Senate investigates moving brokers; releases reportBy Eric Anders • Sep 20th, 2012 • Category: American Moving and Storage Association (AMSA), Consumer Help, Consumer Protection, FMCSA, Hostage Load, MovingScams
A New Consumer Protection Problem in the Household Goods Moving Industry
On Thursday, September 20, 2012, the Senate Commerce, Science and Transportation Committee held a public hearing to discuss the growing number of complaints that virtual household goods moving companies and move brokerage services were scamming unsuspecting consumers online.
Titled "Taking Consumers for a Ride: Business Practices in the Household Goods Moving Industry", the two hour hearing and live webcast included a witness panel that included:
- Anne Ferro, the administrator of the United States Federal Motor Carrier Safety Administration
- Timothy Barry, Principal Assistant Inspector General for Investigations for the U.S. Department of Transportation Office of Inspector General
- Reana Kovalcik, a consumer
- Linda Bauer Darr, the President and CEO of the American Moving and Storage Association; and,
- Jason Romrell, the President and Chief Legal Counsel of Budget Van Lines, a licensed household goods and property move broker.
The hearing coincided with the release of a Committee report, Internet Brokers: A New Consumer Protection Problem in the Household Goods Moving Industry. A link to the report and exhibit are included below, along with the prepared remarks made by FMCSA's Ferro and AMSA's Darr.
This is the press announcement that was released prior to the hearing summarizing the Senate committee's findings.
Oversight & Investigations: Reports
Staff Report on Internet Moving Brokers
A New Consumer Protection Problem in the Household Goods Moving Industry
Sep 19 2012
WASHINGTON, D.C.— Chairman John D. (Jay) Rockefeller IV released a Committee staff report detailing the results of a year-long investigation into consumers’ complaints about distressing experiences with their moving companies and the potential abuses consumers face when moving across state lines. The investigation found that in many cases, Internet-based moving brokers and household goods carriers quote consumers one rate to move their goods, but then charged an exorbitant markup in order to complete the move—often after the carrier has already taken physical possession of the property.
“Thousands of consumers are often stuck at the mercy of abusive moving companies at one of the most vulnerable times in their lives,” said Rockefeller. “This investigation opened the doors to the world of Internet moving brokers and their tactics to mislead and confuse consumers. As more and more Americans feel comfortable arranging their moves online, these brokers will have access to a larger pool of consumers to deceive. We must put a stop to the practices these companies are using to swindle consumers.”
Key findings of the Committee Investigation:
- The moving brokers with the most complaints filed with the FMCSA employed similar business practices and relied heavily on the Internet to generate business. Consumers who used the brokers that generated the most complaints filed with the FMCSA described very consistent scenarios. The consumers went online to shop for moving services and through an Internet search, usually conducted via a search engine, the consumers identified and contacted an “Internet moving broker.” Frequently, the business names used by the brokers were often very similar to well-known, reputable brand names, like United Van Lines or Budget Truck Rental.
- The business practices that Internet moving brokers use to find customers, provide estimates, and arrange moves regularly confuse consumers. Committee staff has interviewed dozens of the Internet moving brokers’ former customers who repeatedly stated that they were not made aware that they were hiring a broker, and that they were surprised when an entirely different company arrived on the day of their move. Consumer complaints obtained by the Committee also regularly showed that consumers were not made aware they were hiring a broker, rather than a carrier. The websites for Internet moving brokers often failed to clearly disclose the fact that they are merely brokers and that they do not play a role in the interstate moves that consumers are undertaking.
- Internet moving brokers have their customers pay “deposits” that are nothing more than their fees. Internet moving brokers provided information to the Committee that showed they labeled their broker fees, which sometimes amounted to thousands of dollars, as “deposits.” Consumers repeatedly stated that they were not aware these “deposits” were not dedicated to the payment of their actual moves. Customers of Internet moving brokers frequently paid thousands of dollars in “deposits” to the Internet moving brokers and these “deposits” were never shared with the carriers performing the moves. Consequently, before the consumers’ belongings were placed on trucks, they had already paid hundreds – and sometimes thousands – of dollars, to companies that played no role in the actual moves.
- Internet moving brokers never do on-site visits to catalog consumers’ belongings and determine the price estimates. Without conducting visual inspections of the consumers’ goods the brokers gave the consumers an estimated price for the moves. The brokers’ estimates were usually significantly lower than the prices quoted by other moving companies that conducted on-site visits.
