The Federal Motor Carrier Safety Administration has finalized a rule that will change the financial responsibility requirements for brokers and freight forwarders. They are set to include a provision enabling the agency to shut a broker or freight forwarder down quickly in the event of a drawdown on a bond or other required financial security with valid claims, or for other reasons.
Called the "Immediate Suspension of Broker/Freight Forwarder Operating Authority" provision in the new final rule, the measure would allow FMCSA to suspend the operating authority registration of a broker or freight forwarder when its available financial security falls below $75,000. Today, the process often plays out over the course of a 30-day waiting period after notification of cancelation of the security from the bonding company or trust fund, a gap commonly exploited by bad actors to move freight with no intention to pay carriers.
[Related: A 'hit it and move on' brokered freight scam, and more loopholes]
In the final rule, FMCSA spells out these reasons a broker’s or forwarder’s “available financial security” may fall below $75,000:
If the broker or freight forwarder does not replenish funds within seven calendar days after notice from FMCSA, under the terms of the new rule the agency will shut the entity down with a notification of suspension of operating authority. FMCSA intends to use its forthcoming Unified Registration System (URS) platform to receive information from surety providers, trustees, brokers and freight forwarders to administer the agency's immediate suspension responsibilities.
With freight fraud seemingly at unprecedented heights, FMCSA noted that this final 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."
