[Senate Hearing 109-529]
[From the U.S. Government Publishing Office]
S. Hrg. 109-529
PROTECTING CONSUMERS FROM FRAUDULENT PRACTICES IN THE MOVING INDUSTRY
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MAY 4, 2006
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
U.S. GOVERNMENT PRINTING OFFICE
28-212 WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001
0SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana Chairman
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada BARBARA BOXER, California
GEORGE ALLEN, Virginia BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire MARIA CANTWELL, Washington
JIM DeMINT, South Carolina FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana E. BENJAMIN NELSON, Nebraska
MARK PRYOR, Arkansas
Lisa J. Sutherland, Republican Staff Director
Christine Drager Kurth, Republican Deputy Staff Director
Kenneth R. Nahigian, Republican Chief Counsel
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Samuel E. Whitehorn, Democratic Deputy Staff Director and General
Counsel
Lila Harper Helms, Democratic Policy Director
------
SUBCOMMITTEE ON SURFACE TRANSPORTATION AND MERCHANT MARINE
TRENT LOTT, Mississippi, Chairman
TED STEVENS, Alaska DANIEL K. INOUYE, Hawaii, Ranking
JOHN McCAIN, Arizona JOHN D. ROCKEFELLER IV, West
CONRAD BURNS, Montana Virginia
KAY BAILEY HUTCHISON, Texas BYRON L. DORGAN, North Dakota
OLYMPIA J. SNOWE, Maine BARBARA BOXER, California
GORDON H. SMITH, Oregon MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia FRANK R. LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire E. BENJAMIN NELSON, Nebraska
DAVID VITTER, Louisiana MARK PRYOR, Arkansas
C O N T E N T S
----------
Page
Hearing held on May 4, 2006...................................... 1
Statement of Senator Allen....................................... 2
Statement of Senator Lott........................................ 1
Statement of Senator Pryor....................................... 11
Prepared statement........................................... 11
Statement of Senator Stevens..................................... 26
Witnesses
Curran, Jr., J. Joseph, Attorney General, State of Maryland...... 12
Prepared statement........................................... 15
Letter, dated January 21, 2004, from the National Association
of Attorneys General....................................... 16
Edge, Kay F., Assistant Professor of Architecture, School of
Architecture and Design, Virginia Tech......................... 26
Prepared statement and attachments........................... 27
Harrison, Joseph M., President, American Moving and Storage
Association.................................................... 43
Prepared statement........................................... 45
Hoemann, Warren, Acting Administrator, Federal Motor Carrier
Safety Administration.......................................... 20
Prepared statement........................................... 21
Kelly, J.R., Director, Division of Consumer Services, Florida
Department of Agriculture and Consumer Services................ 41
Prepared statement........................................... 42
Sakamoto-Wengel, Steve, Deputy Chief, Consumer Protection
Division, Office of the Attorney General, State of Maryland.... 57
Zinser, Todd J., Acting Inspector General, Department of
Transportation................................................. 4
Prepared statement........................................... 6
Appendix
Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared
statement...................................................... 61
Response to Written Questions Submitted by Hon. Daniel K. Inouye
to:
J. Joseph Curran, Jr......................................... 63
Kay F. Edge.................................................. 66
Joseph M. Harrison........................................... 71
Warren Hoemann............................................... 64
J.R. Kelly................................................... 71
Todd J. Zinser............................................... 62
Response to Written Questions Submitted by Hon. Frank R.
Lautenberg to:
Warren Hoemann............................................... 65
Todd J. Zinser............................................... 63
U.S. Chamber of Commerce, prepared statement..................... 61
PROTECTING CONSUMERS FROM
FRAUDULENT PRACTICES IN THE MOVING INDUSTRY
----------
THURSDAY, MAY 4, 2006
U.S. Senate,
Subcommittee on Surface Transportation and Merchant
Marine,
Committee on Commerce, Science, and Transportation,
Washington DC.
The Subcommittee met, pursuant to notice, at 10:05 a.m. in
room SD-562, Dirksen Senate Office Building, Hon. Trent Lott,
Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. TRENT LOTT,
U.S. SENATOR FROM MISSISSIPPI
Senator Lott. The hearing will come to order. Thank you,
panel, for being here this morning and for being in your
places. We are going to need to move right along this morning
because we know that some of you have other commitments, and
also the Senate will be having a series of votes beginning at
11 a.m. So I hope we can be done with our proceedings here by
about 11:15 a.m. or so. So if you would summarize your
statement, we will put your full statement in the record, and
then it will give me an opportunity and perhaps other Senators
that will be here. We do have an indication that Senator
Stevens and Allen and Inouye, Lautenberg, and Pryor and perhaps
others will come by this morning. Thank you for this
opportunity for us to pursue an issue that we worked on last
year. We want to make sure that during this hearing that we
think carefully about the best way to protect consumers from
fraudulent practices in the moving industry, and also to make
sure that the moving industry is not unfairly maligned and that
they are part of decisions we make as to how we are going to
handle issues and complaints in the future. Without going into
the history, we all know that in 1995, before Congress
abolished the ICC, the Interstate Commerce Commission, that
agency had 94 individuals in field offices available to
directly assist customers and consumers that experienced
problems. There were an additional 18 headquarters' employees.
When Congress abolished the ICC and transferred jurisdiction
over the moving industry to the Department of Transportation,
only a handful of employees were assigned to work on this
problem. So it comes as little surprise that complaints by
consumers skyrocketed. And last year, when we were having
hearings on this part of SAFETEA-LU, the highway bill, I was
frankly surprised by the number of complaints and the
difficulties that had been encountered. It really took me aback
because I didn't realize that there were so many and the
magnitude of them and the difficulty in how one would get
redressed. Mark Pryor, our Senator on the Committee here from
Arkansas, former Attorney General, was particularly interested
in this and concerned about it, so we tried to come up with
language that would allow us to have some better ways to
address this problem. And so, we did have language that I
included in the bill, the highway bill, entitled Household
Goods Mover Oversight Enforcement and Reform Act--try to tip
the scale back a little bit on behalf of the consumer. I do
feel like consumers should have a clear, accessible, easy way
to get redress or to file complaints. I was talking to somebody
on behalf of the moving industry this morning who indicated
well, they can get online. A lot of people don't get online. I
don't get online. When I want to move from Washington, D.C.
area to Mississippi, I'm going to look in the phone book. I'm
going to look up a dagblame moving company, and I'm going to
call them. And so--and if I have a complaint, I am not going to
want to have to dig around in the Federal bureaucracy to find
somebody to take my call. I want somebody at home in
Mississippi that could help me get the right solution. So we
did have this provision. We went back and forth. We worked with
all sides of the issue. We had input from Senators, DOT, the
Department's Inspector General, GAO. We worked with the moving
industry. We worked with Senators involved. However, at the
last minute, before final passage, after hearing these
complaints, the Appropriations Conference Committee report from
the DOT basically put these pro-consumer provisions on hold for
a year. And I really felt that this was, you know, an
inappropriate, unfair act, and I made it clear that I intend
for that not to be left in place. I was extremely disappointed
that Senator Bond of Missouri handled this matter in this way.
I want to--again, I want to work with everybody involved and do
the right thing, but I was very disappointed in the way that
was handled the last minute by the Appropriations Committee
after the authorization committee had acted. So there's the
issue, and here we are. We got a distinguished panel with some
different views on all of this, I am sure. And we'll be glad to
hear from you, but first, I wonder--Senator Allen, you have an
opening statement you'd like to put into the record at this
point and make some comments?
STATEMENT OF HON. GEORGE ALLEN,
U.S. SENATOR FROM VIRGINIA
Senator Allen. Thank you, Mr. Chairman. I appreciate it. I
am not going to be able to stay because we have a hearing going
on in Energy to get in the new Secretary of Interior, and I
want to get there. I would like to applaud your leadership on
this issue. I am glad you have convened this hearing. This
provision you are talking about expires at some point this
year. One of your witnesses is Ms. Edge, who moved from
Connecticut to Radford, Virginia, I have read your testimony
here and it's an absolutely frustrating, aggravating nightmare
of a story. She has taken action, and she used the Internet.
And in fact, reading her testimony here, the DOT was supposed
to set up a complaint database. They were mandated to set this
up apparently in 1998. The consumers have had to rely on
consumer advocacy websites. Granted, not everyone is online. We
have seen that in a variety of other areas, but more and more
people are getting online. Maybe if a mother or a father is
moving and somebody would go check online and say well, this
batch of folks here have had, you know, 13 complaints about
them. Meanwhile, another one--oh, they don't have any
complaints about them. But there ought to be some repository
for these rogue movers who blackmail folks, hold their goods,
and swindle them. People are frustrated. Moving is a stressful
enough event anyway without adding this sort of just absolute
aggravation to it, and any of these rogue movers ought to be
prosecuted. We have actually passed laws to increase the
penalties, now those penalties need to be enforced. As I see
this issue, this is interstate commerce, so there is Federal
jurisdiction. Sure, there are some people who move within a
state, but most of this is interstate commerce, so there is
Federal jurisdiction. I think it makes great sense to have
national standards so that the contracts--whether the
contract's in Connecticut or the contract's in Virginia or the
contract's in Mississippi or the contract's in Missouri, that's
the standard. Then the question is how do you enforce it. How
do you enforce the violations? This is not a discussion of
first impression for the whole Commerce Committee. I have
worked on issues such as people stealing telephone records--you
know, the pretexting. We have an end data breach. There is a
national standard. And yes, various Federal agencies enforce
those laws, but we have also allowed State Attorneys General to
enforce these national standards. And so, the question is why
these have not been apparently adequately enforced. What can be
done to enforce these laws? The vast majority of moving
companies, especially the large reputable ones, do a great job.
Their image is tarnished by these fly-by-night operations that
change their names, and then it shows up as a clean record. So
the question is, Mr. Chairman, and I very much appreciated
hearing your remarks, how can we not have more Ms. Edge
situations occurring. I think it's in the interest of the
Federal Government, it's in the interest of the American Moving
and Storage Association to find ways that this can be enforced.
I don't know for sure, but I would guarantee that the members
of your association are embarrassed, and I know they have taken
action to try to remedy situations when people are just left
high and dry and their goods are not moved. You have done a lot
of good things over the years, but the question is how best to
enforce these national standards. I don't think the Chairman
has been advocating a patchwork of 50 different laws and
different interpretations, but a national standard and then
enforce it in the states in a practical way. And to the extent
that this Committee, the Subcommittee, the full Committee, the
Senate can work on it, I think that is ideal for you all
addressing some of these matters. Maybe you don't have the
personnel, but regardless, there needs to be a much better
concerted effort because this seems to be a continuing problem,
a continuing nightmare. There have been some new remedies that
have been done by the association itself, but the Chairman
here, Senator Lott, has long been an advocate of this. I am an
advocate of reasonable regulations, and I do think there should
be national standards properly enforced. And to the extent it
seems like there is a debate as to whether or not these should
be enforced in state courts or Federal courts, and I am not
sure I know what the difference is.
Senator Lott. The difference is they are worried about
class action.
Senator Allen. Well, I am not for class action lawsuits.
Senator Lott. I am not either, and my state wouldn't allow
it.
Senator Allen. Well, we don't allow it in Virginia either.
Senator Lott. But other states like Missouri apparently
may, so therein is, I guess, one of the considerations.
Senator Allen. Then what we might do is not allow class
action lawsuits if it's in a Federal court or a state court
under this national Federal statute--regardless.
Senator Lott. Yes. Our language last year did not allow
this to be dealt with as a class action lawsuit.
Senator Allen. Well, I think that people of goodwill and
shared goals and missions can come together on this. And I am
not one for over burdensome regulations and more litigation,
but if there is a bad actor, those bad actors need to be
punished. It could be simple negligence, but if somebody has
got a bad record, there needs to be a financial burden put on
them. So Mr. Harrison, I, of course, like free enterprise and
free markets, and I think that there may be a way to do it. I
think Senator Bond's efforts were well-intentioned. I am not
sure if his measure actually harms. I think that you still have
prosecutions under it, and I am not going to get into process--
--
Senator Lott. Yes. But I am the one that's offended by the
process. I do want to say you sound like the gentleman from
Virginia, Mr. Jefferson, in your comments, so we understand
what you're saying.
Senator Allen. All right. Well, thank you, Mr. Chairman. I
thank all our witnesses. I am going to follow the record of
this hearing and look forward to working with all of you all
here, and I--there may be--you have shown magical ways of
getting disparate parties together on even more contentious
issues than this, Mr. Chairman. And I thank all our witnesses
and again also welcome Ms. Edge here, and I am sorry that your
move--a wise move from Connecticut to Virginia--and that batch
was out of Connecticut, right?
Ms. Edge. New York.
Senator Allen. New York. All right, but they weren't out of
Virginia. Thank you. I am sorry I have to----
Senator Lott. Thank you, Senator. And let's go to our
witnesses now, and we'll begin with Mr. Todd J. Zinser, the
Acting Inspector General of the Department of Transportation.
We have enjoyed so much working with your predecessor, and we
are looking forward to working with you, and we'll be glad to
hear your testimony at this point, sir.
STATEMENT OF TODD J. ZINSER, ACTING INSPECTOR GENERAL,
DEPARTMENT OF TRANSPORTATION
Mr. Zinser. Thank you, Mr. Chairman. We appreciate the
opportunity to testify today on household goods moving fraud.
First, Mr. Chairman, the vast majority of well over one million
household goods shipments each year are conducted by honest
professionals. What I will testify about today is a small, but
very serious criminal element operating at the fringes of the
industry which has victimized thousands of U.S. citizens. Even
though our staff of criminal investigators is relatively small,
about a hundred special agents nationwide are very busy
investigating fraud in DOT safety and grant programs--over the
past 5 years, we have investigated household goods fraud
committed against about 8,000 victims nationwide by 25
companies operating under a variety of different names. These
investigations resulted in 90 convictions and nearly $16
million in fines and restitution. Jail terms have totaled over
175 years with some defendants receiving prison terms of more
than 12 years. Another 25 individuals who were indicted remain
fugitives. In the Office of Inspector General, we focus on
cases where a mover holds a consumer's goods hostage while
demanding more money than what's legal. In committing these
crimes, these corrupt movers engage in extortion, conspiracy,
wire fraud, mail fraud, money laundering, and false bills of
lading and shipment weights. We conduct investigations with the
FBI and state and local law enforcement officials. The Federal
Motor Carrier Safety Administration also provides critical
assistance on these cases. We have also used undercover stings
with the FBI to catch these criminals red-handed. The fraud
schemes carried out by the now defunct Majesty Moving and
Storage of Plantation, Florida are typical. Over the period
2000 to 2003, Majesty defrauded over 1,200 victims out of over
$2.3 million. Early on, Majesty advertised through the
telephone directories and newspapers and direct mail. Then it
expanded to the Internet to lure customers from well beyond its
Florida location. Majesty would give customers low estimates,
but once the household goods were on a truck, the movers would
demand payment two to ten times the original quote. Majesty
often put the goods in a rented storage unit unknown to the
customer and defaulted on the rent if the customer did not pay
the extorted amount. The storage facility would eventually take
possession of the customer's goods due to nonpayment of the
rent. Some of the Majesty's customers never saw their goods
again. In 2004, Majesty's owner was convicted of multiple
felony counts and sentenced to over 12 years in Federal prison.
The court ordered him to pay nearly a million dollars in fines
and restitution. Fifteen other Majesty defendants were
convicted, and two remain fugitives. Mr. Chairman, these crimes
victimize Americans from all walks of life--retirees, disabled
veterans, single parents, young professionals, and families.
This morning, the Subcommittee will hear from a victim of one
of these extortion schemes. These criminal enterprises came to
our attention after regulation of interstate household goods
transportation was transferred from the ICC to the Department
of Transportation and ultimately to the Federal Motor Carrier
Safety Administration. While we have not audited its household
goods program, we recognize that FMCSA has taken steps to
increase its household goods enforcement and outreach efforts
over the last several years. We would also like to commend the
industry for its efforts to educate and assist the public in
combating the hostage goods problem. As the Federal Motor
Carrier Safety Administration moves forward to carry out the
SAFETEA-LU provisions and better protect consumers, we have the
following near-term recommendations: First, SAFETEA-LU requires
that the department establish and make public a data base of
complaints for consumers that they can check. FMCSA has a
database that lists complaints by category, and they have a
toll-free number that you can call and check for a registration
on an operator, but they have not yet made the database public,
and they need to do so promptly in time for this year's moving
season. Second, state and local enforcement personnel now have
the authority to put out of service commercial vehicles who do
not have valid registrations with the DOT. We found that many
of these fraudulent companies fail to register with DOT and the
FMCSA, and the agency needs to ensure that the local
enforcement people know they can put these people out of
service. Third, FMCSA needs to do more to implement the
SAFETEA-LU provisions, especially with respect to state
enforcement of some of these Federal consumer protection
provisions. Legitimate concerns have been expressed about the
potential for inconsistent enforcement by the states. FMCSA
needs to devote much greater attention to addressing these
concerns. For example, we think that the working group
established by SAFETEA-LU on enforcement can be instrumental
here, but FMCSA needs to ensure that greater progress is made.
We also note that GAO has been directed by SAFETEA-LU to study
and report to Congress by early 2007 on the issues surrounding
state enforcement of consumer protections concerning household
goods.
In conclusion, Mr. Chairman, we pledge in the Office of
Inspector General to continue our investigations and to work
with Congress, the Department, consumer groups, and the
industry to remove the criminal element from this important
industry, and I'd be happy to answer any questions that the
Subcommittee may have.
[The prepared statement of Mr. Zinser follows:]
Prepared Statement of Todd J. Zinser, Acting Inspector General,
Department of Transportation
Chairman Lott, Ranking Member Inouye, and Members of the
Subcommittee:
Thank you for the opportunity to testify today on household goods
transportation fraud. This is a serious problem with thousands of
victims across the country. Although the vast majority of the well over
one million interstate household goods shipments each year are
conducted by hard-working professionals and honest household goods
carriers, our investigations have found criminal elements that operate
at the fringe of the industry and victimize the public.
In April 2005, we testified before your Committee and highlighted
this problem, among other issues related to the surface transportation
reauthorization bill. We discussed legislative proposals to better
protect consumers from household goods fraud, and Congress subsequently
incorporated several provisions in SAFETEA-LU \1\ to strengthen
consumer protection. We want to continue to work with the Congress and
the Department to remove the criminal element from this important
industry, and we appreciate the opportunity to update the Committee on
our investigative work in this area.
---------------------------------------------------------------------------
\1\ The Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users.
---------------------------------------------------------------------------
Since 2000, our investigations have led to the prosecution of 25
household goods carriers (many operating under multiple names), along
with their officers and employees, for allegedly defrauding about 8,000
victims nationwide. These investigations resulted in 90 convictions and
nearly $16 million in fines, restitution, and other monetary
recoveries. The offenders were sentenced to jail terms totaling over
175 years, with some receiving prison terms exceeding 12 years. Another
25 individuals who were indicted remain fugitives.
The criminal conduct we have targeted through our investigations
consists of holding a customer's household goods hostage while
demanding significantly larger sums of money than quoted. In carrying
out this crime, the perpetrators engage in extortion, conspiracy, wire
fraud, mail fraud, money laundering, and falsification of bills of
lading and shipment weight documents. Thanks to SAFETEA-LU, there is
now a specific criminal statute that makes holding household goods
hostage a Federal felony.
Our household goods criminal investigations are often conducted
with the FBI and with the assistance of the Federal Motor Carrier
Safety Administration (FMCSA). In several cases, we carried out
undercover operations in which our agents and those from the FBI posed
as consumers to catch perpetrators in the act. In many cases, state and
local law enforcement officials also participate in the investigation.