- The “binding estimates” that Internet moving brokers provided to their customers frequently provided no price certainty. Although the purpose of a “binding estimate” is to provide price certainty for a consumer undertaking an interstate move, consumers who booked their moves through Internet moving brokers often experienced significant price increases for their moves after the moves had begun. Committee staff found multiple examples of price increases for thousands of dollars with very little justification for the increases.
- Internet moving brokers create the conditions for harmful moving experiences. To convince consumers to do business with them, Internet moving brokers frequently provided very low estimates to consumers. Because Internet moving brokers also routinely took substantial fees, labeled as “deposits,” many carriers inevitably attempted to make up the difference by increasing the price once the moves began.
- Internet moving brokers should be aware their practices are harming consumers. Committee staff found a significant amount of evidence suggesting that Internet moving brokers should be aware that their practices are harming consumers. Their former customers frequently complained to them about terrible moving experiences, including significant price increases and carriers holding their goods hostage.
The report notes that "In the course of its review of FMCSA consumer complaints, Committee staff learned that the owner of Nationwide Relocation Services, Aldo DiSorbo, owns and operates several broker companies, all of which use the same business model and offer the same services as Nationwide Relocation Services."
"For the purposes of its investigation", then, the "Committee staff analyzed Mr. DiSorbo’s broker companies as a single entity, and will be referred to in this report as the “DiSorbo Broker Companies.”
The Senate investigative committee determined that, as a group, "the DiSorbo Broker Companies had extremely elevated levels of consumer complaints about price increases and hostage situations as displayed in the report."
And the beat goes on …?
One of the recommendations made during the hearing was that a toll free hotline number should be posted on all interstate bill of ladings to allow consumers to express a grievance when a hostage load situation is occurring. The idea seemed to appeal to several members of the panel.
Chairman Rockefeller and Senator Pryor also suggested to Mr. Romrell that websites like Budget Van Lines be less misleading and more open about their broker status when advertising to inexperienced consumers.
One of the critical items not discussed were the comments included in Darr's prepared AMSA testimony about how unregulated container moving companies, general freight common and contract carriers, and 'for-hire' labor services were circumventing the Consumer Protection Regulations for licensed household goods carriers.
This lack of federal or state oversight and/or enforcement often creates creates just as much pricing and compliance confusion for consumer as regulated move brokers.
The reports concluded that "many of the business practices used by Internet moving brokers appear to be problematic for consumers and lead to a significant number of consumer complaints. As the household goods moving industry continues to evolve, policymakers, regulators, and law enforcement officials will need to put more effort into understanding the role of Internet moving brokers and the impact that these practices are having on consumers."
Hopefulle, cnce approved for public release, a copy of the Senate Recording Studio's webcast 4-4977 will be added to the U.S. Senate Committee on Commerce, Science, and Transportation YouTube website at: http://www.youtube.com/user/SenateCommercePress/
Currently the only video available is Chairman Rockefeller's opening statement which in included in the links below.
On Tuesday, September 25, 2012, Senate Commerce, Science and Transportation Committee Chairman John D. Rockefeller IV (D-WV) sent letters to three major search engines based in the U.S. – Google, Yahoo, and Bing – alerting them to their how their popular online shopping services are being used by unscrupulous internet brokers and rogue movers to scam unsuspecting customers.
Related Senate Committee Files:
Chairman Rockefeller's opening statement on consumer abuses by moving companies – Senate Commerce Committee's YouTube Channel
Staff Report Internet Moving Brokers (PDF) – Senate Commerce, Science and Transportation Committee
Exhibit I – Senate Commerce, Science and Transportation Committee
Congressional Testimony of Anne Ferro, the administrator of the United States Federal Motor Carrier Safety Administration
Congressional Testimony of Timothy Barry, Principal Assistant Inspector General for Investigations for the U.S. Department of Transportation Office of Inspector General
Congressional Testimony of Reana Kovalcik, a consumer
Congressional Testimony of Linda Bauer Darr, the President and CEO of the American Moving and Storage Association; and,
Congressional Testimony of Jason Romrell, the President and Chief Legal Counsel of Budget Van Lines, a licensed household goods and property move broker.
Congressional Hearing: Are movers scamming consumers? – RELO Roundtable
Senate investigates household goods carriers and move brokers – RELO Roundtable
Senate relies on industry pros to rout out rogue movers – RELO Roundtable
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