In a report to Congress regarding illegal broker activity in the trucking industry, the Federal Motor Carrier Safety Administration cited a lack of data and statutory authority.
Broker fraud has been a hot topic in recent years and is estimated to cost the trucking industry as much as $800 million annually. Truckers have called for FMCSA to take action, asking the agency to enforce existing broker transparency regulations. Considering that FMCSA has said that experienced truck drivers are the safest drivers, the argument is that keeping truckers in the industry by protecting them from broker fraud has a direct link to safety.
The July report to Congress, however, says that FMCSA lacks the necessary data to determine if double brokering affects safety.
“FMCSA is still assessing the relationship between motor carrier safety and incidence of unlawful brokerage,” the agency wrote. “While the agency has received multiple expressions of concern from stakeholders regarding fraud related to double brokering, it lacks data to quantify or confirm a safety impact.”
The Owner-Operator Independent Drivers Association, which represents small-business truckers, argues that broker fraud negatively affects safety.
“When you have a small carrier that is involved in one of these broker schemes, they’re not paid,” Doug Morris, OOIDA’s director of security operations, told Land Line Now. “That takes away from the bottom line, and when margins are razor thin, you have to make a decision – maybe I’ll try to make those tires last a little longer. These are safety issues, and it also creates a lot of stress on owner-operators who aren’t getting paid for a load.”
Jurisdictional hurdles
FMCSA’s report also focuses on its limitations in tackling broker issues. The agency notes that it “does not have the statutory authority to administratively adjudicate and assess civil penalties for violations … and that the FMCSA must seek an adjudication of civil penalties for such violations in the United States District Court.”
The process also limits the agency’s ability to enforce broker and household goods consumer protection regulations.
“The need to refer cases to the Department of Justice for the assessment of civil penalties for violations of commercial regulations creates a significant barrier to enforcement, including for unauthorized brokerage violations,” FMCSA wrote. “Without statutory authority to assess civil penalties administratively for violations of FMCSA’s commercial regulations, FMCSA’s ability to effectively enforce these regulations is significantly limited.”
Morris criticized the agency for lumping household goods into the report rather than just focusing on an “epidemic” problem in the trucking industry.
“Unfortunately for our members and truckers in general, there’s no one to report it to,” Morris said. “If you call law enforcement, they’re not trained to take this type of report. And, unfortunately, there is no agency that will take these reports.”
Morris added that the agency should at least make sure that brokers are legitimate and remove the ones who are not.
Broker transparency petition
In 2020, OOIDA petitioned FMCSA to start a rulemaking aimed at improving transparency in broker transactions.
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 carriers 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 allowing brokers to sidestep the rule.
FMCSA granted the petition in 2023 and is projected to issue a notice of proposed rulemaking in October. It is unclear what exactly the agency will propose. LL
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