Is it legal to sell an MC number? Trucking businesses obviously get bought and sold all the time. Think of Knight-Swift buying U.S. Xpress or DB Schenker acquiring USA Truck in big, publicized transactions with lots of lawyers going over the paperwork.
But then there's a gray, or maybe even black market for MC numbers to help fraudsters evade detection from carrier vetting software or even the Federal Motor Carrier Safety Administration itself. Some shady operations offer trucking companies up to $30,000 for an MC number with a good history and relationships with big shippers like Amazon or J.B. Hunt.
Freight fraud watchers have in the last few years reported double brokers buying up MCs in the tens, hundreds, or even thousands, whether registering them anew with FMCSA or buying them from existing trucking companies. Over the same period, cargo theft has ballooned 600%, largely due to stolen, or maybe sold identities of carriers and brokers.
[Related: How much is your MC worth? Maybe as much as $30,000]
After a cross-border freight specialist was approached to sell his MC, Overdrive asked FMCSA about Truck Secure Inc., a company that advertises as buying and selling MCs.
"Operators cannot sell MC numbers individually, but they can sell entire operations or companies and ask FMCSA to record the transfer," an FMCSA spokesperson told Overdrive.
Indeed since 2013, FMCSA does not process "applications for transfer of operating authority, issue transfer approvals, or require the $300 fee formerly associated with such applications," a notice in the Federal Register reads. "Under the new transfer recordation process, both transferors and transferees will be asked to provide basic identifying information concerning their business operations, ownership, and control, e.g., name, business form, business address, and name(s) of owner(s) and officers. No application form is required, and no transfer fee applies."
Basically, these days, when two willing parties want to transfer an MC, they're asked, not required, to tell FMCSA about it, and there isn't even an application.
Truck Secure was looking to buy the MC number, but requested the USDOT pin number, FMCSA portal login, a release letter from factoring companies, and other key documents in the sale, but perhaps not exactly the "entire operation," which might include trucks, trailers or other assets owned by the business.
Additionally, Truck Secure did seem to sell the prospect of avoiding FMCSA scrutiny, with a bullet point on its website advertising "less audits" and "a clean safety history, which will not draw unwanted attention from the authorities."
FMCSA said it didn't have legal authority to regulate business sales, but "when the agency receives reports of people buying or selling 'dormant' or 'clean' registrations for the purpose of evading agency investigations or enforcement, FMCSA will consider whether there are any violations of our regulations."
The spokesperson further explained that the type of violations FMCSA generally finds "would be of our regulations prohibiting the use of an affiliate to avoid enforcement." FMCSA asks applicants in the Unified Registration System to disclose any affiliations to other FMCSA-regulated entities "under penalty of perjury." A bill in the House backed by trucking and broker trade groups would green-light FMCSA to assess $10,000 fines for violations of the regulations prohibiting the use of affiliates, but FMCSA doesn't currently enforce the perjury clause or assess the $10,000 fines for complicated administrative law reasons.
[Related: FMCSA's confusing excuse for not enforcing its own rules]
FMCSA said it would also want to ensure the entity buying the MC would still be subject to enforcement for safety violations, and overall still seemed to want to take a hard look at MC number sales even when the sale wasn't directly a violation of the regs.
"If there are no violations of our regulations, but there appears to be some other activity which may be criminal in nature, the agency refers those matters to the OIG/law enforcement agency as appropriate," the FMCSA spokesperson continued.
At that point, FMCSA acknowledged its duty towards the trucking industry and pointed towards a planned modernization effort in the registration system as a potential longterm fix.
After all, by the end of 2025, FMCSA says there won't be any MC numbers anyway.
"While the agency has no jurisdiction over criminal matters, we have a duty to maintain the accuracy and integrity of the data in our systems, and the new registration system (and the associated changes like the retiring of MC #s) will likely help deter or detect fraudulent or other unauthorized activity through increased security requirements and enhanced data analysis," the FMCSA spokesperson concluded.
[Related: FMCSA to audit all authorities, hires new registration fraud team]
