Although the official notice of approval has yet to appear in the Federal Register, FMCSA closed the petition for rulemaking and notified TIA of its approval in a letter dated March 11.

TIA originally petitioned the agency in June 2023, urging the implementation and enforcement of existing provisions regarding experience and training prerequisites for brokers and freight forwarders entering the market. This call for action stems from a specific provision within the Moving Ahead for Progress in the 21st Century Act, enacted in 2012.

That provision said that, “a broker or freight forwarder must employ as an officer an individual who has three years of relevant experience or provides the Secretary of Transportation with satisfactory evidence of the individual’s knowledge of related rules, regulations and industry practices.”

“Unfortunately, incidents of fraud have only increased over the past decade, culminating in a plague of fraud in 2023,” TIA wrote. “Today’s marketplace remains filled with fraudulent entities and criminal actors who sully the marketplace at the expense of all regulated entities and ultimately impose an estimated $800 million per year upon American consumers.”

Highlighting concerns over the proliferation of unscrupulous brokers, freight forwarders, and motor carriers, often referred to as “reincarnated” or “chameleon” entities, TIA underscored the need for rigorous enforcement, especially amid the market disruptions caused by the global pandemic.

“The U.S. Congress, through MAP-21, sought to address these concerns through the TIA-supported legislative language, but unfortunately and inexplicably, the agency has failed to implement several key provisions, including the experience or training requirement,” the group wrote. “At the very least, these requirements could help to mitigate rampant fraud by criminals who are entering the marketplace on a regular basis with hundreds of different authorities.”

To obtain operating authority from FMCSA, TIA recommends that brokers either employ individuals with relevant experience or select candidates who have completed an FMCSA-certified course from an accredited institution. The suggested course duration ranges from 30 to 90 hours and can be completed online or in person.

“TIA urges the agency to take immediate action regarding this petition,” the group wrote. “The actions requested will strengthen the registration process of brokers and freight forwarders and weed out bad actors. These changes will improve safety throughout the supply chain by barring criminal and otherwise irresponsible actors from the marketplace.”

Source: Land Line

The post Broker Training Petition Granted by FMCSA appeared first on Truck Drivers USA.

The rule, initially proposed earlier this year and officially finalized on Nov. 15, introduces amendments to regulations regarding broker and freight forwarder responsibility. Its implementation is scheduled for Jan. 16, 2024.

“This final rule will result in benefits to motor carriers resulting from a decrease in the claims against brokers that go unpaid,” FMCSA stated. “FMCSA will immediately suspend brokers that do not respond following a drawdown on their financial security. Such brokers will no longer be able to accrue liabilities that they do not plan, or lack the ability, to pay.”

The agency is intensifying scrutiny in five key areas of broker financial responsibility, along with initiating repercussions for noncompliance. These areas include assets readily available, immediate suspension of broker/freight forwarder operating authority, surety or trust responsibilities in cases of financial failure or insolvency, enforcement authority, and eligibility criteria for entities providing trust funds for broker trust fund filings known as form BMC-85.

In terms of assets readily available, the final rule designates cash, irrevocable letters of credit issued by federally insured depository institutions, and Treasury bonds as acceptable categories of assets in broker/freight forwarder trust funds for meeting claims payments to carriers.

“FMCSA has determined that these asset types are readily available because they are stable in value and can be easily liquidated within seven calendar days of an event that triggers a payment from the trust,” the agency said. “Other asset classes such as real estate are not sufficiently liquid, while stocks, non-Treasury bonds, and other securities involve significant risk to the investor, and therefore none of these asset classes can be considered readily available.”

The compliance date for this provision is set for Jan. 16, 2026.

Concerning the immediate suspension of broker operating authority, the FMCSA has outlined that when a broker or freight forwarder’s available financial security drops below $75,000, the agency may suspend its operating authority registration.

“If the available financial security falls below $75,000 and the broker or freight forwarder does not replenish funds within seven calendar days after notice from FMCSA, the agency will issue a notification of suspension of operating authority to the broker or freight forwarder,” the agency said. “Such notification must be made in writing, by electronic means, within two business days of either a payment from the bond or trust that causes the available financial security to fall below $75,000 or a determination by the surety provider or financial institution that such payment will be inevitable once the 60-day period for submission of claims has elapsed.”

The compliance date for this provision is set for Jan. 16, 2025.

