FMCSA says it has too little data to assess double-brokering fraud

Trucks on the highway
FMCSA needs more power to stop broker fraud. (Photo: Jim Allen/FreightWaves)

WASHINGTON — Federal regulators have told Congress that the administration is struggling to get a handle on broker fraud due to a lack of data as well as jurisdictional issues.

In a “Unlawful Brokerage Activities” report sent to Congress last week, the Federal Motor Carrier Safety Administration confirmed that it continues to assess the relationship between motor carrier safety and unlawful brokerage incidents.

However, “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 FMCSA report states.

The report noted that the agency “does acknowledge an association between motor carriers with poorer safety performance and carriers that lack a verifiable ‘brick and mortar’ principal place of business (PPOB). And the agency has also received comments and other information asserting that use of a virtual PPOB is more common among entities that engage in unauthorized brokerage.


“As brokers do not typically engage in the actual transportation of goods, however, the direct safety impact of failing to register with FMCSA as a broker is unclear.”

FMCSA is considering additional research into “any safety nexus with unlawful brokerage” as required by an appropriations bill passed by Congress in 2022.

Much of the report refers to FMCSA’s oversight of broker violations that occur in the household goods-moving sector of the trucking industry. But because an administrative law judge with the U.S. Department of Transportation held in 2019 that FMCSA does not have statutory authority to assess civil penalties for violations by unauthorized brokers, the agency’s ability to combat broker fraud generally is “significantly limited,” FMCSA stated.

The agency must instead defer to the U.S Department of Justice (DOJ).


“Unless a regulated entity that violates FMCSA’s commercial regulations voluntarily resolves its noncompliance, FMCSA must refer cases to DOJ for enforcement of those regulations,” the report points out. “The need to refer cases to DOJ complicates and hampers the ability of FMCSA to enforce the agency’s commercial regulations, including those regarding unauthorized brokerage.”

To have the ability to assess civil penalties, FMCSA said it would be necessary to revise federal statute. “Such an action will allow FMCSA to assess civil penalties administratively and in a timely manner, rather than engaging in a lengthy referral process with DOJ.”

FMCSA said it is planning additional efforts to “raise awareness of unlawful brokerage activities involving general freight.”

The report also updated Congress on efforts to deal with broker fraud, including guidelines issued in June 2023 to help expose illegal brokers.

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