FMCSA to Fight Broker Fraud
When it comes to the Federal Motor Carrier Safety Administration (FMCSA) enforcing safety, usually one thinks of safety from collisions, but could it also include safety from being scammed by bad faith actors? We remember writing an article three years ago where the Transportation Intermediaries Association said this falls out of the purview of the FMCSA, but it seems the FMCSA has made the decision that it is going to start enforcing against brokers who do not pay for completed deliveries.
Details
Current rules require a broker or freight forwarder to have $75,000 in available financial security at any given time, as a buffer to make payments when needed. Now, when the FMCSA catches wind through the Unified Registration System that a business has under $75,000, it has seven days after the FMCSA notifies them of such to replenish the missing funds or else the FMCSA will suspend their operating authority. The plan is to fight bad faith actors who fully intend to dissolve the business and pocket the money, while also allowing legitimitate businesses a small window to make amends.
In their own words, the FMCSA says this rule, “aims to reduce fraud by limiting the time brokers can continue to accrue claims while experiencing financial failure or insolvency before their operating authority registration is suspended. These changes adopted in this rule will result in fewer motor carriers accepting loads from brokers who do not intend to pay.”
Furthermore, the FMCSA states that the assets kept in a BMC-85 must be very liquid–cash, irrevocable letters of credit, or treasury bonds–that the company would have no problem using to pay a debt owed to a fleet that has already completed its side of the business agreement.
Conclusion
These new regulations will go into effect when the old regulations regarding broker surety bonds and trust funds expire, which will be January 16th, 2025. Until then, fleets must remain ever vigilant about the brokers and freight forwarders from which they accept their loads.
If you want to read the Final Rule published in full you can do so at this webpage.
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