No time to waste

The good news is that the Federal Motor Carrier Safety Administration said it plans to address broker problems in the trucking industry. The bad news is that as of press time in early September, the agency still hadn’t unveiled those plans.

Meanwhile, the Owner-Operator Independent Drivers Association said that instances of broker fraud were rampant amid an economic downturn. OOIDA has long pushed for FMCSA to address the lack of broker transparency.

“We believe the agency must publish a notice of proposed rulemaking and promote broker transparency as soon as possible,” OOIDA wrote in an Aug. 17 letter to FMCSA. “Updating these regulations will protect carriers from unlawful brokers and help protect the public by providing a marketplace in which each party behaves in a clear and transparent manner.”

FMCSA announced in March that it would release a notice of proposed rulemaking to address the issue. Although the U.S. Department of Transportation’s Spring 2023 Unified Regulatory Agenda projected the notice would be unveiled in June, the industry was still waiting in September for it to be published in the Federal Register.

OOIDA told the agency that there is no more time to waste.

“Since the agency’s rulemaking announcement in March, instances of rampant broker abuse and fraud persist,” OOIDA wrote. “Motor carriers are victimized through unpaid claims, unpaid loads, double-brokered loads or load-phishing schemes on a daily basis. If broker transparency regulations and enforcement can be improved, then disputes between motor carriers and sureties will be reduced, there will be less need for litigation, less need for FMCSA intervention and the economic health of the broker/motor carrier component of the transportation industry will be stronger.”

Petition

OOIDA petitioned FMCSA in 2020 to begin the rulemaking process for more transparency in trucking transactions with brokers.

OOIDA’s petition asked the agency:

• To require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed
• To explicitly prohibit brokers from including any provision that requires a carrier to waive their rights to access the transaction records

Regulation CFR 371.3 already requires that brokers keep records of each transaction with a carrier and that each party to the transaction has a right to view these records. OOIDA asked the agency to begin enforcing that regulation and to eliminate any loopholes that allowed brokers to sidestep the rule. The Small Business in Transportation Coalition also petitioned the agency.

FMCSA granted the petition in March, but it is still unknown what the agency will propose to fix the problem.

Persistence

In the meantime, OOIDA has remained vigilant in its efforts to prompt FMCSA to take action. Since its petition in May 2020, OOIDA wrote follow-up letters in September 2022 and this past March.

OOIDA’s latest plea for change reused portions of its 2022 letter for emphasis.

“Listening to our members, we know that improving broker transparency remains a top priority for small-business motor carriers,” OOIDA wrote. “While their concerns may intensify during more challenging economic times, there is constant frustration caused by brokers skirting federal transparency requirements without recourse. As conditions in the trucking industry change, and more carriers face challenges, we can assure you that FMCSA and others in the federal government will continue to hear about the lack of broker transparency from small-business truckers.”

Improving broker transparency will improve highway safety and driver retention, the Association wrote.

“OOIDA urges FMCSA to promulgate the transparency in property carrier broker transactions notice of proposed rulemaking without further delay.”

Investigating

Lawmakers also have asked the U.S. Department of Transportation to do more to stop broker fraud.

Sen. Mike Braun, R-Ind., Rep. Mike Bost, R-Ill., and several other lawmakers wrote to the U.S. Department of Transportation’s Office of Inspector General on May 22 to address the problems of broker fraud and other supply chain thefts.

The DOT’s Office of Inspector General responded to the letter, saying it is committed to investigating double-brokering among freight carriers.

In an Aug. 22 letter to Braun, Bost and the other lawmakers, the Office of Inspector General said it would continue to collaborate with FMCSA to investigate double brokering and other fraud schemes.

“Recognizing the importance of preventing and detecting fraud, waste and abuse in our transportation system, we will continue to partner with FMCSA and the Department of Justice to investigate the most egregious allegations of household goods moving and double-brokering fraud, in addition to our primary focus on cases that align with OIG’s top investigative priorities,” DOT Inspector General Eric Soskin wrote in the response letter.

Although Soskin said his office is committed to combating the problem, OOIDA said that more needs to be done.

“FMCSA is moving in the right direction on finally ensuring brokers comply with federal transparency requirements, but it doesn’t seem like anyone at DOT has the tools, resources or motivation to tackle what has become rampant broker fraud,” said Collin Long, OOIDA’s director of government affairs.

The letter from the lawmakers said about 3,500 supply chain schemes are conducted each year and suggested the creation of a task force.

“The harm from such crimes also falls upon shippers, financial services, manufacturers, wholesalers, retailers and consumers,” the lawmakers wrote. “The harmful economic ripples cause the cost of doing business to increase, as well as the price retailers and consumers pay for replacement products and other uncompensated costs.”

OIG’s response did not address the request for the creation of a task force. LL