In cases of broker failure or insolvency, surety providers or financial institutions are granted the right to cite financial failure or insolvency as grounds for canceling a surety bond or BMC-85 trust agreement.

FMCSA defines financial failure or insolvency as “any payment made or other default pursuant to … the regulatory provision that addresses the situations under which a broker or freight forwarder’s operating authority may be immediately suspended, which the broker or freight forwarder does not cure” in accordance with the rules.

The compliance date for this provision is also Jan. 16, 2025.

Regarding enforcement authority, the agency will provide notice of suspension to the surety/trust fund provider in identified circumstances, allowing 30 calendar days for a response before issuing a final agency decision. Monetary penalties of $12,882 per violation are added, and the surety/trust fund provider becomes ineligible to provide broker financial security for three years.

The compliance date for this provision is set for Jan. 16, 2025.

Lastly, entities eligible to provide trust funds for BMC-85 filings will no longer include loan and finance companies.

“This type of institution is not subject to the rigorous federal regulations applicable to chartered depository institutions or to the state regulations applicable to insurance companies,” according to FMCSA. “Loan and finance companies will now be prohibited from offering BMC-85 trusts unless they obtain certification to operate as another type of financial institution that remains on the list of eligible providers.”

The compliance date for this provision is set for Jan. 16, 2026.

The Transportation Intermediaries Association (TIA), representing truck brokers, highlighted in comments that adjustments to broker financial backing requirements were necessary, and the implementation of new oversight is deemed “long overdue.”

“TIA petitioned the FMCSA in 2014 to move forward with rulemaking on the key provisions of the law as they related to broker and freight forwarder financial instruments and implementation provisions,” TIA said. “This is a huge step towards addressing potential financial fraud and making sure that funding is available to protect motor carriers and brokers.”

The Owner-Operator Independent Drivers Association (OOIDA) advocated for stronger oversight within several provisions when the rule was initially proposed.

“[The final rule is] a step in the right direction to enhance oversight of broker financial responsibilities as we continue to work with partners to fight for increased broker transparency and the elimination of broker fraud,” OOIDA said. “We encourage FMCSA to continue to move in the right direction by expediting their rulemaking on OOIDA’s 2020 petition to enhance broker transparency. Truckers shouldn’t have to wait an additional year for the agency to ensure brokers are following federal regulations.”

Source: Freightwaves

The post Broker Fraud is Cracked Down On in New FMSCA Ruling appeared first on Truck Drivers USA.

The rule, initially proposed earlier this year and officially finalized on Nov. 15, introduces amendments to regulations regarding broker and freight forwarder responsibility. Its implementation is scheduled for Jan. 16, 2024.

“This final rule will result in benefits to motor carriers resulting from a decrease in the claims against brokers that go unpaid,” FMCSA stated. “FMCSA will immediately suspend brokers that do not respond following a drawdown on their financial security. Such brokers will no longer be able to accrue liabilities that they do not plan, or lack the ability, to pay.”

The agency is intensifying scrutiny in five key areas of broker financial responsibility, along with initiating repercussions for noncompliance. These areas include assets readily available, immediate suspension of broker/freight forwarder operating authority, surety or trust responsibilities in cases of financial failure or insolvency, enforcement authority, and eligibility criteria for entities providing trust funds for broker trust fund filings known as form BMC-85.

In terms of assets readily available, the final rule designates cash, irrevocable letters of credit issued by federally insured depository institutions, and Treasury bonds as acceptable categories of assets in broker/freight forwarder trust funds for meeting claims payments to carriers.

“FMCSA has determined that these asset types are readily available because they are stable in value and can be easily liquidated within seven calendar days of an event that triggers a payment from the trust,” the agency said. “Other asset classes such as real estate are not sufficiently liquid, while stocks, non-Treasury bonds, and other securities involve significant risk to the investor, and therefore none of these asset classes can be considered readily available.”

The compliance date for this provision is set for Jan. 16, 2026.

Concerning the immediate suspension of broker operating authority, the FMCSA has outlined that when a broker or freight forwarder’s available financial security drops below $75,000, the agency may suspend its operating authority registration.