Here are some examples of investigations that resulted in significant
and successful prosecutions.
After extorting over $2.3 million from 1,200 victims, the
owner of a now-defunct Florida carrier, Majesty Moving and
Storage, was convicted of extortion, wire fraud, conspiracy to
commit money laundering, and creating false bills of lading. He
was sentenced to more than 12 years in Federal prison. At the
defendant's January 2005 sentencing, the judge expressed
outrage for the ordeals that victims had been through at the
hands of the defendant who had made himself rich ``victimizing
people who simply wanted their belongings moved . . . ''
Fifteen other company employees were also convicted, while 2
other employees remain fugitives.
Four individuals who operated Starving Students Moving and
Storage, in Brooklyn, New York, were prosecuted for defrauding
approximately 150 customers and holding the customers'
household goods hostage. Two received Federal prison sentences
of 12\1/2\ years. In addition to the prison sentences, the
defendants were ordered to pay over $2.5 million in fines and
restitution. Starving Students conducted similar business
practices under 4 other company names.
Ego Line Moving & Storage of California defrauded
approximately 500 victims nationwide of over $1.5 million
during a 3-year period. Sometimes, if a customer refused to pay
significantly inflated charges, their household goods were
simply tossed out of the truck. Four persons were convicted in
Federal court for this scheme, and 3 were imprisoned.
Three employees of All Points USA, a Florida moving company,
were convicted of various offenses in Federal court including
wire fraud, mail fraud, extortion and conspiracy. The 1,100
victims of the fraud suffered losses of more than $2 million
over the course of the 4-year conspiracy. One employee was
sentenced to 7 years in Federal prison while the other 2
received 5-year sentences. All 3 were ordered to pay a total of
over $1 million in restitution. The 2 owners of the company are
believed to have fled the country and remain fugitives.
The victims of these crimes come from all walks of life. They
include retirees, disabled veterans, single parents, young
professionals, and families who many times have entrusted almost all of
their possessions to companies who appear legitimate but soon reveal
their criminal nature. In some instances, the victims never see their
belongings again, or they recover their damaged possessions many months
later. Sometimes their goods are looted and sold, or end up in the
homes of the perpetrators. Here are a few examples of how victims
suffered from this particularly cruel form of extortion.
Household goods belonging to a mother and infant were held
hostage for more than a year because the mother did not pay the
carrier's demand of a five-fold increase in the cost of their
move from New York to Florida.
A West Virginia couple paid $5,000 in bogus charges after
the carrier threatened that they would never again see their
household goods, which included a piano that had belonged to
the couple's deceased son. Although they eventually received
their goods, the piano had been damaged beyond repair.
An elderly New York couple, intimidated and fearing physical
harm from a moving crew, paid $5,000 for a move quoted at
$1,500.
A Massachusetts woman testified at trial that she felt
``violated'' when a carrier loaded her goods on a truck and
demanded $16,000--more than four times the company's estimate
of $3,600.
A family of nine, moving from Illinois to California, took
only clothes and a few other personal possessions. The rest of
their belongings, including the textbooks for the home-schooled
children, were loaded onto a truck. The moving company refused
to deliver their household goods until they paid $7,700 for a
move quoted at $1,500. Unable to pay, they were forced to live
6 weeks in an empty house. To this day, family members are
overcome with emotion when recalling their ordeal.
Criminal enterprises, like the one that victimized that family,
first came to our attention when the Interstate Commerce Commission
(ICC) was terminated at the close of 1995, and authority for regulating
interstate household goods transportation was transferred to the
Department of Transportation. FMCSA now has responsibility for day-to-
day regulation of interstate household goods movers, although its role
is more limited than the ICC's.
Under current statutory provisions, customers are responsible for
resolving their own loss or damage disputes with movers by going to
court or using an arbitration program that each household goods carrier
is required to establish. Our office has authority to investigate fraud
involving any entity regulated by the Department. In the case of
household goods fraud, we open investigations when there are
allegations that large numbers of consumers have been victimized
through schemes to hold their household goods hostage. Generally, we do
not investigate individual consumer complaints.
We recognize that FMCSA has increased the attention it pays to
household goods enforcement and outreach over the last several years.
We have not assessed the effectiveness of the increased activities.
However, based on our review of the new SAFETEA-LU provisions and audit
work we have carried out in other areas of FMCSA's programs and
operations, we would make the following 3 recommendations for FMCSA in
the near term as it moves to better protect the consumer.
First, SAFETEA-LU requires that the Department establish a
database for consumer complaints on household goods carriers
and make the information available to the public. We understand
that FMCSA maintains a database at its headquarters that lists
complaints broken into categories, including goods being held
hostage.
FMCSA is working to establish a system meeting the public
access requirement. Such a system will enable the public to
identify carriers with multiple complaints, and perhaps avoid
carriers with a track record of complaints of holding household
goods hostage. SAFETEA-LU gives FMCSA until August 2006 to meet
the database and public access requirement. FMCSA informed
Congress in 2003 that it would develop a web-based report
providing public access to mover complaint history in response
to a 2001 Government Accountability Office recommendation. As
the busiest time for moving--summer--is fast approaching, FMCSA
should promptly complete its work to make this information
available to the public in time for this year's moving season.
Aside from providing consumers with a tool for making better-
informed decisions when selecting a mover, public access to
complaint information may have the added benefit of improving
the information FMCSA has to conduct its enforcement and
oversight operations. Our audit work regarding motor carrier
safety information has shown that when data are made public,
greater attention is devoted by the agency to ensuring that the
data are complete, timely, and accurate. Such improved data can
be used by FMCSA to better target its enforcement work and
assess the success of its outreach efforts.
Second, the Committee's attention to cross-border trucking
safety issues raised in our previous audit work helped clearly
establish the authority of state enforcement personnel to place
commercial vehicles ``out of service,'' if they do not have
valid operating authority from FMCSA. By this action, a vehicle
must cease operations until proper operating authority is
obtained.
Because our investigations have identified household goods
carriers doing business without operating authority or after
having their authority revoked, this authority to bar these
vehicles from the highways provides state officials with
another tool to use against corrupt interstate household goods
movers. FMCSA should ensure state enforcement personnel use
this tool when possible against unregistered or suspended
carriers that hold household goods hostage or commit other
fraud. This tool can be used to place ``out of service'' any
vehicles that continue to operate after operating authority is
suspended. SAFETEA-LU also allows the Secretary to suspend the
registration of a carrier holding a shipment hostage.
Third, in our view, FMCSA can do more to implement the
SAFETEA-LU provision which allows states to enforce Federal
consumer protection provisions for individual shippers, as
determined by the Secretary. Although legitimate concerns about
the potential for inconsistent enforcement by state authorities
should be addressed, we view state enforcement as a positive
factor. In particular, it would be beneficial to leverage state
enforcement resources against movers who hold household goods
hostage.
Common Household Goods Fraud Schemes
Our fraud investigations have been concentrated in South Florida,
the greater New York City metropolitan area, and California. However,
the problem is not confined to those regions, and other states covered
in our investigations include Colorado, Illinois, Oregon and Washington
state, with victims from all over the country. The number of household
goods criminal cases we have investigated has remained fairly constant
over the past 3 years, although the number of complaints we receive
concerning household goods on our IG Hotline has increased
significantly during that time. FMCSA's hotline for household goods has
seen increases as well.
The fraud carried out by Majesty Moving and Storage of Plantation,
Florida, illustrates the schemes used by virtually all the operators we
have investigated. Majesty, whose owners were sentenced last year,
defrauded over 1,200 victims out of over $2.3 million. To conceal their
complaint history and to avoid enforcement action, Majesty frequently
operated under a variety of names, such as Apollo Van Lines, America's
Best Movers, Movers Express, Star Movers, and First Class Moving. They
also used the name Mayflower Express, for which they maintained an
advertisement in a telephone directory that stated ``Mayflower
Express--Move with the Name You Trust.'' This served to confuse
consumers into thinking they were dealing with Mayflower Transit, a
legitimate and long-established mover. Mayflower Transit successfully
sued Mayflower Express to stop the unauthorized use of its Mayflower
trade name and logo.
Prior to the advent of the Internet, operators such as Majesty
relied primarily on advertising through telephone directories,
newspapers, and direct mail. The Internet has broadened the market, and
for unscrupulous movers, this enables them to lure customers well
beyond their local area.
Majesty used the Internet to bring in most of its customers by
subscribing to ``find a mover'' websites. For a fee, these websites
forwarded leads on prospective customers to their subscribers. Carriers
such as Majesty in turn contacted potential customers and provided
estimates for household goods moves that were often considerably lower
than most legitimate carriers.
The estimates were also typically calculated based on volume (as
measured in cubic feet) rather than by the common method of calculating
based on the actual weight of the goods. Estimating by volume (the
amount of space the goods occupied in the truck) created greater
opportunities for fraud. Our investigations disclosed that movers would
often put small items in large boxes and leave empty space between the
truck's bulkhead and the first row of boxes.
Majesty did not provide on-site estimates. Rather, it calculated
its volume estimates based upon a written or verbal list of items
provided by the customer via telephone, fax or e-mail. To justify
charging for additional cubic feet, Majesty often claimed that the
customer added items on moving day and withheld items from the original
estimate list. Prior to having their household goods picked up by
Majesty, customers were required to pay a deposit.
After household goods had been loaded onto the truck, the customer
would be informed that they had more goods than originally estimated
and that the cost of their move had increased often 2 and even up to 10
times the original price. If a customer protested the price increase
and demanded their goods be unloaded, Majesty typically drove away with
the customer's goods.
Household goods were then often stored in a rented storage unit
located near where they had been picked up. Typically, the first
month's rent was free to the movers and they would pay only one
additional month's rent. If the customer chose not to pay the inflated
``hostage'' price, the moving company would not make any further rent
payments. The storage facility would eventually seize and auction or
otherwise dispose of the customer's goods, due to non-payment of the
rent. In some instances we found that moving company employees had
stolen items from customer shipments--even using some of the stolen
shipments to furnish their own homes.
In 2004, Majesty's owner, Yair Malol, was convicted of multiple
felony counts of wire fraud, extortion, creating a false bill of lading
and conspiracy to commit money laundering. Malol was sentenced to over
12 years in Federal prison and ordered to pay $986,665 in restitution.
When his prison term is completed, Malol will be surrendered to the
Bureau of Immigration and Customs Enforcement for proceedings to expel
him from the United States. Fifteen other Majesty defendants were also
convicted, while eight defendants remain fugitives.
Nearly all of our investigations involve fraud schemes similar to
those employed by Majesty. In another case, involving a California
company named Ego Line Moving & Storage, the movers sometimes simply
tossed the victims' possessions from the truck and onto the pavement,
rather than store them. Ego Line defrauded approximately 500 victims
nationwide of nearly $1.5 million during a 3-year period.
Owners of a company called Starving Students Moving and Storage,
which also did business under three other names, used what Federal
prosecutors called a ``blizzard of lies'' to trick unwitting customers
into making large additional payments. If customers balked, their goods
were held in a warehouse until more money was paid. The defendants
created multiple websites to attract customers, such as
``FlatPriceMove.com.'' Two of the four defendants in this case were
each sentenced to over 12 years imprisonment. Restitution and fines in
the case totaled over $2.5 million.
Starving Students was preceded by yet another company, Jacoby
Moving and Storage (Jacoby), owned by Avinoam Damti. Jacoby had been
the subject of numerous complaints, and its interstate operating
authority was revoked in September 1996 and its intrastate authority
was revoked in February 1997. About 2 weeks later, Starving Students
applied for operating authority, listing Damti's brother-in-law as
president. Two other companies applied for operating authority in 2000.
Each of the three applications listed a different co-defendant as its
president, serving to conceal that the fourth defendant, Damti,
president and owner of the revoked Jacoby, was the actual owner of all
three new companies.
Conclusion
From our perspective, Subtitle B of SAFETEA-LU includes important
safeguards for consumers moving their household goods. We also commend
the industry for its efforts to educate and assist the public in
combating the hostage goods problem. Although it is too early to gauge
the full effect of the SAFETEA-LU provisions, we have specific comments
on two: the provision creating a Federal felony of holding goods
hostage, with a two-year maximum penalty for each count, and another
granting states the authority to take enforcement actions under Title
49 of the United States Code and associated regulations.
The new Federal felony sends a strong message that the government
takes this criminal conduct very seriously. That alone is likely to
have a significant deterrent effect. The existence of a Federal statute
may also simplify the prosecution of some of these cases. Up to now,
our cases have relied on a number of different Federal statutes, such
as wire fraud, conspiracy, and extortion, to convict perpetrators of
household goods fraud. One significant concern, which we commented on
last year, is that the 2-year maximum penalty established by SAFETEA-LU
is not on par with other Federal felonies. Federal felonies typically
have at least a 5-year maximum penalty, and prosecutors may be less
inclined to use the new statute because of the relatively low sentence.
SAFETEA-LU also provides that states can enforce consumer
protection provisions for individual shippers, as determined by the
Secretary. We previously supported granting states enforcement
authority in this area and continue to do so. Currently, states are
limited in their ability to enforce some state laws, including certain
consumer protection provisions, because Federal law preempts
application of these state laws with respect to interstate moves. \2\
While legitimate concerns about the potential for inconsistent
enforcement by state authorities should be addressed, we view state
enforcement of designated Federal provisions as a positive factor. In
particular, it would be beneficial to leverage state enforcement
resources against movers who hold household goods hostage.
---------------------------------------------------------------------------
\2\ The Carmack Amendment was enacted in 1906 to establish a
uniform system of liability to eliminate uncertainty associated with
conflicting state laws on interstate shipments.
---------------------------------------------------------------------------
At present, corrupt household goods movers are generally not
Federally prosecuted until numerous victims are identified and a large-
scale case is developed. For example, the hostage goods cases we
investigate often involve hundreds or even over a thousand victims,
with fraud totaling millions of dollars. State authorities are in a
better position to pursue cases with fewer victims and smaller losses,
and to provide more timely action to stop unscrupulous movers--perhaps
even while the hostage goods are still on the truck.
Given the large number of victims and the serious impact this crime
has on their lives, investigative and prosecutorial resources at all
levels must be used to combat household goods fraud. We will continue
to do our part investigating these crimes. We will also continue to
work with the Congress and the Department, along with consumer groups
and industry, to seek ways to remove these criminal elements from the
household goods industry.
This concludes our testimony. We would be glad to answer any
questions that you have.
Senator Lott. Thank you very much. I'll have some questions
when all the panel has made their statement. So we are
delighted to have now Mr. J. Joseph Curran, the Attorney
General of the State of Maryland, and we'll be glad to hear
from you. I suspect you know a fellow former Attorney General
who just arrived here. Perhaps before we go to you, Mr. Curran,
if you would bear with me just a second. I don't want to rush
you, but Senator Pryor has provided leadership in this area,
worked on the legislation last year, and I'd give you an
opportunity to make a statement at this point if you'd like,
Senator Pryor.
STATEMENT OF HON. MARK PRYOR,
U.S. SENATOR FROM ARKANSAS
Senator Pryor. Well, thank you. I have a statement for the
record, but Senator Lott's really shown a lot of leadership in
this. We appreciate you and all the things that you are doing.
I am sorry I am running late. I just caught a--got caught in
traffic. Have you ever--has that ever happened to you?
Senator Lott. Not in Mississippi.
[Laughter.]
Senator Pryor. Well anyway, thank you, Mr. Chairman, for
doing this and agreeing to this, and I want to thank all the
panelists for being here. I know it's taken some time, and the
staff has spent a lot of time pulling this together. So thank
you all for doing that, and I'll have a few questions. Thank
you.
[The prepared statement of Senator Pryor follows:]
Prepared Statement of Mark Pryor, U.S. Senator from Arkansas
This Committee--myself, Senators Lott, Inouye, Stevens, and
McCain--spent a lot of time and worked very hard last year to craft a
workable and sensible consumer protection framework for household goods
movers as a part of SAFETEA-LU
The legislation that ultimately passed represented a compromise
between legitimate moving companies, consumer protection groups and
advocates, the Administration, states, and Members here on the
Committee.
That compromise was temporarily altered during last year's
consideration of the Transportation, Treasury, Housing and Urban
Development, the Judiciary, and Independent Agencies Appropriations
Act.
Those changes resulted in less--not more--protection to consumers
entrusting all their possessions to moving companies.
I believe this watering down of the legislation we all worked so
hard to pass is unprecedented in consumer protection law, and we must
ensure that all of our colleagues and our constituents understand the
ramifications of those changes.
One of the central features of the legislation was to allow states
to enforce portions of the Federal law to give consumers immediate
recourse when their goods are held hostage.
The changes made in the TTHUD Appropriations legislation would
greatly limit that ability, and would force consumers to continue to
rely on the FMCSA for redress--an option that has proven over the years
to not be the best one for consumers.
FMCSA is a safety agency--they do not have the people power to
address every one of the over 3,000 complaints they receive each year
on rogue movers. We must fix this problem.
Mr. Chairman, I thank you for holding this hearing, and I want you
to know, and I want my colleagues to know, that I think it is very
important that we get this right.
I will continue to work hard on this issue until we do.
Senator Lott. Partially also, I live in Washington, D.C.
where I can walk to work. You know, in view of the present
gasoline prices, I need that option.
Mr. Curran.
STATEMENT OF J. JOSEPH CURRAN, JR., ATTORNEY GENERAL, STATE OF
MARYLAND
Mr. Curran. Well, thank you very much for permitting me to
stop over this morning and talk about what we need--the State
of Maryland--the Attorney General's Office would like to have.
And I might add it was but only 2 years ago that I signed a
letter with 37 other Attorneys General directed to the House
Committee studying this very issue, so it is something that we
in the Attorneys General offices across the Nation have had
concerns about. Now, let me just share with you the practical
realities of what really happens in this area. People do move
for a variety of reasons--job changes, come closer to your
family, come to the Washington area. And so, the reality is
people do move. Now, what happens is that if a Maryland
resident were to move, say, from Silver Spring to Baltimore,
they are protected by the Maryland Consumer Protection Act, and
we are able to help them with their local contact. You had
mentioned that if you wanted to move, you would want to deal
with somebody local. Well, it's so easy to have access to the
Attorney General's Office rather than someplace in the Federal
administration or Federal bureaucracy. Where they are in
Baltimore, we have at all times some 20 persons answering phone
calls from citizens all over the state on a variety of issues,
so there is ready access for that person who moves and has an
egregious complaint. Whereas--as in the case I think you will
hear from another panel person--whereas if you move from
Richmond, Virginia to Baltimore, you are not covered by the
Maryland Act. The same consumer, the same citizen, the same
person who lives in our state now has to deal with what I think
is the less than effective Federal Act. So all we really want
is the ability to treat consumers the same, whether they move
from Richmond to Baltimore or Silver Spring to Baltimore, where
there is an egregious act. Now, in the matter of complaints, we
are not acting, you know, outrageously, we are dealing with the
kinds of complaints that Mr. Zinser just talked about--things
where there are fraudulent, deceptive acts covered by our
Maryland Act, where if a mover attempts to hold hostage the
goods from this person who moved from Richmond until they pay a
higher price, our Maryland Act now, if it were able to be
covered, would require that the customer only pay the estimate,
but the mover has the right to sue in court. In other words, we
don't want to deny the mover the right to make a legitimate
claim, but do it in a court action, not on the sidewalk
complaining that we are not going to move your goods until you
pay more. We had to change our law in 2002 because those things
actually did happen. So I think I am--although I am speaking
today only for the Maryland Attorney General's office, I want
to let you know that I did have the chance just 2 years ago to
join 47 other Attorneys General who say let us handle the
citizen's complaint in our state in our consumer protection
office. And I think that's the point that I--although I can't
speak for them now, I--it leaves me certain that they all feel
the same way. We have an effective law. We have ready access.
