Household Goods Shipping Consumer Protection Act Gains House Approval

The United States House of Representatives Committee on Transportation and Infrastructure (T&I) recently signed off on a bill focused on legislation focused on addressing freight fraud.

The legislation—H.R. 8505, the Household Goods Shipping Consumer Protection Act—was introduced in May by Rep. Eleanor Holmes Norton (D-D.C.) and Rep. Mike Ezell (R-MS). Its objective is to equip the Federal Motor Carrier Safety Administration (FMCSA) with the necessary tools to protect consumers from fraud perpetrated by scammers in the interstate transportation of household goods, according to Holmes Norton and Ezell.

And they added that this legislation was drafted to address an emerging type of fraud focused on entities charging an up-front fee, pack and hold consumers’ household goods and subsequently demand more funds to deliver and release the items. What’s more, they added that involved companies have created websites with fake 5-star reviews, and when negative reviews are submitted, the scammers then will close down the existing companies and open up new companies—and repeat the scheme by operating under a new FMCSA license.

In a statement issued by Holmes Norton in May, she laid out the key components of the legislation, including:

• giving FMCSA the authority to assess civil penalties against unregistered shippers and against entities that hold consumers’ personal goods hostage;
• giving FMCSA the express authority to reimburse states for enforcing federal consumer protection laws related to the transportation of household goods; and
• establish requirements to ensure that motor carriers, brokers, and freight forwarders that seek registration are operating legitimate businesses

This legislation was strongly endorsed by Anne Reinke, President and CEO of the Transportation Intermediaries Association (TIA).

“This legislation, fully supported by TIA, aims to combat the rampant fraud plaguing the supply chain by reinforcing existing regulations and restoring the Federal Motor Carrier Safety Administration’s authority to take civil actions against fraudulent criminals,” she said. “With a 600% increase in cargo theft reported between November 2022 and March 2023, the industry faces significant financial losses, and fraud continues to be a critical issue, costing the industry and American consumers nearly $800 million annually. The impact of fraud extends beyond just the immediate financial burden. The average gross cost of fraud reported by industry members is over $400,000. This rise in fraudulent activities not only disrupts the supply chain but also drives up the cost of goods, ultimately affecting consumers across the country. TIA applauds the T&I Committee for addressing this pervasive issue and will continue to work with Congress and industry partners to advance meaningful solutions that protect the supply chain and the American economy.”

TIA recently issued a report examining the impact of fraud within freight transportation.

The report’s findings were based on feedback from 200 TIA members across various sectors, with the report focusing on things, including the most prevalent fraud types, the financial impact on businesses and the widespread nature of these incidents, according to TIA.

Key findings from the report included: 98% of respondents said truckload freight is the primary target of fraud; there are eight types of fraud identified— spoofing, unlawful brokerage scams, fictitious pickups, phishing, identity theft, email/virus, inbound phone calls and text messages; and the average gross cost of fraud reported by survey respondents is $402,340, with an approximate cost per load of $40,760, with fraud increasing the cost of goods, affecting the supply chain, and impacting consumers, among other findings.

Along with TIA other industry groups strongly supporting this legislation include: American Trucking Associations’ Moving & Storage Conference; Owner-Operator Independent Driver Association; the National Association of Small Trucking Companies; Commercial Vehicle Safety Alliance; Institute for Safe Trucking; and Road Safe America.

With H.R. 8505 now having gained House and Senate approval, it will now head to President Biden to be signed into law.

By Jeff Berman