When it's broke, fix it!

By William J. Augello -- Logistics Management, 10/1/2000

Sen. John F. Kerry (D-Mass.) and Rep. Zoe Lofgren (D-Calif.) have introduced a bill that could solve many of the problems that have arisen from the deregulation of transportation industries during the past decade or two. The "Movers Responsibility Act" (S. 2369 and H.R. 5060) would repeal the current pre-emption by federal law of the state laws that affect loss-and-damage claims filed against interstate common carriers. Although the justification statement for this bill relates to a claim against a moving company (thus the title), the bill as written would affect all common carriers.

The object of this legislation is to permit claimants to seek relief under state consumer-fraud and deceptive-practices laws, which generally provide for an award of treble damages and attorneys' fees to successful claimants. There certainly is justification for this measure in light of the numerous complaints received from household-goods shippers concerning movers' charges as well as their practices in handling loss-and-damage claims.

The problem with this bill, I believe, is that it does not relate to rate disputes or carriers' deceptive advertising practices. A broadening of this bill to include those areas is needed to close the void that was created in the Federal Trade Commission Act when it excluded common carriers from FTC jurisdiction in order to avoid a conflict with the jurisdictions of the Interstate Commerce Commission (ICC) and Civil Aeronautics Board (CAB). When those agencies were eliminated, however, Congress only gave the Department of Transportation (DOT) jurisdiction over airlines' deceptive advertising practices. No specific jurisdiction was given to the DOT over other common carriers' deceptive practices.

Adoption of remedial legislation would curtail some of the deceptive practices that exist in the transportation industry today, such as the illusory "money-back ground guarantee" now being offered by some package-express carriers. It would also curtail the dilatory treatment of overcharge, duplicate-payment, and loss-and-damage claims by many carriers, which forces claimants to either sue the carrier or write their claims off as uncollectable.

The National Association of Attorneys General is also petitioning Congress to allow states to take action against airlines that use deceptive practices in advertising their services. The association's president, Maine Attorney General Andrew Ketterer, wrote to congressional leaders that "... this industry should be held to a standard of truthful advertising and honest dealings with its customers."

That is an objective that should apply to freight carriers and household-goods carriers as well. Carrier organizations will naturally raise objections on the ground that it would upset uniformity of law. The more important objective, however, is to prevent deception and bad faith in claims negotiations. This bill deserves the shipping community's attention because it would fill the current void in enforcement of consumer-protection laws in the transportation industry. The bill should be modified, however, to cover all types of disputes and thus induce more honest dealings by all freight and household-goods carriers in their claims and advertising practices.

William J. Augello is an adjunct professor at the University of Arizona in Tucson and also serves as executive director of the Transportation Consumer Protection Council Inc. (TCPC). He may be reached in Tucson at (520) 531-0203, at TCPC's headquarters in Huntington, N.Y., at (631) 549-8984, or via e-mail at williamaugello@worldnet.att.net.