We have volunteers on the job. We can mediate. We can turn
these things around quickly if you just give us the
opportunity. Now, I know that might not be the thrust of the
current bill, but I am saying if, in your wisdom, you have the
chance to take a look at what we are saying in our statements--
and I have given my statements and showed the number of claims
we have brought against them--Maryland moving people. We get
about 200 complaints a year, half of which are about interstate
and half of which are intrastate.
Senator Lott. How many?
Mr. Curran. 200, sir, so that's a volume. Now, I admit some
of them may--well, you broke my piano--well, you scratched the
furniture, and that's something else. However, when there is a
broken piano or there is a scratched cabinet, and if the moving
company has said you have insurance and, in fact, you don't
have insurance, that's a fraudulent claim. We have had things
like that--the moving company charges a premium for insurance,
but there is no insurance. So yes, we would step in there on a
broken piano or damaged goods, but most of these things are
holding hostage, lowball estimates, putting in some term upon
arrival that was never in the original estimate. They are
things that really offend people, and all we are asking is the
ability to go against those persons who are doing bad things,
egregious things, things that offend consumers. We are not
trying to hurt legitimate businesspeople. In fact, legitimate
businesspeople don't do bad things, rarely do bad things, so we
are just saying give us the authority in Maryland to use the
Maryland law to help a Maryland consumer whether he or she
moves from Richmond to Baltimore or Silver Spring to Baltimore.
And that's essentially the thrust of my position on behalf of
Maryland, but I daresay it's still the position of the other
distinguished men and women that I have had a chance to work
with, such as the wonderful Senator from Arkansas who did a
great job as the Attorney General, and I am convinced is even
doing just as great a job here. And if you'll----
Senator Lott. He's got real potential, and I am working.
[Laughter.]
Senator Lott. If he'll learn to vote with me a little more,
although he is making some movement in that direction. I think
he's got great potential, sir.
Mr. Curran. Senator, if you would permit me----
Senator Lott. Thank you, Mr. Attorney General.
Mr. Curran.--I had mentioned to the National Association of
Attorneys General people--although it is not all that far from
here to Baltimore, I am supposed to be back around noon. And if
you'll permit me, I am leaving one of our staff.
Senator Lott. Well, before you leave, I wonder if former
Attorney General Pryor might want to address a question or two
to you.
Mr. Curran. OK.
Senator Lott. I suspect maybe you're a little antsy to
maybe get into this discussion, so you want to jump in here?
Senator Pryor. I'd just like to ask a couple of questions
if I could, Attorney General Curran, and thanks again for being
here. I know you had to adjust your schedule to do it, and we
really really appreciate it. You talked about how you have
about 200 complaints a year--half interstate, half----
Mr. Curran. Yes.
Senator Pryor.--intrastate. The numbers that you have
there, how many are situations where the goods are really being
held hostage? You know, there is really a problem, and I
understand this problem because in our Attorney General's
office we handled a lot of smaller complaints about movers who
may have broken this or scratched that, or they didn't have
insurance. Do you have a sense from your statistics--and I
don't even know if your office keeps that type of statistic--
but do you have a sense of how many are actually held hostage?
Mr. Curran. Yes, sir, we do. And I have a category from
2003 to 2005, so it's not an expansive one, but we have a
category called Failure To Unload Goods, and we interpret that
to mean being held hostage.
Senator Pryor. Right.
Mr. Curran. It has not been a large number--22 in 2003, 26
in 2004, and 9 in 2005 on the hostage thing. Now, as I said,
primarily in 2002, we passed a law that says you can't hold
hostage in Maryland in intrastate, and we require them to pay
the estimated price, but let the moving company sue us in
court. So there are the numbers. They are not----
Senator Pryor. OK.
Mr. Curran.--large numbers.
Senator Pryor. So when your office contacts a moving
company--generally speaking, is the moving company responsive
to your office? Do they try to work with you? Do they try to
get it straightened out?
Mr. Curran. It's a mixed bag, as you might expect. We do
have a mediation service. If it's an intrastate within state
borders, we have the leverage of our law. And therefore, we
call and say this is the Attorney General's Office, we'd like
to talk to you about a problem that has been raised by this
consumer. We generally get a pretty good reception because we
have the leverage of our law and which--and this is the thing
of--we can get restitution, we can get a civil penalty, we can
get our costs, and we can get injunctive relief. So we have
that leverage. So I would say they are going to pick up the
phone and talk to us. And you know, we are not cowboys on these
things, we try to be constructive. But if it's interstate,
Richmond or Missouri to Baltimore, we don't have that leverage.
And therefore, we try to mediate. But in all fairness, they're
smart enough to know that we don't have any leverage, and we
don't get the cooperation we'd like. Now, some of these things,
as I say, are a broken piano or a scratched table, and that's
in--on these complaints too. I don't want to mislead you, there
are 200 complaints a year about hostage. That's not the case.
Senator Pryor. Right, I understand. No, I think you have
been very clear on that. Mr. Chairman, I think that's all I
have.
[The prepared statement of Mr. Curran as follows:]
Prepared Statement of J. Joseph Curran, Jr., Attorney General, State of
Maryland
Good morning and thank you for the opportunity to address this
Committee regarding the need for State Attorneys General to enforce
laws to protect consumers who are victims of deceptive practices by
interstate movers. We believe we should be able to provide our citizens
with the same protection when they move to Rockville, Maryland from
Milwaukee, Wisconsin that we are currently able to provide them when
they move to Rockville from Baltimore.
Currently, consumers are extremely vulnerable to unscrupulous
interstate movers. A 2001 report from the GAO concluded that, since the
termination of the Interstate Commerce Commission in 1996, there has
been virtually no oversight of interstate movers at the Federal level.
While Federal enforcement has increased recently, as the Federal Motor
Carrier Safety Administration reported that it fined 17 movers in 2005
for violations, that represents only a small dent in addressing the
more than 10,000 consumer complaints it has received since 2001.
Additionally, the Federal authority is limited to imposing fines
upon moving companies, while State Attorneys General have the authority
under state consumer protection laws to also seek restitution for
injured consumers and obtain injunctive relief against deceptive
practices. However, many state and Federal courts, interpreting the
Carmack Amendment, have held that the Amendment precludes state
agencies, including State Attorneys General, from enforcing state
consumer protection laws when interstate movers harm consumers. Last
year, Congress briefly gave State Attorneys General limited authority
to enforce Federal law and regulations against interstate movers, but
revoked that authority shortly thereafter.
Each year, my office receives between 150 and 200 complaints from
consumers about problems they've experienced with household goods
movers. Those complaints are fairly evenly divided between complaints
involving interstate moves and complaints involving intrastate moves.
Here is an example of a complaint my office received against an
interstate mover:
A consumer who was moving from Rockville, Maryland to
Rehoboth Beach, Delaware was given an estimate of $1,495 for
the move. On the day of the move, the moving company arrived
and told the consumer for the first time that there would be a
surcharge of 40 cents per pound for ``additional weight'' that
had not been included in the estimate. On the day of the move,
the consumer was told the move would cost $2,847, almost double
the original estimate. The consumer paid, having no other
choice at that point. Attempts by the consumer and by my office
to resolve the complaint with the moving company have been
unsuccessful.
At the present time, there was no further action that my office
could take to assist the consumer. By contrast, we have been able to
address these types of complaints against intrastate movers through our
state consumer protection laws.
In 2002, Maryland's General Assembly enacted the Maryland Household
Goods Movers Act, which prohibits a household goods mover from
enforcing or threatening to enforce a lien against a consumer's
household goods in relation to an intrastate move. This law was passed
in response to numerous complaints from consumers about household goods
movers who would provide consumers with estimates for moving the
consumer's goods and then, on the day of the move, refuse to unload the
consumer's goods unless the consumer paid a price that significantly
exceeded the estimate. Since the law took effect, the number of
complaints received by my office concerning a mover refusing to unload
a consumer's goods during an intrastate move has dropped each year,
from 11 in 2003 after the Maryland law first took effect, to 8 in 2004,
to only 2 such complaints in 2005. By contrast, the number of similar
complaints involving the refusal to unload a consumer's goods during an
interstate move has gone from 10 in 2003, to 15 in 2004, and 7 in 2005.
When we have received complaints about intrastate moves, my office
has been able to successfully use our State consumer protection laws to
bring enforcement actions to protect Maryland consumers. My office has
entered into settlements with moving companies that had generated the
most complaints from Maryland consumers, including complaints about:
lowball estimates
refusing to unload consumers' goods when consumers were
being charged amounts on the day of the move that significantly
exceeded estimates
misrepresenting that consumers were being sold insurance
failing to disclose material contract terms
asserting liens that the movers were not legally-authorized
to assert, and
using contracts that made it unreasonably difficult for
consumers to file damage claims.
In 2003, my Consumer Protection Division entered into an Assurance
of Discontinuance with Starline Van Lines, Inc. d/b/a Prime Movers,
Inc., located in Beaver Heights, Maryland. Prime Movers agreed to
injunctive relief, including an agreement not to ask consumers to pay
more than 110 percent of the estimated price it provided the consumer.
Prime Movers agreed to pay restitution of all premiums charged to
consumers for insurance it did not procure and 50 percent of the amount
by which the price it charged consumers exceeded Prime Movers'
estimate. Prime Movers also agreed to pay a civil penalty and costs.
In 2002, my office entered into an Assurance of Discontinuance with
Magic Movers of Jessup, which since changed its name to 1st Class
Movers. Under the settlement, Magic Movers agreed to injunctive relief
designed to prevent the alleged practices, including an agreement by
Magic Movers to arbitrate consumer claims through my Consumer
Protection Division's arbitration program. Magic Movers also agreed to
pay restitution of insurance premiums collected from consumers for
insurance that was never procured and costs.
The Division was previously able to reach settlements in 2001 with
Mid-Atlantic Moving and Storage of Annapolis, which later became
Nationwide Moving and Storage Company of Forestville, Maryland, and
with Metro Moving and Storage Company of Hyattsville, Maryland, which
later became Metropolitan Moving and Storage Company. Both settlements
involved allegations similar to those in the Magic Movers and Prime
Movers cases and, in addition to injunctive relief addressing the
alleged violations of the Consumer Protection Act, required the
companies to pay civil penalties, costs, and restitution to injured
consumers.
My Consumer Protection Division is currently preparing to file an
enforcement action under Maryland's Consumer Protection Act against
another Maryland moving company that engaged in similar practices.
Although the authority that State Attorneys General were briefly
provided to address similar complaints involving interstate moves under
the Household Goods Mover Oversight and Reform Act of 2005 was limited
to enforcement of Federal laws and regulations in Federal courts, that
authority would have provided State Attorneys General with some
leverage to address many of those complaints. However, as stated in a
2004 letter to Congress in support of H.R. 1070 signed by the Attorneys
General of 48 states, we continue to believe that Attorneys General
should be able to enforce state consumer protection laws against rogue
interstate movers. We have used these laws to great effect in combating
fraud in other interstate industries and believe it would greatly
assist our efforts to protect our citizens against abusive practices by
interstate movers. Additionally, our state consumer protection laws
enable us to obtain relief for injured consumers, which is not a remedy
available under Federal law. The 2005 law provided for the Comptroller
General to study whether State Attorneys General should be given this
authority to help supplement limited enforcement at the Federal level.
I strongly urge this Committee to support legislation that would
allow State Attorneys General to enforce our consumer protection laws
to address abuses by interstate movers just as we are currently able to
do with respect to intrastate movers. I look forward to the day when
consumers can move their household goods confidently around the country
without the fear of fraud and abuse.
Attachment
National Association of Attorneys General
Washington, DC, January 21, 2004
Representative Thomas E. Petri,
Rayburn House Office Building,
Washington, DC.
Re: Securing Consumers' Assurance in Moving Act of 2003--
H.R. 1070
Honorable Thomas Petri:
We, the undersigned Attorneys General, are writing to express our
support for H.R. 1070, which would authorize State Attorneys General to
enforce our state laws to protect consumers who are victims of
deceptive practices by interstate movers.
Currently, consumers are extremely vulnerable to unscrupulous
interstate movers. Since the termination of the Interstate Commerce
Commission in 1996, there has been virtually no oversight of interstate
movers at the Federal level. At the same time, many State and Federal
courts, interpreting the Carmack Amendment, have held that the
Amendment precludes state agencies, including State Attorneys General,
from enforcing state consumer protection laws when interstate movers
harm consumers.
The results have been disastrous for many consumers. From 1996 to
1999, consumer complaints against interstate movers received by the
Federal Department of Transportation rose 107 percent. During that same
period, interstate moving complaints to the Better Business Bureau rose
72 percent. From 1996 to 2000, consumer requests for arbitration to the
American Moving and Storage Association (the moving industry's trade
association) rose 750 percent.
Consumers have been defenseless against a variety of deceptive or
fraudulent behaviors including, but not limited to:
Movers have tripled estimates for a move after they have
possession of the consumer's goods. If the consumer refuses to
pay the inflated bill, the mover holds the consumer's goods
hostage until it receives the money.
Consumers, who have tried to insure themselves against loss
and damage by purchasing ``valuation'' through their movers,
have complained that either the protection was worthless, or
that the mover pocketed the money rather than purchasing the
promised coverage.
Consumers have discovered charges on their credit cards for
moving services that they neither received nor authorized.
Although State Attorneys General have been able to address these
types of complaints against intrastate movers through our state
consumer protection laws, there is often very little that we, in the
state law enforcement community, can do to protect our citizens against
these and other consumer fraud problems in interstate moving.
H.R. 1070 provides a sensible and workable solution to this
problem. It explicitly gives States the authority to pursue rogue
interstate movers under state consumer protection laws. We have used
these laws to great effect in combating fraud in other interstate
industries. In fact, interstate movers are one of the only industries
arguably exempt from consumer protection laws. Given the record of
fraud and abuse in this area, it is time to eliminate this exemption.
The moving industry opposes H.R. 1070 for several reasons, each of
which is without merit. The moving industry has protested that H.R.
1070 will hurt legitimate movers--not rogue movers. This is not true.
This new law should not affect legitimate movers at all. Consumer
protection laws require only that movers not defraud their customers.
They are generally enforced by Attorneys General only when the State
finds that a mover has engaged in a pattern of fraud or deception.
Further, to the extent that interstate movers are also engaged in
intrastate moves, they are already subject to these laws.
The moving industry claims that it will face speculative liability
risks, such as damages for emotional distress. Consumer protection laws
typically allow the Attorney General to seek consumer restitution,
injunctive relief, and penalties against businesses that engage in
deceptive practices. Penalties generally are capped by statute, at a
set amount per violation. This is not the unlimited liability suggested
by the movers. While some States allow claims for emotional distress,
they must be related to what common law permits and will generally be
sought only in actions by individual consumers, not the States. In
these situations, the standard is quite high and often not easily
attainable by victims of consumer fraud. Typically, these laws are used
to redress physical injuries that are caused intentionally and are due
to gross negligence.
Meanwhile, the moving industry has proffered several unacceptable
suggestions for enforcement. One suggestion has been to provide States
with the ability to enforce the Federal regulations that govern
interstate moves. These are not consumer protection laws. The current
Federal regulations cover primarily the resolution of loss and damage
claims. They do not address fraud and deception. They are not designed
to make the consumer whole or to provide injunctive relief against
future deceptive practices by unscrupulous movers. They do not
adequately protect consumers, and therefore provide little incentive
for state enforcement.
An additional industry proposal would impose the requirement that a
State prove that a carrier's violation of the regulations is ``knowing
and persistent.'' This unreasonably high standard is not imposed upon
States in any other consumer protection laws, which generally require
only that the deceptive practices have the capacity and tendency to
deceive consumers. Further, the moving industry seeks to preclude
effective or meaningful litigation enforcement by State Attorneys
General by limiting state recovery in any enforcement action only to an
individual consumer rather than all consumers affected by violations.
The movers support the proposal to add $1 million and seven full-
time employees to the Federal Motor Carrier Safety Administration
(FMCSA) to handle consumer fraud complaints in interstate moving across
the country. Although the State Attorneys General welcome increased
Federal enforcement to protect consumers, FMCSA has gone on record
stating that they do not want this responsibility. Further, given the
magnitude of the problem, we believe that seven people would be
woefully inadequate to provide effective protection across the country.
Instead, we should be utilizing the resources of state and local
government consumer protection agencies across the country to
complement enforcement at the Federal level. Federal funds could be
much more wisely used as proposed under H.R. 1070--to coordinate
enforcement by state and Federal agencies and to provide information to
the public through a database of complaints about interstate movers.
We applaud you and your colleagues for proposing this important
piece of legislation. We look forward to the day when consumers can
move their household goods confidently around the country without fear
of fraud and abuse.
Sincerely,
Attorney General Gregg Renkes,
Attorney General of Alaska.
Attorney General Terry Goddard,
Attorney General of Arizona.
Attorney General Mike Beebe,
Attorney General of Arkansas.
Attorney General Bill Lockyer,
Attorney General of California.
Attorney General Ken Salazar,
Attorney General of Colorado.
Attorney General Richard Blumenthal,
Attorney General of Connecticut.
Attorney General M. Jane Brady,
Attorney General of Delaware.
Corporation Counsel Robert J. Spagnoletti,
Corporation Counsel of D.C.
Attorney General Charlie Crist,
Attorney General of Florida.
Attorney General Thurbert E. Baker,
Attorney General of Georgia.
Director Mark Recktenwald, *
---------------------------------------------------------------------------
* Of the states listed, Hawaii is not represented by its Attorney
General. Hawaii is represented by its Office of Consumer Protection, an
agency which is not a part of the state Attorney General's Office, but
which is statutorily authorized to represent the State of Hawaii in
consumer protection actions. For the sake of simplicity, the entire
group will be referred to as the ``Attorneys General,'' and such
designation as it pertains to Hawaii, refers to the Executive Director
of the State of Hawaii Office of Consumer Protection.
---------------------------------------------------------------------------
Office of Consumer Protection of Hawaii.
Attorney General Lawrence Wasden,
Attorney General of Idaho.
Attorney General Lisa Madigan,
Attorney General of Illinois.
Attorney General Stephen Carter,
Attorney General of Indiana.
Attorney General Tom Miller,
Attorney General of Iowa.
Attorney General Phill Kline,
Attorney General of Kansas.
Attorney General Gregory D. Stumbo,
Attorney General of Kentucky.
Attorney General Charles C. Foti, Jr.,
Attorney General of Louisiana.
Attorney General G. Steven Rowe,
Attorney General of Maine.
Attorney General J. Joseph Curran, Jr.,
Attorney General of Maryland.
Attorney General Tom Reilly,
Attorney General of Massachusetts.
Attorney General Michael A. Cox,
Attorney General of Michigan.
Attorney General Mike Hatch,
Attorney General of Minnesota.
Attorney General Jim Hood,
Attorney General of Mississippi.
Attorney General Jeremiah W. Nixon,
Attorney General of Missouri.
Attorney General Mike McGrath,
Attorney General of Montana.
Attorney General Brian Sandoval,
Attorney General of Nevada.
Attorney General Peter W. Heed,
Attorney General of New Hampshire.
Attorney General Peter C. Harvey,
Attorney General of New Jersey.
Attorney General Patricia Madrid,
Attorney General of New Mexico.
Attorney General Eliot Spitzer,
Attorney General of New York.
Attorney General Roy Cooper,
Attorney General of North Carolina.
Attorney General Wayne Stenehjem,
Attorney General of North Dakota.
Attorney General Jim Petro,
Attorney General of Ohio.
Attorney General W. A. Drew Edmondson,
Attorney General of Oklahoma.
Attorney General Hardy Myers,
Attorney General of Oregon.
Attorney General Gerald J. Pappert,
Attorney General of Pennsylvania.
