Broker organization sues over hike in bond requirement

| July 19, 2013

The Association of Independent Property Brokers and Agents is suing the Federal Motor Carrier Safety Administration over a substantial hike in the broker bond requirement.

The FMCSA requires a $10,000 surety bond or trust fund agreement for brokers and freight forwarders. The 2012 highway reauthorization act mandates that amount increase to $75,000 on Oct. 1.

Overdrive reporting on efforts to raise the broker minimum surety requirements in June 2012. Read that story here.
Overdrive reporting on efforts to raise the broker minimum surety requirements in June 2012. Read that story here.

On July 16, the 1,800-member not-for-profit trade group filed its complaint in federal district court in Ocala, Fla. Association President James Lamb said the $75,000 bond amount is arbitrary and “not rationally related to a legitimate government purpose.” Other charges include that the FMCSA violated the Administrative Procedure Act by not conducting rulemaking to set the new bond amount, he said.

The increase marks the first change in the amount required since the mid-1980s and was backed by the Transportation Intermediaries Association, the third-party logistics industry professional group.

TIA worked with the Owner-Operator Independent Drivers Association and the American Trucking Associations on the legislation they said was targeted at mitigating marketplace fraud.

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  • Karen

    Why isn’t this grandfathered? If you already have your broker authority, your bond should remain at the now current rate of $10000.00. The new brokers should be held liable for the new rates as of October 1st. Why penalize the rest of us with this massive increase? Unless it is to rid the trucking industry of us small time brokers so that the big companies can dominate the market. I mean, who pays the trucks more, the independent brokers or the big time brokers? Who would regulate all of that?

  • gearjammer2000

    most small time [not all] bloodsuckers,er brokers have perverted the system and wreaked the system.
    my question is why they only raised it to 75,000
    it would be appropriate to make it at least 250,000, then they would have a little bit of skin in the game

  • Steve

    As a trucker who has been stiffed on freight bills through brokers’ bankruptcy, I believe their total freight bills owed should NOT exceed their bonding. We have to be insured for the total amount of cargo we carry as well any possible liabilities for our actions (mine is currently $3mil) so why shouldn’t they be responsible for payment? I don’t use brokers any more because they take way too much for the service they provide and they won’t pay you until they get paid, so what do they really offer? If you have your own authority and insurance and a cell phone, you don’t need ‘em and if you don’t, they usually can’t help you anyway. If you wait 30 days for your money, you might find that they closed up shop 3 weeks ago. Their $10K bond was probably gone in the first 5 minutes.

  • martymarsh

    First I have to address the not for profit trade group, WHAT?
    Serious smoke and mirrors being used here.
    Now the real instigators, the big boy’s are looking to eliminate the small boys so they have all of the freight, and Washington goes along with it because the money wheel keeps turning. It is that simple, the corrupt directing the corrupt.
    I bet we all know the names.

  • martymarsh

    As far as I am concerned, you are right on the money.

  • Bill

    10,000 is way too low to cover freight bills outstanding when a brokers goes under. They are correct raising on all brokers even ones in business before the bond was raised because even established businesses fail sometimes.

  • martymarsh

    I don’t really think raising the bond is the answer, for reasons I have already posted, but that don’t mean there are not answers.
    A broker should be required to own at least one truck.
    All loads brokered out and the fuel taxes and mileage report should be done by the broker, if it’s not my load why am I doing all the work.
    For screwing us out of our money, brokers should have to invest just a little bit more than a computer and telephone.

  • BunniRabbyt Happily Retired Th

    For you people that dont think the bond should be raised where have you been that last 30 years # freight rates have risen , not much, 10,000 dont cover as much and brokers are doing a whole lot more business. Why should you be exempt from having to change with the times. Do you not think truckers have had a lot more change and expenses you brokers are in there with them or should be. I have been stiffed by brokers and never got a dime. Should be treated as a felony since it was related to interstate commerce. Just remember brokers WITHOUT A TRUCK HAULING IT YOU ARE USELESS. SO GO RENT A MULE AND HAUL IT.

  • MD

    I understand your frustration in what you are stating. Not all brokers are evil. Grant it, some are. The same for truck drivers. You have good ones and bad ones. I have been in the trucking industry since 1989. I have driven trucks, and now I broker and drive as a small family business. I can honestly say that yes there are alot of brokers who refuse to go through a factoring company to get your money to you. Regardless, it does take time for a broker to get the money from the shipper, normally 32-60 days. If a broker is big enough and can hold his own earnings, he can pay the driver immediately, but there is always a fee for the service because of the delay from the shipper to pay the broker. I believe in an honest pay for an honest days work. 90% always goes to the truck plus all fuel surcharge. That is your money.

  • rcgauto

    As a freight broker I’m glad to see the increase in the broker’s bond for several reasons.

    1)I believe carriers will be better protected in the event that a broker can’t pay their bills. This may hay happen for variety of reason even through no fault of the broker as shippers can refuse to pay freight bills.

    2)It will be harder to become a broker and that is a good thing. Higher standards will improve the quality of the brokers and as a result the service that shippers and carriers receive.

    3)It will still be affordable to obtain a $75,000 bond. We are getting quotes near $3500 which is not that expensive.

  • Localboyzz

    Hello if you have info on 3500 I would rather do that than the 50,000 bond iam siting on now with the bank if you could help iam at localboyzz311@msn.com thank you

  • rcgauto

    Check your email – I sent you some information

  • martin

    Steve: It is absurd to expect every broker to have a bond equal to the freight bills. There are many honest brokers out here like myself, 10 years in business not a single bond claim. However, I’m probably going to have to shut down with the new bond requirement. Have you ever heard of credit insurance? It is available to trucking companies and will cover YOU!! If a $2 million/year broker closes, how far do you think the $75K will go? $75K is not great protection for carriers. It is only another way the big firms can squeeze smaller outfits like myself out of the market.

  • Bob_Ingersoll

    Do you know what brokers do when taking a load. THEY CHECK THE CREDIT OF THE SHIPPER. Why is it so very hard for truckers to do the same.

  • James P. Lamb

    Hey, truckers…have you experienced a problem getting paid by a broker who was put out of business by MAP-21′s new bond law? (Only carriers or independent truckers with an MC Number should answer this question)…

    VOTE HERE: http://www.linkedin.com/groupItem?view=&gid=121014&type=member&item=5829315826909474817&trk=groups%2Finclude%2Fitem_snippet-0-b-ttl

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