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TIA Member News

Shipper Scam Reported

A TIA carrier member reported this week that they were the victim of a new scam.  The member also reported that they have been in contact with FMCSA, which also reports being aware of the scam.

It appears that FMCSA has found numerous shippers across the country which is setting up brokerage operations.  The brokerages appear to be legitimate, and there is no visible connection between the two companies.  The shipper moves its freight through the brokerage.  The brokerage hires a carrier.  The carrier delivers and forwards the bill to the broker.  The broker gets the money from the shipper establishing what the shipper believes to be estoppel.  Unfortunately, the scam continues with the broker giving most of the money back to the shipper and not paying the carriers.  The carrier goes back to the shipper who argues that they do not have to pay twice.  The TIA member and other carriers have gone away believing that there is no recourse in court or with FMCSA.

In response to the TIA member's inquiry, TIA responded recommending that the member report the shipper/broker on Watchdog.  TIA also reported that there are problems with the shipper's scam that could cause it to crumble like a house of cards.  First, Title 49, Section 317.9 (a) states, "A broker shall not charge or receive compensation from a motor carrier for brokerage service where:  (1) the broker owns or has a material beneficial interest in the shipment or (2) the broker is able to exercise control over the ownership of the two."  The fraudulent brokerage operation could run into trouble also, by not complying with the regulations for bonding, process agent, and record keeping sections of the regulations.

The claim of estopple may be problematic if the brokerage is established for fraudulent reasons and does not comply with the statue.

Finally, TIA reported to the member that it did not need DOT to act on violations of the statute.  In the ICC Termination Act (1995), Congress created a private statutory right (49 USC 14704(a)(2) of action for damages sustained by any person as a result of an act or omission of a motor carrier, freight forwarder, or broker that violates any part of the Interstate Commerce Act. This provision provides for both damages and attorney fees if a carrier, freight forwarder, or broker violates any provision of the Act.

Last Updated on Tuesday, 20 April 2010 15:44

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