Attorney General Patrick Lynch,
Attorney General of Rhode Island.
Attorney General Lawrence E. Long,
Attorney General of South Dakota.
Attorney General Paul Summers,
Attorney General of Tennessee.
Attorney General Greg Abbott,
Attorney General of Texas.
Attorney General Mark Shurtleff,
Attorney General of Utah.
Attorney General William H. Sorrell,
Attorney General of Vermont.
Attorney General Iver A. Stridiron,
Attorney General of Virgin Islands.
Attorney General Jerry Kilgore,
Attorney General of Virginia.
Attorney General Christine Gregoire,
Attorney General of Washington.
Attorney General Darrell V. McGraw, Jr.,
Attorney General of West Virginia.
Attorney General Peg Lautenschlager,
Attorney General of Wisconsin.
Co-Sponsors of H.R. 1070
Representatives:
Ackerman (D-N.Y.), Baird (D-Wash.), Baker, R. (R-La.), Beauprez
(R-Colo.), Brown, H. (R-S.C.), Brown, S. (D-Ohio), Brown-Waite
(R-Fla.), Burgess (R-Texas), Calvert (R-Calif.), Costello (D-
Ill.), Doyle (D-Pa.), Frost (D-Texas), Honda (D-Calif.),
Isakson (R-Ga.), Johnson, E.B. (D-Texas), Kleczka (D-Wis.),
LaTourette (R-Ohio), Lee (D-Calif.), Lipinski (D-Ill.), Lofgren
(D-Calif.), McCollum (D-Minn.), Mica (R-Fla.), Moran, James (D-
Va.), Pastor (D-Ariz.), Price, D. (D-N.C.), Rehberg (R-Mont.),
Watson (D-Calif.).
Senator Lott. All right. Good, let's proceed then. Mr.
Warren Hoemann, Deputy Administrator of Federal Motor Carrier
Safety Administration, DOT. We'll be glad to hear from you,
sir.
STATEMENT OF WARREN HOEMANN, ACTING
ADMINISTRATOR, FEDERAL MOTOR CARRIER SAFETY
ADMINISTRATION
Mr. Hoemann. Thank you, Chairman Lott and Senator Pryor. I
am pleased to appear before you to discuss FMCSA's programs
that help consumers protect themselves and help remove
unscrupulous movers and brokers from the household goods
industry. We have already talked about how stressful a move is.
About 40 million Americans relocate every year. 1.6 million of
those moves are interstate in nature, handled by about 4,000
companies. Now, the majority of those go very well, as we have
heard. But there are rogue movers who prey upon consumers, as
we have heard, from holding hostage loads, and there are
brokers exercising deceitful practices on the Internet,
requiring a deposit, for example, for a move and then never
arranging the move. And when the shipper--the consumer goes to
find that broker, that broker is nowhere to be seen. Now,
SAFETEA-LU did give us important tools to use, and we are very
grateful. With these new tools in hand, we have a two-pronged
approach--one is consumer education, and two, is very
aggressive enforcement. A well-informed consumer, we believe,
is the best defense against a rogue mover. We have developed a
consumer education program to inform consumers before the move
and help consumers protect themselves against dishonest and
rogue companies. We want consumers to have the power to make
safe and smart choices. Our consumer education program includes
a new website. Sorry to say there is a website, but it is
www.protectyourmove.gov. We also have a national household
goods partnership to help us spread the word on moving fraud,
and the partnership members include the Inspector General's
Office and state law enforcement, moving industry, and consumer
protection groups. Our future consumer education plans include
the development of new materials in English and Spanish. We are
expanding the website to address Internet moving fraud, and we
have an aggressive outreach program through the U.S. Postal
Service and the General Services Administration. Now, turning
to enforcement--in 2005, FMCSA received approximately 3,000
household goods complaints. Much like the Attorney General, a
good portion of those were about loss and damage, which we do
not oversee. However, we do oversee the more egregious
violations. What we do is monitor the geographic areas
generating the highest volume of complaints, and then we
conduct enforcement strike forces with our state partners in
those targeted areas. The largest volume of complaints
historically have come from--involving movers and brokers in
California, Florida, New Jersey, and New York, followed closely
by Georgia, Illinois, and Texas. Last year, we had strike
forces in those states, and we produced approximately 100
household goods compliance reviews--a top-to-bottom physical
under compliance, and 20 enforcement cases, which are the civil
actions that we are allowed to bring against carriers and
brokers. This year, we have already conducted two strike
forces--again returning to Florida, Georgia, and Texas, and
also taking action in Colorado to nip in the bud some growing
complaints there, and we successfully did that. Over the years
since 2001, we have significantly increased our enforcement. In
2001, we had 13 compliance reviews. Last year, we had 381. At
the same time, we have increased our enforcement cases from six
in 2001 to 43 last year. Earlier, I mentioned SAFETEA-LU made
important changes, and we are grateful for the new authority
for the State Attorneys General and state enforcement officers
to enforce the Federal household goods regulations through a
civil action against the carrier or broker. We need these
partners. We need them to have the same tools we do. We also
appreciate the establishment of the $10,000 penalty for the
hostage load violation, a per day penalty--thank you, and the
minimum $25,000 penalty for operating without registration.
Those put real teeth into our enforcement. On the near horizon
is a notice of proposed rulemaking we are preparing for
improved household goods broker regulation as also required by
SAFETEA-LU. Mr. Chairman, household goods fraud has a potential
to affect everyone. The goal of eliminating disreputable
companies from the business is one we all share. Our consumer
education program increases the awareness of the warning signs
of a disreputable mover and gives tools to the consumer. Our
enforcement and compliance program has yielded tangible
results. We believe the two combined together--education and
enforcement--is the surest way to address this threat, combined
with the cooperation of all levels of government, which we are
pledged to. Thank you, and I'll be happy for some questions.
[The prepared statement of Mr. Hoemann follows:]
Prepared Statement of Warren Hoemann, Acting Administrator, Federal
Motor Carrier Safety Administration
Introduction
Chairman Lott, Ranking Member Inouye, and Senators of the
Subcommittee, thank you for inviting me today to discuss the Federal
Motor Carrier Safety Administration's (FMCSA) oversight role in
household goods transportation. I am pleased to appear before you to
describe FMCSA outreach, education, enforcement, and compliance
programs that help consumers protect themselves during a move and help
to remove unscrupulous movers from the household goods industry.
Mr. Chairman, a household move can be a stressful undertaking, as
many of us in this room know firsthand. An estimated 40 million
Americans relocate each year, approximately 1.6 million of which are
interstate moves, handled by approximately 4,000 companies.
Fortunately, the majority of household moves are completed without
incident. Consumers in these moves are well served by registered,
legitimate, safe, and trustworthy household goods carriers. However,
there exists a small group of unscrupulous and dishonest movers that
gives the entire moving industry a bad name. These ``rogue movers''
prey upon distraught consumers by agreeing to haul their goods and then
holding their possessions hostage for exorbitant and unexpected fees.
Some of these movers never return the goods to the consumer, selling
them instead and pocketing the proceeds.
In addition to the moving companies, FMCSA focuses its attention on
those household goods brokers who conduct dishonest business practices.
Brokers are persons who act as a go between, arranging household goods
moves between a customer and a carrier. Dishonest brokers engage in
deceptive practices via the Internet. For example, a dishonest broker
may request an initial deposit for a move from the shipper and then
never arrange for the move. In the same instances, the shipper cannot
locate the broker because the broker does not have a physical address
listed or has moved and/or closed. It is these types of movers and
brokers that we seek to eliminate from the legitimate marketplace.
Background
The Department of Transportation (DOT) inherited the oversight of
the moving industry as a result of the Interstate Commerce Commission
(ICC) Termination Act of 1995 (the Act). Until the enactment of this
law sunsetting the Commission, the ICC issued and enforced consumer
protection regulations to ensure consumers arranging an interstate move
received basic information on tariffs, estimating requirements,
weighing practices, insurance coverage, and requirements for delivery.
DOT's inherited authority included jurisdiction over household goods
carriers and brokers to protect consumers on interstate moves by
defining the rights and responsibilities of consumers and household
goods carriers and brokers. The Act required motor carriers who
transport household goods for-hire in interstate commerce and brokers
who arrange the interstate transportation of household goods to comply
with Federal commercial regulations.
Among the functions transferred to FMCSA were the registration of
for-hire household goods carriers and brokers and the monitoring of
compliance with the financial responsibility requirements. In
transferring these commercial regulations to DOT, Congress directed the
discontinuation of the ICC's dispute resolution functions. Although the
ICC did not have the authority to resolve disputes involving loss or
damage, it assisted consumers by contacting carriers to encourage
timely claims handling. The Act instead encouraged consumers to resolve
household goods disputes through arbitration or by bringing a civil
action in a court of appropriate jurisdiction. These are the primary
means by which consumers can resolve loss and damage claims. The Act
did not give the Federal Highway Administration (FHWA), FMCSA's
predecessor agency, jurisdiction over dispute settlement. Should
consumers elect not to use binding arbitration, they can take the
carrier to court. Additionally, the Act established a private right of
action for a shipper to recover damages for carrier violations of the
commercial regulations. In essence, the ICC Termination Act ended the
Federal Government's role in resolving household goods disputes.
It is important to mention that FMCSA has oversight only over
interstate moves. Even then, FMCSA does not have jurisdiction over all
of these moves. FMCSA's consumer protection regulations apply only to
agreements between motor carriers and individual shippers. They do not
apply to household goods shipments moved under the terms and conditions
of a government bill of lading, which includes military moves, or so-
called national account shipments where a company arranges to move its
employees.
Until 2001, FMCSA and FHWA addressed household goods complaints
with a small number of specialists who handled a broad range of
household goods and regulatory matters. These specialists investigated
consumer complaints through contact with carriers to resolve instances
of alleged noncompliance. As the result of a Government Accountability
Office (GAO) audit in 2001, which identified a need to centralize
household goods complaint data, FMCSA expanded its program to centrally
collect complaint data. In August 2005, the enactment of the Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy
for Users (SAFETEA-LU) further required us to make that data available
to the public so that they can make better consumer choices by August
2006. We are now developing the prototype of the database and expect to
meet this statutory deadline.
SAFETEA-LU made other important changes affecting FMCSA's oversight
of household goods transportation. In order to address these new
responsibilities, FMCSA has developed a two-pronged approach. The first
is an enhanced outreach program to better educate consumers and the
second is an aggressive program to take enforcement actions against
noncompliant movers in the industry. I would like to describe each
briefly.
Consumer Outreach
A well-informed consumer is the best defense against the rogue
mover. Federal and State actions after the fact cannot recompense
injured consumers. In 2004, FMCSA's Safety Violation and Household
Goods Consumer Complaint Hotline at 1-888-DOT-SAFT (1-888-368-7238)
received an increased volume of household goods consumer calls, which
suggested a critical need for a more effective outreach and education
program. In response to this need, FMCSA developed a Consumer
Information Program to provide consumers with information to protect
themselves against dishonest and rogue movers. FMCSA relies on public
and private organizations, as well as the moving industry, to increase
consumer awareness of the moving process thereby enabling the consumer
to make a safe and successful move.
In FY 2005, Congress provided $1.5 million to FMCSA to develop
outreach initiatives to help educate the general public. We used these
funds to develop an outreach and education strategy, conducted market
research of the moving industry, and developed a communications plan
for deployment. During FY 2006, Congress provided $1 million for
household goods outreach and education initiatives. FMCSA will spend
these funds to develop new outreach materials in English and Spanish,
enhance our Protect Your Move website to focus on Internet moving
fraud, and evaluate our household goods consumer information program to
determine future enforcement and outreach initiatives.
For example, in February 2005, FMCSA established a national
Household Goods Partnership comprised of two Federal agencies, the U.S.
Postal Service and the Federal Maritime Commission, State law
enforcement agencies, consumer protection groups, and several moving
industry associations. The DOT Office of the Inspector General (OIG) is
also a partner. The group coordinates efforts to address moving fraud.
Additionally, the partnership has helped FMCSA launch a consumer
education campaign on how to have a successful move and avoid falling
victim to rogue movers. This campaign is called ``Protect Your
Memories. Your Money. Your Move.''
Following up on the partnership, in April 2005, FMCSA developed a
new Moving Fraud Prevention website to assist consumers
(www.protectyourmove.gov) that provides guidance and best practices to
help people avoid being taken advantage of, or worse, getting caught in
a scam by a rogue mover or broker. The site provides a list of
federally registered and insured movers and brokers. It provides
details about household goods regulations governing professional moving
companies, information about how to file a complaint in the event of a
problem, and moving tips on how to have a successful move.
Additionally, the website also serves as a resource for members of the
Household Goods Partnership by providing an online campaign toolbox for
conducting a ``Consumer Education Campaign to Reduce Moving Fraud.''
The website also provides links to local Better Business Bureaus,
consumer protection agencies, State Attorneys General, and moving
associations. Since its activation, the website has had more than 2.2
million hits.
A recent enhancement to our outreach efforts is an awareness
campaign through the Postal Service. We will soon distribute
approximately 11 million leaflets in its Mover's Guides to regions in
the United States that have the highest concentration of household
goods complaints (i.e., California, Florida, New Jersey, and New York).
Also through our partnership with the Postal Service, we expect to
reach roughly 1.8 million registrants via its online Change of Address
service, which provides an online move planning service for household
goods consumers.
Another way we have broadened our distribution of household goods
outreach brochures to the general public is through a cooperative
agreement with the U.S. General Services Administration's (GSA) Federal
Citizen Information Center. To date, GSA has distributed over 43,000
copies of the Ready to Move--Tips for a Successful Interstate Move
brochure. FMCSA sent copies of this brochure to all registered
household goods brokers to provide to their customers, and placed it on
our Protect Your Move website. In addition, we distributed over 50,000
of the brochures to our field offices, State governments, and
Partnership members for dissemination to the general public in their
area.
To continue to educate consumers, we recently updated our pamphlet,
Your Rights and Responsibilities When You Move, for the moving industry
to provide to its customers, as required by SAFETEA-LU. We will
distribute copies to our field offices and State offices. The updated
pamphlet can be downloaded from our website distribution. We published
a Federal Register Notice on April 7, 2006, revising the pamphlet to
incorporate the SAFETEA-LU changes. As part of our outreach efforts,
FMCSA provided over 443,000 Protect Your Move brochures and posters to
our field offices, State governments, and Partnership members for
dissemination to the general public in their area.
It is the Agency's plan to continue to work with our partners to
develop outreach initiatives and educate consumers about the moving
industry and its business practices. In addition to consumer outreach
and education, enforcement is a key tool in eliminating unscrupulous
movers from the moving industry.
Enforcement
FMCSA has increased its enforcement efforts in order to protect the
American public from illegal activities and deceitful business
practices by rogue moving companies. In 2005, we received almost 3,000
household goods complaints, which included 622 calls on hostage freight
situations, 575 on unauthorized operations, and 2,281 on pick-up and
delivery complaints. A good portion of the calls, 1,644, pertained to
lost and damaged goods. As mentioned earlier in this statement, FMCSA
does not have jurisdiction to resolve disputed loss and damage claims.
Mr. Chairman, as we increase our outreach and enforcement efforts in
this area, we expect that complaints will increase initially from these
current levels--a good indicator that we are reaching consumers and
educating them on ways to ensure a successful move. Once consumers
become more aware of the issues and pitfalls to avoid, we anticipate
complaints will decrease.
FMCSA enforcement staff continually monitors the geographic areas
containing movers who are subject to the highest volume of complaints.
FMCSA then conducts enforcement ``strike forces'' in these areas. The
largest volume of complaints involve movers and brokers located in the
States of California, Florida, New Jersey, and New York, followed
closely by the States of Georgia, Illinois, and Texas.
In FY 2005, FMCSA conducted strike forces in California and
Florida, and combined strike forces in New Jersey and New York, and
Illinois and Texas. These activities were conducted with the assistance
of various State entities, including the Florida Department of
Agriculture, the Texas Department of Public Service, and the New York
DOT. These four strike forces produced approximately 100 household
goods compliance reviews and 20 enforcement cases, which are civil
actions brought by FMCSA against the carrier or broker.
This fiscal year, FMCSA has conducted two of its four planned
strike force activities--the first of which was in Colorado. After
receiving numerous complaints at our Colorado Division office, our
enforcement staff worked closely with the Colorado Public Utilities
Commission to conduct this strike force. Of the 16 companies identified
for the strike force, all resulted in household goods compliance
reviews, which produced 3 enforcement cases. This successful action
substantially reduced the volume of household goods complaints received
by FMCSA's Colorado Division.
During the second strike force activity in FY 2006, FMCSA focused
its efforts in Florida. Additionally, these household goods compliance
reviews, based on the number of consumer complaints, were also
conducted in Georgia and Texas. A total of 47 household goods
compliance reviews were conducted, which resulted in 11 enforcement
cases to date. In Florida, we also discovered approximately 30
household goods carriers and brokers that were no longer in business.
Household Goods Compliance Reviews
FMCSA has increased its performance of household goods compliance
reviews since 2001. In FY 2001, a total of 13 household goods
compliance reviews were conducted. This steadily increased to 20 in FY
2002, 30 in FY 2003, to 52 in FY 2004. FMCSA's goal for household goods
compliance reviews in FY 2005 was 300, which included our strike force
activities. We exceeded our goal with a total of 381 household goods
compliance reviews. FMCSA's goal in FY 2006, which also includes strike
force activities, is 450 household goods compliance reviews, a goal we
are pursuing aggressively.
Currently, household goods compliance reviews are conducted based
on complaint data that is captured in FMCSA's National Commercial
Complaint Database. This information is analyzed on a regular basis to
determine priorities for conducting reviews on household goods carriers
and brokers. When a complaint is received, it is reviewed for substance
and the database checked to determine if a pattern of complaints
alleging noncompliance exists. If a pattern is identified based on
complaints and geographic location, we conduct a household goods
compliance review on the operations of these carriers or brokers to
determine compliance with FMCSA regulations.
When a compliance review discloses violations of agency
regulations, FMCSA's Enforcement team initiates action to assess civil
penalties for the violations. Through all of these efforts, FMCSA has
been able to increase its compliance and enforcement actions.
Total Number of Household Goods Compliance Enforcement Cases
FY 2001 6
FY 2002 12
FY 2003 3
FY 2004 11
FY 2005 43
SAFETEA-LU Provisions
As a result of SAFETEA-LU's enactment in August 2005, FMCSA was
given increased mandates in many areas of household goods enforcement.
Household goods carriers are required to offer arbitration to shippers
and the level at which binding arbitration is required was increased
from $5,000 to $10,000 under SAFETEA-LU. For claims in excess of
$10,000, the carrier must agree to arbitration for the shipper to be
able to have the claim arbitrated. Additionally, the arbitration
requirements, which were previously limited to disputes over loss and
damage, have been expanded to include disputes over payment of
additional delivery charges.
Section 4206 of SAFETEA-LU enabled State Attorneys General and
other State enforcement officials to enforce Federal household goods
regulations through civil action against a carrier or broker in U.S.
District Court. The FY 2006 Transportation, Treasury, Housing and Urban
Development, the Judiciary, the District of Columbia, and Independent
Agencies Appropriations Act placed limitations on State enforcement
authority by permitting States to pursue civil actions only against
carriers and brokers who meet specific statutory criteria. This
limitation sunsets on September 30, 2006. To our knowledge, no State
has pursued civil action on behalf of consumers based on the authority
granted by SAFETEA-LU.