“If the available financial security falls below $75,000 and the broker or freight forwarder does not replenish funds within seven calendar days after notice from FMCSA, the agency will issue a notification of suspension of operating authority to the broker or freight forwarder,” the agency said. “Such notification must be made in writing, by electronic means, within two business days of either a payment from the bond or trust that causes the available financial security to fall below $75,000 or a determination by the surety provider or financial institution that such payment will be inevitable once the 60-day period for submission of claims has elapsed.”

The compliance date for this provision is set for Jan. 16, 2025.

In cases of broker failure or insolvency, surety providers or financial institutions are granted the right to cite financial failure or insolvency as grounds for canceling a surety bond or BMC-85 trust agreement.

FMCSA defines financial failure or insolvency as “any payment made or other default pursuant to … the regulatory provision that addresses the situations under which a broker or freight forwarder’s operating authority may be immediately suspended, which the broker or freight forwarder does not cure” in accordance with the rules.

The compliance date for this provision is also Jan. 16, 2025.

Regarding enforcement authority, the agency will provide notice of suspension to the surety/trust fund provider in identified circumstances, allowing 30 calendar days for a response before issuing a final agency decision. Monetary penalties of $12,882 per violation are added, and the surety/trust fund provider becomes ineligible to provide broker financial security for three years.

The compliance date for this provision is set for Jan. 16, 2025.

Lastly, entities eligible to provide trust funds for BMC-85 filings will no longer include loan and finance companies.

“This type of institution is not subject to the rigorous federal regulations applicable to chartered depository institutions or to the state regulations applicable to insurance companies,” according to FMCSA. “Loan and finance companies will now be prohibited from offering BMC-85 trusts unless they obtain certification to operate as another type of financial institution that remains on the list of eligible providers.”

The compliance date for this provision is set for Jan. 16, 2026.

The Transportation Intermediaries Association (TIA), representing truck brokers, highlighted in comments that adjustments to broker financial backing requirements were necessary, and the implementation of new oversight is deemed “long overdue.”

“TIA petitioned the FMCSA in 2014 to move forward with rulemaking on the key provisions of the law as they related to broker and freight forwarder financial instruments and implementation provisions,” TIA said. “This is a huge step towards addressing potential financial fraud and making sure that funding is available to protect motor carriers and brokers.”

The Owner-Operator Independent Drivers Association (OOIDA) advocated for stronger oversight within several provisions when the rule was initially proposed.

“[The final rule is] a step in the right direction to enhance oversight of broker financial responsibilities as we continue to work with partners to fight for increased broker transparency and the elimination of broker fraud,” OOIDA said. “We encourage FMCSA to continue to move in the right direction by expediting their rulemaking on OOIDA’s 2020 petition to enhance broker transparency. Truckers shouldn’t have to wait an additional year for the agency to ensure brokers are following federal regulations.”

Source: Freightwaves

The post Crack Down on Broker Fraud Included in New FMSCA Ruling appeared first on Truck Drivers USA.

“For years, OOIDA has been fighting against unequal broker rules,” OOIDA says on the website. “The current system hurts small businesses and gives shady brokers an unfair advantage.”

OOIDA is taking action to address the issue by advocating for greater transparency in brokered trucking transactions. In 2020, OOIDA petitioned the Federal Motor Carrier Safety Administration to initiate the rulemaking process on this matter.

Their petition requested the following from the agency:

• The requirement for brokers to automatically provide an electronic copy of each transaction record within 48 hours of completing the contracted service.
• The explicit prohibition of brokers from including any provisions that would require carriers to waive their rights to access transaction records.

Although FMCSA granted OOIDA’s petition in March, a proposal to resolve the problem has not been released yet.

OOIDA emphasized the urgency of the matter to FMCSA in August, stressing that time cannot be wasted.

“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.”

Discover helpful resources and stay informed on broker issues with their website’s dedicated page. Watch a video on fraud prevention, access the latest news, and gain valuable advice on what to do if you ever fall victim to fraudulent activity.

To report instances of broker fraud, fraudulent damage claims, or non-payment, reach out to OOIDA at 800-444-5791.

In conjunction, OOIDA urges truck drivers to make their voices heard by contacting their lawmakers. It’s crucial to express concerns regarding broker fraud and the need for greater transparency in the industry.

Don’t know who your representatives are? Simply enter your zip code HERE to locate them.

Source: Land Line

The post Taking Down Broker Fraud: OOIDA Leads the Charge for Truckers appeared first on Truck Drivers USA.