The Federal Motor Carrier Safety Administration (FMCSA) is changing its rules to stop fraud in the broker industry. These rules deal with how brokers handle money when dealing with property and freight forwarding.
Starting January 16, 2025, brokers, surety providers, and financial institutions must follow new rules. By January 15, 2026, they must also comply with rules about available assets and who can provide trust funds for FMCSA Form BMC-85. The goal, according to the agency, is to help truck drivers. FMCSA thinks most brokers are honest and keep their promises to truck drivers and shippers. However, a few points to protect truckers and consumers against broker fraud .
The rule focuses on five main areas:
Available Assets
The rule lists what assets a BMC-85 trust can have. FMCSA says these assets are stable and can be turned into cash quickly if needed. “FMCSA has therefore determined that cash, ILCs issued by a federally insured depository institution, and Treasury bonds will constitute the acceptable categories of assets readily available,” it said.
Suspending Broker/Freight Forwarder Authority
If a broker’s financial security drops below $75,000, FMCSA can stop them from working. This happens if their surety bond or trust fund drops below $75,000.
Trust Responsibilities in Financial Trouble
If a surety or trustee knows a broker is having money problems, they must tell FMCSA and1 cancel the responsibility. If the broker fixes the problem, FMCSA will lift the suspension notice.
Enforcement Power
FMCSA can stop a surety or trust fund provider’s authority in certain cases. They give notice and time to respond before making a final decision.
Eligible Trust Fund Providers
FMCSA removes loan and finance companies from the list of providers eligible to serve as BMC-85 trustees because this type of institution is not subject to the rigorous federal regulations applicable to chartered depository institutions or to the state regulations.
The Transportation Intermediaries Association is happy about these new rules. Chris Burroughs from TIA said they’ve been asking for these changes since 2014.
Burroughs added, “third party logistics and brokers are in the midst of a fraud epidemic and one aspect of that fraudulent activity centers around trust fund providers and fraudulent entities in the marketplace. By FMCSA increasing the barrier of entry into the brokerage industry by eliminating fraudulent trust fund providers, criminals and scammers will not as easily gain authority in the marketplace.”
While some groups like the Owner-Operator Independent Drivers Association think more should be done, the American Trucking Associations support the new rules. They believe these rules will protect truck drivers from losses and consumers from bad brokers.
In conclusion, these new rules aim to ensure brokers keep enough money to pay truck drivers and protect truckers and consumers against broker fraud in the trucking industry.