As required by SAFETEA-LU, FMCSA has been working with Federal,
State, and local household goods enforcement agencies to better
coordinate investigations, to optimize our resources, and to achieve
the most effective enforcement results. As a result of these efforts,
FMCSA has established a working group to assist the States with
bringing their own civil actions on behalf of consumers against
household goods carriers or brokers. Comprised of representatives from
the DOT OIG, the National Association of Attorneys General and various
State Attorneys General and U.S. District Attorneys, the Florida
Department of Agriculture, and the Maryland Office of Consumer Affairs,
the group has opened a dialogue to develop practices and procedures to
enhance the Federal/State partnership and make legislative and
regulatory recommendations concerning these efforts. This group differs
from the Household Goods Partnership in that this working group is
designed to assist the States with bringing their own civil actions on
behalf of consumers against household goods carriers or brokers.
Other sections of SAFETEA-LU worth noting are:
Established the minimum penalty at $10,000 per violation for
carriers holding a shipper's goods hostage after they have
received payment necessary to effect delivery under the law.
This should be an effective deterrent against carriers who hold
consumers' belongings hostage.
Increased the minimum penalty for operating without
registration to $25,000. This increase should dissuade the
rogue carrier or broker from attempting to fly below the FMCSA
radar.
Added requirements to the registration process will permit
FMCSA to better track carriers and brokers and may help in
identifying companies who go out of business and try to return
under a new name to avoid FMCSA regulations and penalties.
FMCSA has implemented six of the household goods sections of
SAFETEA-LU by policy issuances. These policy documents were recently
distributed to our field offices and provide operational guidance on
how to apply these new requirements. They include definitions,
household goods carrier operations, liability of carriers under
receipts and bills of lading, arbitration requirements, civil penalties
relating to brokers and unauthorized transportation, and penalties for
holding goods hostage. FMCSA is working on a notice of proposed
rulemaking for a new household goods broker consumer protection rule
that it hopes to publish in the Federal Register in the near future.
This rule implements SAFETEA-LU Section 4212 requirements applicable to
the household goods broker industry and enhances FMCSA's enforcement
tools with regard to that industry. FMCSA is in the process of
completing other rulemakings to codify the remainder of the SAFETEA-LU
sections into law.
Budgetary Resources
In 2000, FMCSA had three employees working on household goods.
Currently, there are twelve total household goods staff--four full-time
program and support staff at FMCSA headquarters and eight full-time
investigators in the field devoted to household goods reviews. During
FY 2005 and 2006, FMCSA trained 75 Safety Investigators to assist in
handling household goods investigations. It is important to note that
household goods compliance review is not the main function of FMCSA
Safety Investigators--it is ancillary to their core safety mission.
Currently, we are able to meet our internal goal of household goods
reviews.
Conclusion
Mr. Chairman, household goods fraud potentially affects consumers
across the Nation. The goal of eliminating disreputable companies from
the moving business is one we all share. As I mentioned in this
testimony, our consumer outreach programs increase both the visibility
of the problem and the awareness of warning signs of a disreputable
mover. We will continue to develop outreach and education strategies
with our household goods partners to help consumers have successful
moves. Our enforcement and compliance program has yielded tangible
results, as is made evident by rogue carriers leaving the industry or
coming into compliance and now operating legitimate businesses. As we
have shown through our strike force activities, cooperation among all
branches and levels of government is the surest way to eliminate this
threat to the American home.
Senator Lott. Thank you very much, Mr. Hoemann. Senator
Stevens, our Committee Chairman, is here. Before we proceed,
Mr. Chairman, would you like to make a statement or any
comments or questions at this time?
STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
The Chairman. No. Sorry to be late, I was in an
Appropriations hearing. I just wanted to catch up on this
hearing. Thank you.
Senator Lott. Right. Well, thank you very much. We are
quite interested now to hear the testimony of Ms. Kay Edge,
Assistant Professor of Architecture, School of Architecture &
Design, Virginia Tech. We understand from Senator Allen that
you had some difficulties in getting from Connecticut to
Virginia and getting a problem redressed, so we'll be pleased
to hear your statement.
STATEMENT OF KAY F. EDGE, ASSISTANT PROFESSOR OF
ARCHITECTURE, SCHOOL OF ARCHITECTURE AND DESIGN, VIRGINIA TECH
Ms. Edge. Thank you, Mr. Chairman, for allowing me to come
here and tell my story. In the summer of 2001, I hired a moving
company to move my belongings from Connecticut to Virginia. I
used the Internet to hire the company, but since I like to
think of myself as a savvy consumer, I did extensive research
before actually paying them a deposit and setting a moving
date. I checked their licensing and insurance status on the DOT
website. I called the DOT and asked questions about weight
tickets and verification of weight, and I checked with the
Better Business Bureau to make sure they had a clean record.
None of this research turned up any red flags about the
company, and I later learned that this is because companies are
able to close under one name and easily reopen under another
name, thereby avoiding the consequences of a bad reputation.
They are even able to avoid DOT fines levied against them by
simply reopening under another name and a new DOT number. The
company's written estimate for moving my things from
Connecticut to Virginia was $2,230, so I hired them to do the
move on August 11th. On moving day, they loaded their truck
with my belongings, locked it up, and presented me with a bill
for $4,745. I tried to argue and reason with them, but there
were five of them and one of me. They had all of my belongings
locked on their truck. I had to get out of my apartment, get to
Virginia, and start a new job. Once I reached Virginia, I tried
again to reason with the moving company owner to no avail.
Since from my perspective my belongings were being stolen, I
contacted the city police, the state police, and even the FBI.
They all told me that this was a civil matter and that I would
have to hire an attorney and take the matter to court. The
lawyers I contacted were at least honest enough to tell me that
their fees would far exceed any settlement I might get from the
moving company. The FMCSA was also unable to assist me. This is
from a letter I received from the New York division of the
FMCSA: ``We have no authority to intercede in matters such as
contract disputes. You would need to bring a civil action
against the company. We are sorry we could not be of assistance
to you.'' In the end, I did in fact have to pay the amount they
demanded--the ransom in cash in order to get my things
delivered. The industry, it seems, has failed to police itself,
and the problems are manifold. The existing laws seem weak, and
they seem as if they are not being enforced. Last I checked,
there were nine DOT investigators in the whole country to
respond to thousands of complaints. State laws concerning fraud
and deceptive practices are currently preempted by the Carmack
Amendment. As you know, this outdated amendment lets moving
companies off the hook because it prevents consumers from suing
in civil court for fraud, extortion, negligence, and
intentional misrepresentation. All state laws are overruled by
the Carmack Amendment. The consumer has no means by which to
stop a scam in progress. And if the moving company is caught,
they only have to pay back what they stole with no punitive
damages awarded to the victim. As far as I can determine, no
other industry enjoys such complete protection from the
consequences of willful fraud of negligence. This is a
situation in which the consumer is completely powerless and
vulnerable to whatever abuse and fraud the company wants to
serve up. The moving industry lobby claims that if Carmack goes
away, there will be an exponential increase in the number of
lawsuits brought by dissatisfied customers, but virtually all
other industries that deal with the individual consumer are
subject to state laws on fraud and deceptive trade practices.
Honest businesses have nothing to fear. The major van lines and
AMSA lobbyists who contribute to campaign funds have so far
been successful, it seems, in preventing meaningful consumer
protection legislation from being passed. And because there are
essentially no consumer protections, there are thousands of
people just like me. Many of the stories are much worse than
mine. Members as well as nonmembers of the AMSA engage in these
fraudulent practices, and major van lines, albeit with much
less frequency, do it as well because the laws don't provide
scammed consumers any recourse. Again, we have no way to stop a
scam as it is being carried out. Since the DOT has not been
able to set up the complaint database that they were mandated
to set up--which by the way, the major van lines have lobbied
against, consumers have had to rely on consumer advocacy
websites such as the one I volunteer with--movingscam.com. We
maintain a list of scam companies on that website that
consumers can check, but I think we can't do this alone. We
need help on this. I thank you for your work on this issue, and
thank you again for allowing consumers to have a voice here.
[The prepared statement of Ms. Edge as follows:]
Prepared Statement of Kay F. Edge, Assistant Professor of Architecture,
School of Architecture and Design, Virginia Tech
In the summer of 2001, I hired a moving company to move my
belongings from New Haven, Connecticut to Radford, Virginia. I used the
Internet to hire the company, but since I like to think of myself as a
savvy consumer, I did extensive research before actually paying them a
deposit and setting a moving date. I checked their licensing and
insurance status on the DOT website; I called the DOT and asked some
specific questions about weight tickets and verification of weight, and
I checked with the Better Business Bureau to make sure they had a clean
record. None of this research turned up any red flags about this
company. I later learned that this is because companies are able to
close under one name and easily reopen under another name, thereby
avoiding the consequences of a bad reputation. They're even able to
avoid DOT fines levied against them by simply reopening under a new
name and a new DOT number. The company's estimate for moving my things
from Connecticut to Virginia was $2,230, all inclusive. So I hired them
to do the move on August 11. On moving day, they loaded their truck
with my belongings, locked it up and presented me with a bill for
$4,745. I tried to argue and reason with them but there were five of
them and one of me, they had all of my belongings on their truck, and I
had to get out of my apartment, get to Virginia and start a new job.
Once I reached Virginia, I tried again to reason with the moving
company owner to no avail. She threatened to place my belongings in
storage and sell everything.
My goods were held hostage for a week while I tried to reason with
the company and while I tried to get law enforcement and regulatory
agencies involved. Since, from my perspective, my belongings were being
stolen, I contacted the city police, the state police and even the FBI;
they all told me this was a civil matter and that I would have to hire
an attorney and take the matter to court. The lawyers I contacted were
at least honest enough to tell me that their fees would far exceed any
settlement I might get from the moving company--this is due to, as the
moving industry well knows, the Carmack Amendment. They recommended
that I pay the ransom and get over it. The FMCSA was also unable to
assist me. This is from a letter I received from the New York division
of the FMCSA: ``The Federal Motor Carrier Safety Administration has
jurisdiction over violations of the FMC Safety Regulations and
Hazardous Materials Regulations by carriers and drivers. We have no
authority to intercede in matters such as contract disputes. You would
need to bring a civil action against the company . . . We are sorry we
could not be of assistance to you.'' They seemed only able to call the
moving company and suggest that they do the right thing. In the end, I
did in fact have to pay the amount they demanded, the ransom in cash,
in order to get my things back. The movers had the power to name their
price, and they knew it. I had no choice but to pay it, all the while
being just about forced to scrape and bow to my own extortionist for
fear of the safety of my property and of their raising the price even
higher.
There are thousands of people like me. Some stories are worse than
mine. Consumer protection is practically non-existent in the moving
industry, which has been increasingly deregulated since 1980 and
essentially unregulated since 1995. The need for protection is urgent,
and has two critical components: (1) stringent, robust laws with real
penalties so as to punish and deter wrongdoing; and (2) enforcement
authority by those many entities out there that are ready, willing and
able to hold moving companies to those laws, but whose hands currently
are tied. These two components are equally crucial, and so far, the
legal regime that is out there purportedly as ``consumer protection''
utterly fails the consumer on both counts. As for the stringent laws,
the FMCSA is charged with promulgating regulations to implement the
Household Goods Transportation Act of 1980, which authorizes ``binding
estimates'' as a consumer protection measure. The FMCSA's predecessor,
the Federal Highway Administration, acknowledged its abilities and
limitations in protecting the consumer in its May 15, 1998 introduction
to the proposed rules, where it stated:
Hostage Freight
The FHWA has been receiving an increasing number of
complaints from individual shippers who claim carriers refuse
to deliver their goods after the individual shippers offer to
pay 110 percent of the estimate as prescribed by 49 CFR
375.3(d). These so-called hostage freight situations defeat the
protections of the 110-percent rule and cause serious
inconvenience to individual shippers. The FHWA does not have
the resources to seek court injunctions to require these
carriers to comply with the regulations and release the
household goods. The FHWA, therefore, proposes changes to
enhance an individual shipper's claim for damages based upon
expenses incurred as a result of the carrier's refusal to
deliver the household goods, reduce the number of disputes
contributing to delays in delivery, and restore price certainty
to the transaction.
But not only are the existing laws weak insofar as they do not
provide for meaningful penalties against moving companies who break the
rules, they are not being enforced anyway. Last I checked, there were 9
DOT investigators in the whole country to respond to thousands of
complaints; that's up from the 3 investigators employed by the DOT when
this first happened to me.
As I alluded to earlier, the lynchpin here is the Carmack
Amendment. State laws concerning fraud and deceptive practices are
currently preempted by the Carmack Amendment. As you know, this
outdated amendment lets moving companies off the hook because it
prevents consumers from suing in civil court for fraud, extortion,
negligence and intentional misrepresentation. No relief that state laws
would otherwise offer to the consumer, including the punitive damages
that all agree the abusers so well deserve, is available to the
consumer. Even if the consumer just wants her goods back for the
agreed-upon price and is not interested in suing after the fact, she
cannot even call the police and get them to force the moving company to
release the hostage goods, again because of Carmack. Even in those
states, such as Florida, which have enacted laws to allow the police to
intervene in what would otherwise be a ``civil matter,'' the police
still cannot intervene if the move happened to be interstate. They can
get involved only in moves within Florida (intrastate). The private
right of action that Carmack gives to a consumer to sue in civil court
after the fact is meaningless. That's because the typical ransom
demand--from a few hundred to a few thousand dollars per shipper--is
still less than what the legal fees would be if the consumer sues after
paying the ransom. And, since the only recovery the consumer can get
under Carmack is the return of the ransom money, the so-called right of
a consumer to sue the moving company is virtually foreclosed.
In other words, currently the only consequence moving companies
have to pay for cheating the customer is to give back what they stole,
and that's only if they get caught. This is a non-consequence. This
situation does not deter abuses and scams. It encourages them. Is it
any wonder that so many stories of nightmare moves, overreaching
business practices, and outright criminality in the moving industry
have come up? As far as I can determine, no other industry enjoys such
complete protection from the consequences of gross negligence or
willful fraud. It is not an exaggeration to say that any individual who
contracts with an interstate moving company is potentially the victim
of the perfect crime.
Now, the moving industry lobby claims that if Carmack goes away,
there will be an exponential increase in the number of lawsuits brought
by dissatisfied customers. But virtually all other industries that deal
with the individual consumer are subject to state laws on fraud and
deceptive trade practices, and hyperbolic scenarios of massive
shutdowns of mom-and-pop businesses in those industries caused by a
flood of frivolous lawsuits have not come to pass. There is no reason
to grant this one industry, the moving industry, exemption from these
laws. Honest businesses have nothing to fear. These laws drive out the
unethical from the market, and keep everyone else honest. Why is it
that your local retailer, dry cleaner, restauranteur, and so on, can't
be expected to get away with lying to customers about a so-called
guaranteed price, but your moving company can? It just defies all
reason and common sense to protect this industry this way. Furthermore,
rolling back Carmack, in addition to finally giving justice to
consumers, would not require any Federal expenditures--in fact, it
would free up DOT investigators to focus on what they consider their
more important task, highway safety. \1\
---------------------------------------------------------------------------
\1\ I am also including with this statement an article from the
Winter 2005 issue of the Lewis & Clark Law Review, titled ``Needed,
Private Attorneys General; Empowering Consumers to Reform the Household
Goods Moving Industry,'' by Joseph L. Franco. This article proposes
that, instead of subjecting the moving industry to the various penalty
schemes under fifty states' laws (even though those schemes are
similar), a penalty scheme to deter and punish unethical moving
companies could be written into Carmack itself, whereby the consumer is
permitted to seek attorneys fees and treble damages under Carmack
itself.
---------------------------------------------------------------------------
The major van lines and AMSA lobbyists, for their own reasons, fear
changes to Carmack more than the damage that has been done to the
industry's reputation. The major van lines and AMSA lobbyists who
contribute to campaign funds have, so far, been successful in
preventing meaningful consumer protection legislation from being
passed, as to both the robustness and enforcement components. For
example, they lobbied against Congressman Petri's H.R. 1070 from 2004,
supported by consumer protection agencies and advocates everywhere,
which would have rolled back Carmack. That proposed provision was
eventually taken out and the remaining consumer protection provisions
were watered down by the time they became enacted as part of the
recently-passed highway plan legislation, SAFETEA-LU. But then the
powerful AMSA member Unigroup, parent of two major van lines, prevailed
upon a senator in its home state to make last-minute changes on another
bill that had the effect of exempting the major van lines from SAFETEA-
LU's already-weakened consumer protections. This is just the most
recent example of the industry's fight to keep its all-encompassing
Carmack protection, at the expense of consumers.
As I said earlier, there are thousands of people like me, people
who have been scammed by the moving companies we trusted. As we
approach yet another summer moving season with still no consumer
protections in place, there inevitably will be more people who will
fall victim in the coming months. The moving companies, large or small,
carry out these scams because they know they can get away with it. They
suffer no consequences for what they do. Members as well as non-members
of the AMSA engage in these fraudulent practices, and the affiliates of
major van lines do it too, because the laws don't provide scammed
consumers any recourse. The scams committed by the affiliates of major
van lines may be of a lesser magnitude--the scams are less frequent and
generally the ransom demands not as exorbitantly high as the smaller or
fly-by-night companies'--but the effect on the individual victim is
always devastating.
Since the DOT has not set up the complaint database that they were
mandated to set up in 1998 (which, by the way, the AMSA has lobbied
against), consumers have had to rely on consumer advocacy websites such
as the one I volunteer with, movingscam.com. We maintain a list of scam
companies on that website that consumers can check. But we can't do
this alone. We need your help. Without it, and without Congress finally
freeing up the states to enforce the laws that protect consumers,
without Congress finally giving individual consumers a remedy other
than the chance to get the moving company to return what it stole in
the first place--there will be no end to this situation. This has been
the third Congressional hearing on the need for consumer protections in
the moving industry since 1998. Almost nothing has changed since then.
How much longer must we wait to get justice?
Attachments
April 26, 2006
Dear Mr. Bertram,
It was a pleasure speaking with you this morning and I appreciate
the work you are doing on this important consumer issue. As we
discussed, I am faxing some of the materials related to my move from
New Haven, Connecticut to Radford, Virginia in August of 2001. After
this traumatic experience of having my belongings held hostage for
several thousand dollars more than the original estimate, I wrote
letters to several Congressmen, Attorneys General and the Department of
Transportation. The only Congressman who responded was Senator
Lieberman. The Department of Transportation sent me a letter saying
that they could not help me. I contacted several attorneys who told me
very honestly that their fees would be much more than I could recover
from the moving company. Because of the Carmack Amendment, moving
companies do not have to pay punitive damages when they are caught
breaking the rules. In October of that year, out of the blue, I
received a letter from the New York City Police Department asking for
the details of my move so that they could pursue a case against this
moving company. Their efforts were successful and the owners of my
moving company spent a couple of months in jail. I received a
restitution check for $410.95.
In addition to this cover letter, I am faxing 17 pages:
Pages 1-2: a faxed estimate that I received from AAA Van Lines in
June of 2001.
Page 3: the bill that the moving company wrote up on moving day
after my belongings were locked on the truck. It's a little difficult
to read but I paid $1,100 on the day of pickup and the remaining bill
was to be $3,645, a total that was about twice the amount they
estimated. I paid that amount on delivery.
Pages 4-5: a letter I sent to Senator Joseph Lieberman to alert him
to this consumer issue.
Page 6: the response I received from Senator Lieberman.
Page 7: a letter I received from the FMCSA, New York division
advising me that they could not help.
Page 8: a letter I received from the New York City Police
Department asking for the details of my move.
Page 9: a news report about the arrest of the moving company
owners.
Page 10: a letter and a copy of my restitution check.
Page 11: a letter I wrote to the USDOT Dockets in response to
proposed regulation concerning the protection of consumers who ship
household goods via interstate motor carrier.
Pages 12-13: a letter I received from the NYDOT in response to one
of my letters of complaint.
Pages 14-15: a letter I received from the Surface Transportation
Board in Washington, D.C.
Page 16: a letter I received from the FMCSA in Washington.
