takes the money that a driver earned the driver is more likely to get at least some if not all of his money. Heck if a broker has $60,000 out there in loads and folds up his bond only covers $10,000 that = $50,000 in unpaid money to the drivers that did their job. Now with $60,000out there in loads if they take the money and run every driver gets paid. Plain and simple if it wasn’t for the broker scams this law wouldn’t be needed but there are thieves everywhere.

Scuba,

This bill is not even aimed at "scumbag" brokers. We've come across people who are in debt because they can't handle their business and are therefore poor payers. We don't do business with them. If a company does business with a bad broker, in spite of their bad credit rating, that IS THEIR FAULT. I am not in any way out of touch. I deal with brokers all day. If my company gets burned, that's my fault. That is no reason to punish small business across the U.S., with fines they cannot support.

Yes, there are brokers who don't pay their bills. This bill has nothing to do with that. This is supposed to be aimed at "fraudulent" brokers. Organized crime has been making a steady in-road into freight brokering the last few years. Lots of scams going on. A fraud would be someone who pretends to be something that they are not.

Brokers need carriers. Carriers need drivers. Drivers need the carrier, who needs the broker. This is a system in which we all need each other at some point. Even the largest of carrier, who may boast having lots of shippers, still move a lot of freight from brokers and forwarders. FDCC does, as does Panther and the rest.

The only thing this will bring is the further demise of legitimate small businesses. And yes, I do hold to the comparison of raised fees on truck drivers. If you could no longer make a living because of the increase of taxes and fees, you would leave the industry. That would be the demise of even more businesses.

 

[Jefferson3000]

While I don't run brokered loads directly....I think it is a good idea....Just like a bank that has to belly up with FDIC insurance...to protect the consumer....unfortunately this has/will hurt a select few of our members that are dabbling in brokered loads....Just because brokering was always done a certain way...as in another piece of the pie taken doesn't mean the rules can not change...I'd prefer less brokers and better pay.

It's a nice thought. If the fees go up, I fear it will ultimately be taken out of the driver's pay. Not good, huh?

 

[OntarioVanMan]

It's a nice thought. If the fees go up, I fear it will ultimately be taken out of the driver's pay. Not good, huh?

I can see your side as well Jefferson....and the end user usually gets stuck with the costs of someone elses cost of doing business.....sh!t flows down hill...and unfortunately unless someone can defy gravity it'll always be that way...

 

[greg334]

Jeff,
You implying that the great purple people eater depends on brokers for their work??

 

[transporter]

brokered loads are here to stay. they serve a major service to both carriers and shippers. furthermore most every carrier sometimes brokers out their freight to other carriers.
raising bond to 100,000 dollars is little more than a feel good gesture. it only good for protecting against week brokers. those who are going through hard times. It doesnt help much against intentional theft of services from carriers by by brokers. Fraugulent brokers move alot of loads in short period that they quickly pass the $100,000 mark. so crooks still will be out there. carriers should do their job and check credit rating and history of broker thus protecting them from fly by night brokers and week brokers.
this 100,000 dollars however will hurt small brokers but the politicians dont care about this.

 

[Scuba]

Well I for one don't care if it hurts a weak broker I think my feelings are well known about brokers. Yes it won't end all of the fraud but at least the drivers may see some relief where at a $10,000.00 bond most never get anything when the brokers goes out. Funny how some say well they aren't all scumbags that go out some are just not good when it comes to handling the money. Well this may get rid of some of those that are just not good with money. If your not good with your money i am fine with that you are only going to hurt yourself but in business if you cant handle your money you hurt others and in some cases you can put another guy out of business. I don't see brokers worrying about putting a trucker out of business when they hold up on paying the freight bill so this trucker isn't going to lose any sleep over a broker going under if they can't get the bond.

 

[transporter]

business is about building relationships. most all the broker problems are caused by carriers not getting to know the broker before doing business with them. credit scores, reputation, years in business. instead some carriers jump at first broker load offered them.
by increasing bond it will limit the number brokers out there. this can actually hurt you.
Some brokers are actually very small time. just one or 2 shippers they pay good and fast but certantly cant afford the $100,000 premiums.
a good start would be to start putting fraugulant brokers in prison for 10 years. and exucuting people who write computer viruses.

 

[Jefferson3000]

Jeff,
You implying that the great purple people eater depends on brokers for their work??

I highly doubt that the "purple people eater" depends on anyone for business. But there are forwarders and brokerages who do depend on the purple one. Did you ever do a Kuehne and Nagel load? Ryder? NLMI? We haven't really worked with them, but I know that almost every load we've ever booked from a certain black kitty belonged to a 3rd party. Just browsed a few records and names like Airways Freight, UPS, Exhibitus, Estes Express, Transgroup, and Central Transport came up.

There is a whole lot of mis-information floating around about what a broker is, and what they really do. A lot of anti-broker sentiment is based more on truckstop gossip than actual experiences. There has developed a belief that moving brokered freight is a sign that a company somehow does not have an adequate customer base. As you can see from some of the names above, there is plenty of freight that is arranged by a third party, even among the biggest names in the biz.

Not only do all of the advertisers on here move brokered freight, almost all of the advertising carriers on this website are brokers as well. It's the only feasible way of providing adequate coverage for your customer. Unfortunately, the image of a broker remains this mysterious guy in a sleazy part of town, taking advantage of truckers, by lying, cheating and stealing.

But hey, no one needs to believe what I say.