Trucking news: New legislation takes aim at practices of trucking brokers and freight forwarders

Legislation focused on providing increased regulatory oversight of brokers and freight forwarders in the trucking industry was introduced this week.

Entitled the “Motor Carrier Prevention Act,” the legislation aims to prevent brokers from abusing the system and defrauding motor carriers, according to its sponsors Senators Olympia J. Snowe (R-Maine) and Amy Klouchbar (D-Minn.).

According to the senators, the objective of this legislation is to prevent brokers from abusing the system and defrauding motor carriers, with a focus on small trucking companies and owner-operators, whom often lack the legal means to recoup losses incurred from fraudulent brokers.

“All too often motor vehicle operators fall victim to the deceitful behavior of fly-by-night brokers and freight forwarders who engage in preposterous criminal activities, such as financial fraud,” said Senator Snowe, a member of the Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security, which has jurisdiction over the legislation. “By updating current regulations, this legislation will give trucking operators peace of mind that they will, indeed, receive payment for a job well done.”

• increases the broker bond from $10,000 to $100,000 and applies the bonding requirement to freight forwarders;
 
• establishe stricter requirements for entities seeking broker/forwarder authority as well as specific guidelines from FMCSA’s review of authority applicants and applications;
 
• establishes strict penalties for violations including unlimited liability for freight charges for brokerage activities without a license or bond.  Authorizes private damages remedies against companies who violate FMCSA regulations;
 
• establish an annual registration requirement to renew broker/forwarder operating authority and generate revenue for FMCSA enforcement. Requires FMCSA to revoke operating authority that is not renewed annually;
 
• establish strict regulations on bond providers and the manner in which bonds are administered;
 
• clarify that motor carriers must have a brokers or forwarders license and bond to put freight on another carrier for compensation; and
 
• require separate registration numbers per authority, and that whatever authority is used in a transaction must be stated in writing.  

This legislation was soundly endorsed by the Owner-Operator Independent Drivers Association. OOIDA Executive Vice President Todd Spencer said in a statement that this law would put a stop to a system that allows rogue brokers and scam artists to operate unchecked.

““Too often, we’ve seen bad brokers get away with collecting payment from shippers but leaving truckers holding the bag,” said Spencer.