Page 17: a letter I received from Attorney General Eliot Spitzer's
office in New York.
Mr. Bertram, I hope I have not overwhelmed you with this material.
Again, I appreciate the important work you are doing on behalf of
consumers. If you need any more information or if this fax is not
readable, please do not hesitate to contact me.
Sincerely,
Kay F. Edge.
______
AAA Van Lines
N. Miami, FL.
Hi Kay Edge,
Here is the e-mail I promised, I believe the price is great and
here it is in writing for your further examination.
About your move from Connecticut to Virginia, I believe I have the
best price for you!!! (If you can find a lower written estimate, we'll
beat it by 5 percent!!!)
Your cost for this move will be $2,230.00. Based on .43 cents per
lb and an estimated 5,180 lb.
Inventory:
1 love seat,
1 lg. sofa,
1 arm chair,
1 rocker (chair),
1 end table,
1 overstuffed chair,
1 TV<30",
1 VCR,
1 rug,
6 dining chairs,
1 dining table,
1 sgl dres.,
1 dbl bed,
3 dbl dres.,
2 triple dres.,
1 night table,
3 chairs,
1 breakfast table,
1 microwave,
1 office desk,
2 2-door filing cabinets,
1 computer,
1 suitcase,
15 1.5 cu. ft. boxes,
15 3.0 cu. ft. boxes,
5 4.5 cu. ft. boxes.
This price covers loading, unloading, insurance, and one month free
storage!!!
No extra charges for fuel, mileage, tax, or weekend and holiday
fees.
The only possible extra would be if you wanted us to pack for you,
which would cost from $4-$18 per box depending on size and that
includes labor and materials and any extra pounds or cubic feet will be
$3-$7 per cubic foot and if you are under the estimated weight you will
be reimbursed .43 cents per lb.
Payment is 50 percent on pickup payable by: cash, credit card
(Master Card or Visa), personal or cashier's check, money order or
debit card.
Fifty percent on delivery payable by: cash, cashiers check, or
money order.
Phone: (203) 773-9301 home; (203) 777-2515 work; (203) 648-9421
cell--Emergency only.
Pickup address: 815 Orange Street, New Haven, CT 06511.
Delivery address: 1710 Grove Ave., Radford, VA 24141.
Pickup date: August 11, 2001.
Storage: No, upon request
If you have any questions or if you feel I left something out feel
free to contact me at:
``www.aaavanlines.com''
3741 NE 163 Street Suite 290
N. Miami Beach, FL 33162
1-800-361-4192
E-mail [email protected]
Sincerely,
Joy S.
______
Radford, VA, September 2, 2001
Senator Joseph I. Lieberman,
Hart Senate Building,
Washington, DC.
Dear Senator Lieberman,
I am writing to tell you about the thousands of consumers who get
bilked out of thousands of dollars every year by disreputable moving
companies that operate brazenly and with impunity. Many of the victims
are your constituents and I know about this because it recently
happened to me.
My harrowing experience with one of these companies took place this
past week when I moved from New Haven, Connecticut to Radford,
Virginia. I like to think of myself as a rather savvy consumer and
being aware of moving company scams, I did extensive Internet research
before engaging AAAVanlines of Miami, Florida (DOT#888804, MC#386956).
Research and phone calls to the Department of Transportation turned up
no red flags on this company. I e-mailed them a list of my household
goods and they responded with an estimate of 5,180 pounds for which I
would be charged .43 per pound. The dollar estimate was $2,230 with
``no add-ons or extra charges.'' The driver of the truck was supposed
to weigh the truck with and without my belongings to determine the
exact weight. I paid a $50 deposit by American Express and booked
August 11. When the truck FINALLY showed up at midday on August 12, it
was an entirely different company than the one I had booked; instead of
AAAVanlines, it was Eilid Moving and Storage of Richmond Hill, New York
(MC#384719). The driver had no ticket to show his empty weight and
proceeded to try to convince me that my move would be cheaper if
computed by cubic foot instead of by pound. He had a fax from
AAAVanlines showing the estimate at .43 per pound. He assured me that
weight could be verified and that I would get the least expensive rate.
When all of my belongings were loaded the driver wrote up a bill for
$4,700, more than twice the original estimate. With no other choice, (I
had to get out of my apartment and all of my things were on the truck)
I asked him to verify the weight, provide proof of weight and to charge
me that way. He agreed to do that and I paid him $1,100 with the
balance to be determined and paid at the destination. When I reached
Virginia, the company called and demanded $3,500 additional IN CASH for
the delivery of my goods and they refused to verify weight. I fought
with them for a week in which they made numerous threats to place my
things in a warehouse and leave them there for weeks. By Thursday they
agreed to provide weight verification and I gave them the go-ahead to
deliver. On Saturday the driver showed up with no proof of weight and
demanded a balance of $3,500 in cash to open the truck and take out my
things. He threatened to take the truck back to New York and place my
goods in storage unless I paid. I had no choice. To get the money I had
to get a cash advance from a credit card at a very high rate of
interest. The company I originally hired, AAAVanlines, takes no
responsibility. I recognize that this is a long and involved story but
this is a widespread problem that desperately needs your attention. It
is my understanding that in the mid 1990s certain codes that would have
regulated this industry and possibly prevented this problem were
abolished by Congress. Since then, these companies have mushroomed and
operated with impunity. No agency even seems able to enforce the weak
regulations that are already in place. I cannot afford an attorney and
I have no time to pursue this matter so I know that I will never get my
money back. But I would like to prevent this from happening to someone
else. Please, please help me do that. I am sending this as both an e-
mail and a letter and anxiously await your response.
Sincerely,
Kay F. Edge.
______
October 22, 2001
Ms. Kay F. Edge,
1710 Grove Avenue,
Radford, VA.
Dear Ms. Edge:
Thank you for contacting me concerning the difficulties you
experienced with the moving company which you hired to transport your
belongings from Connecticut to Virginia.
Your letter was written from the heart concerning a very difficult
and painful situation. As you indicated in your letter, these types of
disputes are under state jurisdiction, not federal, and generally need
to be addressed through legal action, often in small claims court.
There is, however, a piece of legislation, Senate Bill 1316 (S. 1316),
which Senator John Kerry introduced which may assist people in your
situation who file a lawsuit. I have enclosed a copy of S. 1316 for
your reference, and I will keep your comments in mind should this or
other legislation come before the Senate which would assist people in
your situation. In addition, I have forwarded your letter to U.S.
Senator George Allen in Virginia to share your concerns with him. A
copy of that letter is also enclosed.
Thank you for taking the time to contact me regarding this
important issue. Please do not hesitate to contact me again if I can be
of assistance in any other matter.
Sincerely,
Joseph I. Lieberman,
United States Senator.
______
Federal Motor Carrier Safety Administration, New York
Division
Albany, NY, October 16, 2001
Ms. Kay F. Edge,
1710 Grove Avenue,
Radford, VA.
Consumer Complaint--Eilid Moving & Storage
Dear Ms. Edge,
We have received your correspondence detailing your complaint
against the subject carrier.
The Federal Motor Carrier Safety Administration has jurisdiction
over violations of the Federal Motor Carrier Safety Regulations and
Hazardous Materials Regulations by carriers and drivers. We have no
authority to intercede in matters such as contract disputes. You would
need to bring a civil action against the company, either through an
attorney or small claims court. We would also suggest you contact your
Better Business Bureau so that they can alert other consumers who may
contract with this company.
We are sorry we could not be of assistance to you.
Sincerely yours,
Brian K. Temperine,
Division Administrator.
______
NY City Police Department
Richmond Hill, NY, October 30, 2001
Dear Sir or Madam:
I am currently conducting an investigation into the deplorable
moving practices of the following Moving and Storage Companies, Eilid
Moving and Storage 131-11 Atlantic Ave, In & Out Moving and Storage
131-11 Atlantic Ave, Allstate Moving and Storage 1940 Deer Park Ave,
Online Moving and Storage 131-11 Atlantic Ave, On Budget Van Line Inc.
1940 Deer Park Ave, Red Line Moving and Storage 131-11 Atlantic Ave.
If you have moved recently and have used any one of these moving
companies Detective William Whelan and I would like to speak with you.
Could you please respond with a telephone number or new address where
we would be able to contact you regarding this matter. We are also
looking for copies (not your originals) of any documents re: contracts,
legal proceedings etc., that you might still have from your move.
Also if you haven't already, would you please register a complaint
with the U.S. Department of Transportation 1 (212) 264-8700 and the
Better Business Bureau in New York 1 (212) 533-7500.
Detective Whelan can be reached at Criminal Intelligence Division
80-45 Winchester Blvd., Bldg. # 70, Queens Village, NY 11427, Phone # 1
(718) 468-5225. You may contact me at the 102 Precinct, 87-34 118
Street, Richmond Hill, NY 11418 Phone # 1 (718) 805-3200.
Sincerely yours,
Sergeant Michael Liberatore
______
The New York Times, February 14, 2002
Movers Accused of Holding Furniture Hostage
By Robert F. Worth
Three owners of a group of unlicensed Queens moving companies were
arrested yesterday and charged with stealing hundreds of thousands of
dollars a year from customers by demanding vastly inflated cash
payments on their moving day, and holding the customers' belongings
hostage if they refused to pay, the authorities said.
The arrests, a result of a five-month investigation by a state and
Federal task force, are believed to be the first in which moving
companies have been charged with racketeering under the state's
Organized Crime Control Act, said the Queens district attorney, Richard
A. Brown.
The owners of the five companies, which functioned as a single
entity with the same employees, would begin by offering a low estimate
for the moves, Mr. Brown said. Then, after loading the customer's
belongings onto a company van, they would demand a cash payment five to
seven times the original estimate. If the customer refused to pay, the
belongings would be driven away and held until they paid $2,000 to
$5,000 to have them returned, prosecutors said.
``They were trying to rip off as many people as they could,'' Mr.
Brown said.
The investigation began after authorities received at least 60
complaints from people who said they had paid excessive fees to the
moving companies. The companies' owners made $500,000 to $1 million a
year, the authorities said. The owners were identified as Daniel
Mantoza, 37, his wife, Ronit Mantoza, 35, and Morad Alfar, 32, all of
Queens.
They were charged with enterprise corruption, grand larceny,
criminal possession of stolen property, and other crimes, and could
face up to 25 years in prison if convicted, prosecutors said.
Prosecutors described one case in which a customer received a quote
of $1,700 from Online Moving and Storage to move his belongings from
Norwalk, Conn., to Maple Valley, Wash. After his property was loaded
onto a truck, the driver told him the move would cost $7,000 in cash
immediately, or $3,500 in cash to unload the truck. The customer
refused to pay, and the truck drove off with his belongings, which he
has not seen since.
The moving companies, which advertised through the Yellow Pages, on
the Internet, and in leaflets, were identified as Eilid Moving and
Storage; Allstate Moving and Storage; On Budget Van Lines; Online
Moving and Storage; and In and Out Moving and Storage.
Yesterday, investigators seized trucks, computer files and $500,000
in merchandise at the companies' warehouse on Atlantic Avenue in
Jamaica, Queens. It was unknown how much of that merchandise was
legitimately stored, officials said.
A licensed moving company can legally charge an additional 10
percent above the original estimate for interstate moves and 25 percent
for moves within the state, Mr. Brown said. Movers can withhold part of
a customer's merchandise until any fee disputes are resolved, but they
cannot retain them all, he added.
______
Kay Edge,
1710 Grove Avenue,
Radford, VA.
Re: People v. Ronit Mantoza, Daniel Mantoza and Morad Alfar
(In and Out/Eilid Moving)
Dear Ms. Edge:
On July 31, 2002, Ronit Mantoza, Daniel Mantoza and Morad Alfar who
operated several moving companies at 131-11 Atlantic Avenue including
In and Out Moving, Eilid Moving, On Line Moving, Budget Moving and
AllState, pleaded guilty to defrauding certain customers by
intentionally giving low estimates and then forcing customers to pay
higher moving fees.
On October 30, 2002, pursuant to a plea agreement, all of the
defendants plead guilty and were sentenced to several months of jail
and to terms of probation, the conditions of which included a
prohibition against any of the defendants engaging directly or in
directly in the moving and storage business in the future. In addition,
the defendants forfeited cash that was seized pursuant to search
warrants executed at the time of their arrest to be divided on a pro
rata basis among the consumers defrauded who had filed complaints prior
to July 31, 2002. Said restitution is only to refund part of the
increased price that customers were forced to pay. It was further
agreed that, in addition to the restitution, any damage or loss claims
are to be processed by the defendants and forwarded to their insurance
company.
Under the terms of the plea agreement, you were scheduled to
receive the total sum of $1,300.00 in restitution. A check in the
amount of $410.95, which represents a pro rata share of the restitution
monies currently available, is enclosed herewith. This disposition in
no way precludes you from pursuing a civil claim for any additional
funds that you believe are due to you.
I am pleased that our office has been able to have been of
assistance to you in this matter.
Yours very truly,
Diane M. Peress,
Assistant District Attorney, Economic Crimes Bureau.
______
National Association of Professional Movers (the AMSA) Thumbs Its Nose
at Consumers
Consumer protection is urgently needed in the moving industry,
which has been essentially unregulated since 1995. Two competing bills
addressing this topic have recently been introduced in the House of
Representatives. One is H.R. 1070, introduced by Rep. Thomas Petri (R-
Wisconsin), Chair of the House Subcommittee on Highways and Transit, at
the behest of consumer advocacy groups concerned about rampant abuse.
The other is H.R. 2928, which was introduced by Rep. Sherwood Boehlert
(R-New York) after he received a $2,500 campaign contribution from the
national association of professional movers, the American Moving and
Storage Association (the AMSA).
H.R. 1070 is a good first step toward protecting consumers from
being victimized by an out-of-control moving industry. In contrast, the
AMSA-supported H.R. 2928 only exacerbates the current situation. These
are the facts:
1) H.R. 1070 will finally enable local and state police to
enforce Federal laws regulating interstate moving companies.
State Attorneys General will be able to prosecute moving
companies under state fraud and deceptive practices laws which
are currently preempted by the Carmack Amendment. (This
outdated amendment lets moving companies off the hook because
it prevents consumers from suing in civil court for fraud,
extortion [hostage freight] negligence, breach of insurance
contract, breach of contract of carriage, conversion,
intentional misrepresentation, negligent misrepresentation, and
negligent infliction of emotional distress. All state laws are
overruled by the Carmack Amendment.) No other industry enjoys
such complete protection from the consequences of willful fraud
or negligence.
If you've ever been a victim of a hostage load situation in
which a mover held your belongings and demanded thousands more
than the original estimate, you probably know that local and
state police will decline to get involved. Usually they will
tell you that it's a civil matter--a contract dispute between
you and the moving company--and that you must take the company
to court. Again, if you've been a victim of a scam mover, you
know that most attorneys will refuse to take such a case, even
when there's unmistakable fraud, because all you stand to
collect is the amount of the overcharge and/or the depreciated
value of lost or damaged goods. The Carmack Amendment prevents
you from suing for fraud, so you can't get punitive damages,
and your legal fees will amount to more than the moving company
is trying to steal from you.
Rather than supporting a worthy bill like H.R. 1070 to remedy
this situation, the AMSA has belatedly introduced a rival bill,
H.R. 2928, that does not have a clear provision allowing state
Attorneys General to act against moving companies engaging in
interstate fraud. In defense of this consumer-unfriendly
position, the AMSA has argued only that H.R. 1070 will promote
``frivolous lawsuits.''
2) H.R. 1070 codifies current regulations stating that a mover,
upon delivery of goods, cannot charge more than 110 percent of
the original job estimate. In theory, consumers are now able to
bring a civil suit when movers attempt to hold their goods
hostage for more than 110 percent of the estimate. In practice,
this rarely happens because so little in damages can be
recovered. The AMSA, with H.R. 2928, seeks to withhold even
this minimal protection from the consumer, and leaves
completely open-ended the amount that can be charged, even when
a customer has been given a ``binding'' estimate. Under H.R.
2928, before unloading a customer's belongings, moving
companies will be allowed to demand whatever amount they want.
With no maximum collection rule, H.R. 2928 in effect legalizes
the practice of holding people's goods for ransom.
The AMSA keeps on trying to buy influence in Congress, as is shown
by this statement in the August 1, 2003, issue of its newsletter
``AMPAC [the AMSA's Political Action Committee, a lobbying group] needs
to raise a minimum of $15,500.00 by September 30, 2003, in order to
gain the necessary political access to the thirty-one (31) Members of
Congress serving on the House Transportation and Infrastructure
Committee who have not yet received campaign contributions from AMPAC
this year.'' One of AMPAC's top priorities is defeating H.R. 1070.
However much it may be concerned about ensuring the survival of its
own members, the AMSA is taking a stance that harms consumers and
protects scam movers by continuing the status quo. Lawmakers who will
decide this issue must understand that the AMSA-supported H.R. 2928, by
eliminating the 110 percent restriction and by not being clear about
whether State Attorneys General can pursue legitimate redress, takes
away what little legal recourse consumers have. Without H.R. 1070, it
is certain that consumers will keep on getting scammed because there is
no deterrent. Honest movers who do not scam their customers should not
be afraid of a bill that levels the playing field and protects
consumers from the morally challenged in the moving industry.
The situation is urgent. Please support H.R. 1070 by writing to
your Representative in Congress and to the members of the House
Subcommittee on Highways and Transit. You can find your
Representative's name and address at http://www.house.gov/. The Chair
of the Subcommittee is Rep. Thomas E. Petri, and his contact
information is as follows: 2462 Rayburn House Office Building,
Washington, D.C. 20515-4906, phone (202) 225-2476, fax (202) 225-2356.
The names and addresses of the other members of the House
Transportation and Infrastructure Committee are available at http://
clerk.house.gov/committee/index.php?subcomcode=HPW12
Honest moving companies have nothing to fear from H.R. 1070, but if
H.R. 2928 passes, it will be ``open season'' on consumers.
______
State of New York Department of Transportation
Albany, NY, October 5, 2001
Kay F. Edge
1710 Grove Avenue,
Radford, VA.
Dear Ms. Edge:
This letter will acknowledge receipt of your letter of complaint
against Eilid Moving & Storage, received on October 4. 2001.
The move in question is an interstate move (outside the State) and
therefore not within this Department's jurisdiction. This Department
regulates moves within the State of New York. Your move falls under the
jurisdiction of the U.S. Department of Transportation. I have forwarded
your complaint to that agency and enclosed a copy for your reference.
You may also contact the Washington, D.C. office at (888) 368-7238 for
advisement.
Claims involving loss, damage or overcharge that cannot be resolved
by the parties involved will have to be resolved in Civil Court.
I do regret I cannot be of further assistance and if you have any
questions, please call me at (518) 457-4600.
Sincerely,
Raymond Decker,
Transportation Analyst.
______
State of New York Department of Transportation
Albany, NY, October 4, 2001
U.S. DOT,
FHWA Office of Motor Carriers,
Leo W. O'Brien Federal Bldg.,
Albany, NY.
Re: Eilid Moving & Storage
Complainant: Kay F. Edge
The attached complaint from a consumer is being referred to your
agency for review and possible action.
If this is not within your jurisdiction, please advise the
complainant directly and forward to the appropriate agency.
Thank you for your cooperation,
Raymond Decker,
Transportation Analyst.
______
Surface Transportation Board, Office of Compliance and
Enforcement
Washington, DC, December 6, 2001
Ms. Kay Edge,
1710 Grove Avenue,
Radford, VA.
Dear Ms. Edge:
This has reference to your request for assistance regarding your
move from New Haven, CT to Radford, VA, via Eilid Moving & Storage,
Inc. I have requested that the manager of Eilid Moving & Storage, Inc.
furnish me with a report concerning the charges on your shipment. (See
enclosed.) Additionally, I thought that the following information might
be of some assistance to you.
When the ICC was abolished by the ICC Termination Act of 1995
(ICCTA), a number of the ICC's functions were eliminated. Remaining
rail and certain non-rail functions were transferred to the Surface
Transportation Board and remaining motor carrier functions, including
many matters relating to the movement of household goods, were
transferred to the U.S. Department of Transportation (DOT). The DOT's
Federal Motor Carrier Safety Administration (FMCSA) now oversees
licensing, insurance, estimating practices, loss and damage arbitration
and other functions related to motor carriers.
In regard to claims handling, the regulations, which were continued
in effect and are now the responsibility of the FMCSA, require motor
carriers to either pay, deny, make a settlement offer, or advise a
claimant of the status of a claim and the reason for any delay in the
disposition within 120 days of its receipt. The law mandates further
that carriers are to provide a period of not less than 9 months from
the date of delivery for the filing of loss and damage claims and a
period of 2 years from the date of any declination of a claim to file a
civil action. This Board and the FMCSA do not have jurisdiction over
the formal adjudication of loss claims.
The ICC maintained an informal dispute resolution program for
consumer complaints involving household goods moves. However, when the
ICC was abolished by the ICCTA, the Congress eliminated the program as
a part of the sunset of the ICC. The legislative history of the ICCTA
indicates that Congress intended for statutory ``self-help-mechanisms,
such as arbitration or a court proceeding, to be the prevailing means
for individuals to remedy situations caused by violations of the
commercial regulations governing household goods carriers which are now
administered by the FMCSA. Information concerning a carrier's cargo
insurer and consumer rights under the FMCSA's regulations covering
household goods moves may be obtained by telephone by contacting the
FMCSA on 202-358-7027, 7028, or 7029 or 1-888-368-7238, or by mail at
the following address:
Federal Motor Carrier Safety Administration,
Public and Consumer Affairs, Suite 600,
400 Virginia Avenue, S.W.,
Washington, DC 20024.
The ICCTA did establish certain dispute-related provisions that
require a household goods carrier, as a condition to licensing, to
offer arbitration as a means of settling such disputes as may relate to
loss and damage. Specifically, if a shipper requests arbitration of a
disputed loss and damage claim over $5,000, the claim will be submitted
to arbitration only if the carrier consents to binding arbitration.
However, shipper requests for arbitration on disputed claims of $5,000
or less must be submitted to binding arbitration by the carrier. Thus,
if it develops that you are unable to resolve your claim, you may wish
to request arbitration. Most major moving companies participate in an
arbitration program sponsored by the American Moving and Storage
Association (AMSA). The AMSA may be contacted at 1611 Duke Street,
Alexandria, VA 22314-3482, phone 703-683-7410.
Under that portion of the ICCTA administered by this Board, the
charges assessed by a household goods carrier or freight forwarder
operating in interstate commerce must be supported by rates or related
rules or practices contained in a tariff published by the carrier.
Under the provisions of 49 U.S.C. 13702(c) and 14706(c)(1)(B) a
household goods carrier is bound by the terms of its tariffs and must
allow inspection of the tariffs by both the Board and prospective
shippers. The Board has adopted regulations governing the tariffs that
motor carriers and freight forwarders are required to maintain for the
transportation of household goods.
Sincerely,
Lawrence C. Herzig,
Chief, Section of Tariffs, Rates and Informal Cases.
______
Federal Motor Carrier Safety Administration, Insurance
Compliance Division
Washington, DC, October 12, 2001
Refer to: MC-ECI
Ms. Kay Edge,
1710 Grove Avenue,
Radford, VA.
Re: AAA Vanlines
Dear Ms. Edge:
This is to acknowledge receipt of your letter dated September 3,
2001 (Complaint No: MC-ECI-02-0089), to the U.S. Department of
Transportation's Federal Motor Carrier Safety Administration.
The agency received a high volume of correspondence involving
household goods complaints. Your inquiry will be reviewed in the order
received and an appropriate reply will be forthcoming.
Sincerely yours,
Gladys M. Cole,
Chief, Insurance Compliance Division.
______
State of New York, Office of the Attorney General
Broadway, NY, October 1, 2001
Kay F. Edge,
1710 Grove Avenue,
Radford, VA.
Our File Number: CFN01R12330
Company: Eilid Moving & Storage
Dear Kay F. Edge:
On behalf of Attorney General Eliot Spitzer, I am writing to notify
you that we have received your correspondence.
We appreciate your alerting us to this matter. We believe the
organization shown below may be able to assist you and we are
forwarding your correspondence there.
If you do not receive a response in the near future, please follow
up directly with that organization. I suggest you attach a copy of this
letter or, if appropriate, mention that you are adding new information.
Thank you for contacting us.
Very truly yours,
Barbara Anderson,
Bureau of Consumer Frauds and Protection.
Senator Lott. Thank you, Ms. Edge, and I cannot restrain
myself. I have to ask you--as Paul Harvey would say, what is
the rest of the story? I assume this company that you had
difficulty with has been maybe put out of business, hopefully
criminal action taken against them and that you received your
entire--your check back and punitive damages and you have been
greatly rewarded and enriched because you had the temerity to
speak up. Is that the rest of the story?
Ms. Edge. Not at all.
Senator Lott. What's the end of the story? I mean, did--was
that it?
Ms. Edge. It was actually a whole network of movers. I
hired what I thought was a mover, and it ended up being a
broker, and they sold the job to a mover in New York, and
they--thanks to Eliot Spitzer, they were eventually arrested.
They spent a couple of months in jail, and I got a $410
restitution check.
Senator Lott. So you got a little relief----
Ms. Edge. Right.
Senator Lott.--but not a whole lot and after a lot of
difficulties?
Ms. Edge. Right.
The Chairman. Mr. Chairman, can I get in here----
Senator Lott. Sure.
The Chairman.--a little bit?
Senator Lott. Yes, sir, Mr. Chairman.
The Chairman. Can I ask you--you say since DOT has not set
up the company database they were mandated to set up in 1998,
consumers had to rely on consumer advocacy websites. Have you
inquired of DOT why they didn't do that? Have you had anyone
involved?
Ms. Edge. No, I don't know why they didn't do it.
Senator Lott. Ask the guy sitting to your right before you
leave about that.
The Chairman. Well, I think Mr. Kelly could take--should
take it as a request from the full Committee that you deliver
to us within 30 days a reply to this lady and tell us why you
have not complied with the 1998 Act.
Senator Lott. Mr. Hoemann.
Mr. Kelly. I'm from Florida.
Senator Lott. This guy over here.
Mr. Hoemann. That's right. And Senator Stevens----
The Chairman. Mr. Hoemann, all right. Within 30 days, we
want a document, and we'll have a hearing if we are not
satisfied.
Mr. Hoemann. Absolutely, sir.
Senator Lott. Thank you, Ms. Edge. We may come back to you
later. Mr. J.R. Kelly now, Director, Division of Consumer
Services, Florida Department of Agriculture and Consumer
Services. We'll be delighted to hear from you, sir.
STATEMENT OF J.R. KELLY, DIRECTOR, DIVISION OF
CONSUMER SERVICES, FLORIDA DEPARTMENT OF
AGRICULTURE AND CONSUMER SERVICES
Mr. Kelly. Thank you, sir. And I'm not going to talk about
hogs and chickens, I'm going to talk about the other part of
the Department of Agriculture that I work with, which is the
Division of Consumer Services. Thank you very much for the
opportunity to come here and talk with you today. In our
division, we run the state's consumer hotline for Florida. We
are designated as the complaint clearing house for Florida, and
we also have regulatory oversight of about 12 to 14 different
industries, one of which is intrastate moving and is obviously
the reason I am here today. Florida passed a law in 2002
requiring the regulation of intrastate movers, a law that I
will add was supported very favorably by the Florida Movers and
Warehousemen's Association and the moving industry as a whole.
Under our law, movers must register with me, provide proof of
insurance. They are also required to provide written estimates
to consumers. Prior to providing any moving services, they have
to have that estimate signed by both the mover and the
consumer. In addition, under the law, you cannot demand only
cash, you have to allow the consumer to pay two of three types
of payments--cash, personal check, or credit card, whichever of
those two you prefer. That has to be disclosed to consumers up
front. In addition, one of the strongest parts of our Florida
law is that if a consumer tenders payment or makes payment in
the amount of the written estimate--if the mover does not
deliver their--the consumer's goods into their dwelling--they
can't just throw them on the front lawn--if they do not deliver
them into the destination dwelling, it is a third degree felony
in Florida. We also handle consumer complaints in my office,
and we look at complaints from two different areas. Number one,
we always attempt to informally mediate to resolve the
consumer's dispute. We contact the business on behalf of the
consumer and--in attempt to resolve the dispute. The other
thing we do is we review the complaint to make sure the mover
is not operating out of compliance with the Florida intrastate
moving law. Believe it or not, we are successful in a little
over 50 percent of the time in resolving the complaints
satisfactorily. We also engage in enforcement activity when
necessary. Our goal is not to put anybody out of business,
Senator. Our job--we look at it--is to make sure it's an even
playing field and that all businesses follow the same rules.
And therefore, that creates a competitive atmosphere--
environment for consumers. The last thing we do in our office
is consumer education. There have been some comments about
databases. We have a complaint database that is public record
and open to the public, have had it for over 15 years, and that
information is available to consumers. All they have to do is
call our toll-free hotline and ask us what is the background of
a mover, are they registered with you, what is their complaint
history. We also diclose to the consumer how the complaints
were resolved and what was the nature of the subject matter of
the particular complaint. So we do our best to educate our
consumers as much as possible. As I mentioned, we are also the
complaint clearing house in the State of Florida, which means
that we handle complaints in areas we do not regulate, which
would include interstate complaints. In that area,
unfortunately, we are not as successful in resolving the
complaints satisfactorily. It's a little less than 30 percent,
and the main reason is very similar to what the gentlemen from
Maryland mentioned, we don't have authority over interstate
movers. And therefore, we don't have a hammer we can hold over
their head to make them respond to us. In addition, we always
copy every one of our interstate complaints to the FMCSA so
that they get an opportunity to review the complaint and know
what's happening, at least from our Florida consumers. The
complaints we get, generally speaking, fall into three
different categories--broadly speaking--the consumers allege
damaged or lost goods and denied insurance claims, increased
costs that were over the estimates, and then the late arrival
of a moving company. It's supposed to be here on one day, and
it doesn't arrive till two or three days later or both--that's
at both the pickup and at the destination. The 2005 law that I
know is the subject of your concern, it's really too early for
us to say as a state agency what effect it has had with respect
to our mediation, if you will, of the interstate complaints. We
do believe it should result in more businesses responding to
our informal mediation efforts, but only time will tell. And
so, I don't have a whole lot I can offer, but I'll answer your
direct questions on that area. But again, I appreciate the
opportunity to be here, and I'll answer any questions that you
guys have.
[The prepared statement of Mr. Kelly as follows]
Prepared Statement of J.R. Kelly, Director, Division of Consumer
Services, Florida Department of Agriculture and Consumer Services
Chairman Lott, Senator Inouye and members of the Committee: Good
Morning and thank you for the opportunity to present Florida's
perspective on the moving industry. My name is J.R. Kelly and I am the
Director of the Division of Consumer Services at the Florida Department
of Agriculture and Consumer Services (FDACS). The mission of the
Division of Consumer Services is to protect, inform and empower
Florida's consumers and businesses, while promoting a positive business
environment in the state. FDACS has regulatory responsibility over
Business Opportunities, Motor Vehicle Repair Shops, Charitable
Organizations, Florida Do Not Call Program, Dance Studios, Pawnbrokers,
Health Studios, Sellers of Travel, Intrastate Movers, Sweepstakes/Game
Promotions, Lemon Law and Telemarketing; however, we serve as the state
clearinghouse for all consumer complaints, regardless of whether we
regulate that particular industry. We also function as the U.S.
Consumer Product Safety Commission's agent in Florida when it comes to
product recalls, inspections and investigations. We make every possible
effort to assist consumers by directing them to the appropriate
federal, state or county agency.
FDACS began regulating intrastate moving companies on July 1, 2002,
pursuant to a Florida Legislative mandate. Under Florida law, all
persons engaged in the intrastate transportation or shipment of
household goods for compensation must register with FDACS, provide
proof of liability insurance and provide a signed written estimate of
the cost of the move to the shipper. All complaints related to
intrastate movers are handled by FDACS. State law is enforced through
both administrative and civil actions in state courts. In addition to
having the ability to assess administrative and civil monetary
penalties, under Florida law, if a mover fails to deliver a shipper's
goods after a shipper has paid, or attempted to pay, the amount of the
written estimate, it is considered a third degree felony.
While FDACS does process all consumer complaints related to
interstate moves, our ability to assist consumers is somewhat limited
given that the companies are not required to respond to our inquiries.
When an interstate moving complaint is received by FDACS, we use
informal mediation to attempt to resolve the dispute while, at the same
time, forwarding a copy of the complaint to the Federal Motor Carrier
Safety Administration (FMCSA). On average, about half of the consumer
complaints FDACS receives related to intrastate moving are resolved by
Department employees and the case is ``closed satisfactorily'',
indicating that a company has satisfactorily responded to a consumer
complaint. Only 30 percent of the interstate moving complaints are
resolved with this outcome. Whether the move is intrastate or
interstate, complaints relating to either fall into three common
categories:
1. Damaged or lost goods with denied insurance claims;
2. Contract or end of move costs differ from written estimate;
3. Late arrival of mover for pick up or delivery. Late delivery
often results in consumers thinking their items are being held
hostage.
Each complaint is unique but generally they relate in some way to
one of these three broad categories.
The Household Goods Mover Oversight Enforcement and Reform Act of
2005 (Public Law 109-59) and its subsequent modification in Public Law
109-115, provided authority for state entities that regulate intrastate
moving to enforce provisions of Federal law regulating interstate
movers in Federal court. Under the legislation, states are limited to
bringing an action on behalf of an individual shipper to enforce
applicable consumer protection provisions of the Federal law. States
may seek either an injunction or impose civil penalties but such
actions must be brought in Federal District Court. As the legislation
passed a few short months ago, it is difficult to say with any
certainty how beneficial these additional enforcement authorities will
be to states. While some of the bill's provisions could serve as
impediments to its widespread use, passage of the bill will likely mean
that many companies who otherwise would not engage in mediation with a
state pursuant to a consumer complaint, may now do so given that an
enforcement provisions is now available to us.
Mr. Chairman and Members of the Committee, in closing, let me again
thank you for the invitation to appear here today and for the
leadership you are providing on this issue. Florida recognizes that
given the diversity of our population, the potential is there for
unscrupulous businesses to take advantage of our consumers. Working
with the tools given to us by our Legislature, we are doing everything
we can to create a favorable business climate while at the same time
protecting our citizens. I think we are succeeding. I would be happy to
answer any questions you or Members of the Committee may have.
Senator Lott. Thank you very much, Mr. Kelly, and now we'll
hear from Mr. Joe Harrison, President, American Moving and
Storage Association, Alexandria, VA. We thank you for being
here, Mr. Harrison.
STATEMENT OF JOSEPH M. HARRISON, PRESIDENT, AMERICAN MOVING AND
STORAGE ASSOCIATION
Mr. Harrison. Good morning, Mr. Chairman, Senator Pryor. I
am Joe Harrison, President of the American Moving and Storage
Association headquartered in Alexandria, Virginia. AMSA is the
national trade association of the moving and storage industry,
representing 3,500 movers worldwide, 2,100 of whom are
interstate motor carriers regulated by the DOT, Federal Motor
Carrier Safety Administration, and the Surface Transportation
Board. My complete statement to the Subcommittee addresses the
many positive steps Congress took to assist consumers when it
enacted the Household Goods Mover Act last year. Members of
this Subcommittee and your staff are to be congratulated for
your important role in fashioning this legislation. My
industry's vigorous support of several significant measures
included in that legislation attests to our similar commitment
to improving the experience of all interstate consumer
shippers. While we know we have increased the regulatory burden
our industry must bear, we enthusiastically supported every
provision interstate movers should comply with when dealing
with consumers. Your Subcommittee should also be complimented
for authorizing additional funds to the Federal Motor Carrier
Safety Administration for consumer-oriented initiatives and
increased enforcement and oversight of our industry. This
action has helped transform Federal Motor Carrier into a
significantly more effective enforcement agency. AMSA will
continue its cooperation with the agency staff and
investigators, on the operations conducted by movers and
compliance with the consumer protection regulations. We will
also continue our involvement in several of the rulemaking
proceedings that the agency will be issuing affecting consumers
in the near future. My complete statement also describes
several important steps AMSA has taken to improve the public's
understanding of the moving process and what they should expect
when dealing with legitimate movers. I will not use my limited
time this morning to further explain those details. Instead, I
believe it is appropriate that I use my time to emphasize the
importance of regulation of the interstate moving and storage
industry by the Federal Government. A strong Federal presence
in the interstate regulatory arena provides explicit regulatory
boundaries within which all movers should operate. Most
importantly, the Federal regulations should be designed to
effectively assist the 1.5 million American families that rely
on my industry each year for their interstate moves. Legitimate
movers comply with the Federal regulations, rogue movers do
not--therefore, setting a clear demarcation between the two
classes of operators. You can rest assured that the legitimate
movers AMSA represents strive to comply with all of the
requirements of the Federal consumer protection regulations. I
need not waste this Committee's time detailing the many ways in
which rogue movers ignore these same regulations and many
others as they take advantage of consumers. In the past, AMSA
has enthusiastically supported all Federal appropriations
efforts to strengthen the DOT's effectiveness in regulating the
moving industry. We recognize that this will help consumers and
legitimate movers while further isolating rogue movers. We will
continue our support for all proposals that would improve this
situation. The legitimate moving and storage industry, which
AMSA represents, recognizes that the critical service we
perform for the public often becomes entangled in operating
difficulties. While we believe our overall service record is
extremely good, missed delivery dates do occur, loss or damage
does occur, as do other circumstances that are endemic to the
moving process. However, legitimate operators strive to correct
the difficulties these situations create to the satisfaction of
the involved consumers. We are not like the rogue mover, we do
not ignore our responsibilities. Our enthusiastic support of
Federal regulation of the interstate moving industry is driven
by our understanding of the nature of the service we provide to
the moving public. We are physically engaged in the interstate
transportation of household goods. Ours is not a theoretical
exercise involving interstate commerce. Like the railroads, the
airline industry, the bus industry, and the balance of the
trucking industry, we move goods across state lines, and we
rely upon a strong Federal regulatory system to oversee that
process--that includes Federal investigators, Federal
prosecutions when appropriate, and jurisdiction vested in the
Federal district courts when construing and imposing the
consequences of violations of Federal statutes or regulations.
It should be acknowledged that the moving industry, like the
railroad, airline and bus industries, also deals with consumers
and should not be set apart for unique treatment in the form of
state enforcement of the interstate commerce we are engaged in,
including the Federal regulations that dictate every aspect of
our daily operations. My statement notes say the GAO only 5
years ago recommended to Congress that sufficient time should
pass to assess the effects of DOT's enforcement actions before
the state enforcement of Federal statutes and regulations is
considered, and AMSA wholeheartedly agrees with that
recommendation. We recognize that DOT is on track to do its
job, as evidenced by its industry compliance audits and strike
force actions. Those aggressive enforcement efforts should
continue. States can deal with carriers or brokers of household
goods that possess certain unlawful characteristics. State
efforts to identify and terminate the operations of these
operators should continue. The result is a sensible, effective
state/Federal partnership to stop unlawful activities, a goal
that benefits all consumers that require interstate moving
services. AMSA would welcome the opportunity to continue to
work with Members of this Subcommittee and your staff to ensure
that this objective is met. Thank you, Mr. Chairman.
[The prepared statement of Mr. Harrison as follows:]
Prepared Statement of Joseph M. Harrison, President, American Moving
and Storage Association
My name is Joseph M. Harrison. I am the President of the American
Moving and Storage Association (AMSA) with offices at 1611 Duke Street,
Alexandria, VA 22314.
AMSA is the national trade association of the regulated moving and
storage industry with 3,475 members worldwide representing the entire
spectrum of the industry, including approximately 20 national van
lines, 2,120 independent regulated carriers, 760 agents of van lines,
and over 300 international movers. These entities contract with 30,000
independent owner-operators (drivers) who own equipment and perform
much of the physical transportation of household goods. Many, if not
most, AMSA members are small business owners, many of whom are 3rd and
4th generation movers.
The industry employs roughly 450,000 workers, operates 41,000
trailers, 26,000 tractors and 23,000 straight trucks and generates
revenues of $10 billion annually. We operate in every city, town,
borough and hamlet in the United States. In addition to our interstate
transportation service, we perform the intrastate and local moving and
storage services that are required by consumers, industry and the
government, most notably, our military men and women, whom we are proud
and honored to serve. AMSA members perform nearly 1.5 million
interstate household goods moves each year, the majority of which occur
to the satisfaction of the customer.
AMSA members are routinely trusted with not only the personal
effects of their customers, the relocation of high-ranking officials,
but also uniquely ``sensitive'' items such as the National Christmas
Tree displayed on the Capitol Mall each year; this past year,
transported by National Van Lines, headquartered in Chicago, IL; Allied
Van Lines, also headquartered in Chicago, relocated an ancient dinosaur
collection to the Chicago Museum of Art; and Security Moving & Storage,
an agent for United Van Lines, relocated President and Mrs. Bush from
Texas to the White House. Speaking of President Bush, one of our
members, Chuck Kuhn, President and CEO of JK Moving and Storage,
headquartered in Sterling, VA, recently hosted a town hall meeting in
which President Bush addressed the Nation on issues affecting small
businesses--the engine of our national economy. Towards that end, AMSA
has consistently supported Congressional efforts to remove barriers
impeding small business growth, such as excessive taxation, excessive
regulation, and excessive litigation. In addition, AMSA has worked with
Congress and the Administration to rid the marketplace of a small band
of ``rogue'' movers who prey on unsuspecting consumers, and who in
their blatant disregard for Federal regulations, operate on an ``uneven
playing field'' and thus, at a competitive advantage over regulatory-
compliant AMSA members.
This statement is submitted in response to the Subcommittee's
invitation to participate in its hearing on Protecting Consumers from
Fraudulent Practices in the Moving Industry.
The Positive Effects of the 2005 Legislation
Members of this Subcommittee are to be congratulated for your
important role in fashioning the ``Household Goods Mover Oversight
Enforcement and Reform Act of 2005.'' This legislation was a major step
towards improvement of many aspects of the moving process consumers
must deal with when contracting for an interstate move.
From the moving and storage industry's perspective, we believe we
possess a clear understanding of the added steps movers should be
required to follow to improve the consumers' moving experience. That is
why the industry vigorously supported the following measures that were
enacted as part of the 2005 legislation:
Full replacement value carrier liability for loss or damage.
Expanded mandatory arbitration for loss or damage and
transportation charges to $10,000 from $5,000.
Criminal and civil penalties for holding shipments hostage.
Written estimates of charges based on actual surveys of
goods.
Written binding or non-binding estimates of charges.
Use of actual shipment weight as the basis for charges on
all nonbinding estimates.
Tougher broker operating requirements.
Tougher licensing requirements for motor carriers and
brokers.
A DOT database for shipper complaints weighted by size of
mover (shipments) with public access on the Web.
Collection at delivery of charges for services requested by
the customer only and the billing of balances due after
delivery.
Providing all prospective shippers with the DOT brochure
``Ready to Move.''
Quite naturally, these provisions have added to the regulatory
burden legitimate movers must bear when they transport interstate
shipments. My industry is well aware of this fact. Nonetheless, we
enthusiastically supported enactment of each provision because we
believe all movers should comply with these requirements when dealing
with consumers. We also believe that, as the shipping public becomes
more aware of the responsibilities of interstate movers, they will be
better able to distinguish between legitimate movers and the rogues
that prey upon the public and, not surprisingly, do not comply with any
of the DOT FMCSA Consumer Protection Regulations or any other Federal
regulatory requirements.
Your Subcommittee should also be complimented for authorizing funds
to FMCSA for consumer oriented outreach initiatives and increased
enforcement and oversight of the moving industry. This action has
transformed FMCSA into a significantly more effective enforcement
agency. For its part, AMSA has assisted the FMCSA staff with certain
aspects of those activities. AMSA staff members and member carriers
have worked closely with FMCSA investigators to provide them with
information on the operational aspects of the services performed by
movers and on interpretation of the Consumer Protection Regulations.
AMSA is committed to continuing its cooperation with FMCSA and its
investigators as they conduct compliance audits of the operations of
established household goods carriers, including AMSA members, and
pursue unlawful operators. AMSA also intends to participate in several
rulemaking proceedings FMCSA will initiate to implement those
provisions of the 2005 legislation that require amendments to the
Consumer Protection Regulations. AMSA will also continue its vigilance
in all matters that are designed to assist consumers when selecting and
utilizing the services of interstate movers. This includes the AMSA
Arbitration Program which, during the last 5 years, has processed 3,000
consumer inquiries and successfully concluded nearly 1,300 arbitration
cases. In addition, we will continue to impress upon our members the
importance of the AMSA Certified Mover Program through which the AMSA
staff receives and endeavors to resolve consumer service complaints.
\1\
---------------------------------------------------------------------------
\1\ A voluntary self-policing program designed to promote ethical
principles and practices in the moving and storage industry. Members
pledge to conduct their operations in a manner that encourages high
professional standards and quality service. Information about the
program is on the AMSA consumer website www.moving.org.
---------------------------------------------------------------------------
In addition to assisting consumers with complaints and service
problems associated with their move, AMSA provides educational
materials regarding the entire moving process. Providing consumers with
information and the help they require to make informed moving
decisions, including the best way to select a mover, is as important as
the Federal regulations that are designed for their protection. For a
number of years AMSA has maintained a consumer website www.moving.org
devoted exclusively to the education of consumers, information on the
Federal regulatory requirements, how to avoid moving scams, and a link
to the FMCSA educational website www.protectyourmove.gov.
AMSA has also worked with FMCSA on the development of materials for
their educational consumer outreach efforts. We also recently provided
consumer educational moving-related information to Lowes,
Apartments.com, Verizon, Bell South and AT&T, which will become part of
each company's ``moving tips'' websites resulting in even greater
opportunities to educate consumers about the relocating process.
AMSA and its members are committed to the proposition that educated
consumers are better able to avoid unlawful operators and the practices
they employ. One of our members took a major step in this direction
when it established a program identified as ``Move Rescue'' that
assists consumers that have been deceived by unscrupulous operators.
Through this program shippers can call an ``800'' number to speak to a
moving expert and obtain guidance on how best to address their problem
including, if necessary, assistance in retrieving goods that are being
held hostage since, while enforcement officials have the badges, they
do not have the trucks and crews that are necessary to actually finish
a move and ensure that a family's possessions are delivered to their
rightful owners.
State Enforcement of the Federal Consumer Protection Regulations
AMSA and its members have approached the need for consumer friendly
legislation in a cooperative manner. We have not resisted sensible
changes that work to the benefit of consumers and curb the ability of
rogue movers to take advantage of the moving public. That said, AMSA
has also supported State enforcement of the Consumer Protection
Regulations provided those enforcement efforts were directed against
operators that possess the indicia of unlawful or rogue movers (e.g.,
unlicensed by DOT; failure to maintain required insurance; failure to
publish a tariff or participate in an arbitration program, etc.) and,
provided further, that the States' enforcement actions, if they require
court involvement, would occur in the Federal district courts with
jurisdiction in all such matters just as they do today with all DOT
FMCSA enforcement actions.
Enforcement by 50 States of every aspect of the physical operations
conducted by legitimate movers, in our view, would be a seriously
flawed proposition. Our business is the clearest possible example of
interstate commerce. Consistency in the interpretation and enforcement
of regulations and statutes is critical to consumers and to the moving
industry.
AMSA has been a vigorous supporter of increased Federal
enforcement. In fact, FMCSA's significant progress in this area through
its compliance audits should be commended by Congress. These audits
involve reputable carriers as well as unlawful operators that may or
may not be licensed by FMCSA. They are initiated by either consumer
complaints or as part of a safety compliance survey. It is my
understanding that nearly 400 such surveys were conducted by FMCSA in
its most recent fiscal year.
Just 5 years ago, the General Accountability Office noted that no
State enforcement of the Federal operating regulations would be
appropriate until a strong Federal regulatory system was in place. \2\
GAO also recommended that sufficient time should pass to assess the
effects of DOT's enforcement actions before State enforcement of
Federal statutes and regulations is considered. \3\ Therefore, AMSA
believes, just as GAO does, that the full effects of the FMCSA
enforcement efforts should be realized before consideration is given to
an additional enforcement role for the States. State enforcement
activities should be directed with precision at those elements of the
moving industry that have demonstrated their contempt for the well-
being of consumers. And all of those enforcement actions should be
initiated in the Federal courts.
---------------------------------------------------------------------------
\2\ GAO Report Consumer Protection--Federal Actions Are Needed to
Improve Oversight of the Household Goods Moving Industry, March 2001,
p. 6.
\3\ Id., p. 23.
---------------------------------------------------------------------------
It is generally understood that an enforcement action exercised by
a government agency is intended to compel compliance with a law or
regulation. This contemplates that an enforcement agency charged with
this responsibility understands the regulation it is required to
enforce and, most importantly, the nuances of permissible and
impermissible actions by those that must comply with the regulation or
body of regulations. Clearly, this will not be the case if expanded
State authority authorizes enforcement of the Federal consumer
regulations and particularly if this occurs in State courts. To
understand this situation it is appropriate to review the effectiveness
of State regulation of the intrastate transportation of household
goods.
As many as 14 States do not require a license to engage in the
intrastate transportation of household goods. \4\ There is virtually no
regulation of movers in those States and, obviously, there are no
operating standards or regulations of any sort much less regulations
that are as comprehensive as the Federal regulations. Taken as a whole,
the States' regulation of household goods transportation is a collage
of inconsistencies. \5\ AMSA's 2,100 regulated interstate movers are
thoroughly familiar with this situation since they also perform local
and intrastate moving services in every State and it is accurate to say
that no State enforces operating regulations that even closely resemble
the Federal regulations in their comprehensiveness.
---------------------------------------------------------------------------
\4\ AK, AR, AZ, CO, DE, ID, MD, ME, SD, TN, UT, VT, WI and WY. The
State Moving and Storage Associations in several of these States have
urged State officials to, at a minimum, establish a State registration
system for movers, without success. The most common venue for shipper
recourse against an intrastate mover in these States is a small claims
court.
\5\ Many State PUCs or other agencies having some role in
intrastate regulation are also required to oversee the operations of
tow truck operators, taxicabs, bus operators and trash haulers.
---------------------------------------------------------------------------
It is not necessary that I explain in detail the attributes
possessed by the Federal courts when called upon to interpret and
enforce Federal statutes and regulations. They are routinely doing it
today as they process FMCSA cases involving violations of the agency's
safety regulations or household goods regulations. The consistency
resulting from that process is essential to the sound administration
and enforcement of Federal regulations.
The highly successful ``strike force'' enforcement initiatives
conducted by the DOT have ferreted out and prosecuted scores of
unlawful movers and brokers that operated from various sections of the
country taking advantage of unwary consumers. The background and modus
operandi of those operators confirms that most possess certain common
characteristics that many other, as yet, undetected unlawful operators
also possess:
They failed to register with and obtain a license from FMCSA
to engage in the interstate transportation of household goods;
if they possess an FMCSA license or permit, it is in a
pending status or has been revoked for failure to provide
evidence of bodily injury and cargo liability insurance;
if the carrier has been issued an FMCSA license, it has an
unsatisfactory safety rating or it has not been rated by FMCSA;
if the carrier or broker is licensed, the license was issued
less than 5 years before the enforcement action.
Today, State enforcement authorities that encounter carriers or
brokers that possess one or more of these characteristics can
effectively deal with them. The States should continue their efforts to
identify and terminate the operations of unlawful operators, thus,
delivering a major blow to their operations. The end result is a
sensible, effective State/Federal partnership to stop unlawful
activities, an objective that benefits all consumers that require the
services of interstate household goods carriers. AMSA would welcome the
opportunity to continue to work with Members of this Subcommittee and
your staff to ensure that this objective is met.
Senator Lott. Thank you very much, Mr. Harrison. Thanks to
the panel. Let me yield to Senator Pryor for questions that he
might like to ask at this time.
Senator Pryor. Thank you, Mr. Chairman. Let me start, if I
may, with Mr. Zinser. When the IG's Office has taken an
enforcement action against a mover, what are you able to
recover for consumers? Is it restitution, punitive damages,
refunds--what's the nature of your recovery?
Mr. Zinser. Generally, I think the first thing that we are
able to do for the consumers is put the corrupt mover out of
business. That's the first thing. When they get prosecuted and
they are thrown in jail, you know, I think that helps the
consumer. Beyond that, I think that there are mixed results.
There are a lot of fines and restitution ordered by the Federal
courts and then, as you may be familiar with, the ability to
collect those fines and restitutions. I think it's probably
mixed, Senator Pryor.
Senator Pryor. Yes. Just a moment ago, Ms. Edge testified
that some of these movers may get a new DOT number. They may
close down a business and open up another business. Have you
experienced that in some of your investigations?
Mr. Zinser. Absolutely. We have defendants who have, you
know, had their authority revoked. They'll turn around to their
brother-in-law, they'll turn around to their wife, and their
wife will apply for the number and become a motor carrier or a
registered household goods mover.
Senator Pryor. As I understand it, you don't pursue every
single complaint that you get just because the volume is so
great. Is there a certain number of complaints or allegations
against a particular moving company that triggers action by
your office?
Mr. Zinser. I can't say that there is a specific number. I
think the Federal Motor Carrier Safety Administration has come
up with a general number of five or six complaints where they
start really looking at a motor carrier, and then we generally
take a lead from them to tell us who the problem carriers are
in their caseload, and then that will trigger an investigation
by our office.
Senator Pryor. So you may investigate if you get five or
six complaints or--we understand that that number's not
engraved in stone. What happens if you only get one complaint?
What does that consumer do? What recourse does that consumer
have?
Mr. Zinser. Well, I think that's why we support the idea of
getting the state enforcement officials involved. We think the
real key here is that if a consumer has somebody who is holding
their goods hostage and they can get a hold of somebody that
the mover knows has authority to put them out of business, then
that will benefit the consumer. Right now, if they call the
police, the police will show up and say I'm sorry, I don't
really have jurisdiction to help you here, you know, call the
Federal Government, and the Federal Government isn't all over
the place when it comes to household goods issues.
Senator Pryor. Do you have a concern that if the states
have that authority that they'll be inconsistent in how they
utilize or apply that authority?
Mr. Zinser. I personally don't have concerns. I can see
where the industry may have those concerns, but I think we have
had experience in regulated industries--you know, in other
parts of transportation where there has been good joint
cooperation between state enforcement, the regulated industry,
and the Federal enforcement offices, and I think this working
group that you all set up through SAFETEA-LU is one of the
vehicles that can be used to check those concerns.
Senator Pryor. Thank you, and have you done any
investigations into activities in Arkansas?
Mr. Zinser. Yes, sir. I am familiar with at least one or
two cases. One, I think, involved a move from Arkansas to
Idaho, and I think there was a move from California to Arkansas
that we are familiar with. In one case, I know there was a
successful Federal prosecution.
Senator Pryor. OK. Mr. Hoemann, if I can, you heard my
questions here just a moment ago. I saw you shaking your head
or nodding your head yes on the questions about the states and
the state's involvement. Could you comment on that?
Mr. Hoemann. Yes. Senator Pryor, Chairman Lott, we were
glad to see the adoption of the language giving authority to
the State Attorneys General and the state enforcement officials
to enforce the Federal household goods regulations so we have
the same tool for a cooperation basis. We have begun work with
the working group established under SAFETEA-LU. We have had two
meetings so far. It'll be a process of setting up how we
communicate with each other on complaints and the actions each
of them will take, and we know we will have to build on that
platform, but we are looking forward to having more hands out
there in the field actually enforcing it. We do not have the
same concerns, although we can understand them, about disparate
treatment of carriers because built into SAFETEA-LU is a
provision that FMCSA be notified of actions being taken at the
state level, and that purpose is there so that we can help with
uniform treatment. Well, we want carriers obviously to play by
the same rules everywhere and consumers to know when they have
an interstate move, the same rules apply everywhere.
Senator Pryor. Great. Mr. Zinser, if I may, one last
question for you, and that is, in your view, does the FMCSA
have the authority to intervene on behalf of individual
consumers based on the interpretation of House report language?
Mr. Zinser. Senator, I think we would have to study that
issue a little bit more. I know that when the ICC was
terminated, there was language in that Act that talked about
the Federal Government getting out of disputes, and I think the
issue comes down to, well, is this a dispute, or is the
consumer being the victim of a fraud here. And so, I think one
of the things this working group probably needs to look at is
that very question.
Senator Pryor. OK. Mr. Hoemann, if I may, the temporary
modifications to the authority that was included last year in
the Congress for FY06 Federal transportation appropriations
bill, do you think that that language has deterred states from
utilizing that authority?
Mr. Hoemann. Senator, we don't know if there has been a
deterrence there. We do know that we have yet to go through a
full moving season, and we will certainly gain experience under
all the SAFETEA-LU provisions as we go through this. Plus we
have just begun to work, as I said, with the working group as
we educate each other about how we can best cooperate.
Senator Pryor. There is also an enforcement outreach plan
that you all are in the process of deploying under SAFETEA-LU.
Will that help ensure consistency state to state?
Mr. Hoemann. Senator, we certainly hope so. We do the
equivalent thing on the safety side of our business where we
work with our state partners in enforcing safety regulations.
We have training, and we have information, and we also reach
out to the judicial section to be sure that laws are enforced
in court properly.
Senator Pryor. Sure, I understand. Mr. Chairman?
Senator Lott. Well, thank you, Senator Pryor. We will be
having a vote or votes on the floor of the Senate here soon,
and maybe we could just both kind of get involved in the
questions here. Let me ask some specific questions, but first,
Mr. Zinser, I think maybe you are relying on language that
really is not there on something you said a while ago. The
general policy of DOT, as I understand it, since the
termination of ICC has been to not get involved in individual
cases. Is that right or wrong?
Mr. Zinser. I think that has been the policy of the Motor
Carrier----
Senator Lott. OK.
Mr. Zinser.--Safety Administration.
Senator Lott. In fact, Ms. Edge received a letter from DOT
specifically saying that they don't get involved. The
Department cites report language in a House Committee report
accompanying the ICC Termination Act, and I actually was
Chairman of the Surface Transportation Subcommittee back then
when this occurred. I would point out that the conference
report did not include such language. We have it. We'd like to
call it to your attention. And so, you know, I think that the
Department should get involved in individual cases, and I think
you are relying maybe on a misinterpretation.
Mr. Zinser. Well, the----
Senator Lott. Can you give me a response there?
Mr. Zinser. Yes, sir. The Office of Inspector General
really has not studied that issue----
Senator Lott. All right.
Mr. Zinser.--and what we have concentrated on are fraud
cases against consumers, and we have tried to bring criminal
prosecutions. I think there are several areas where the Motor
Carrier Safety Administration needs to look at the law and make
sure that their interpretation of the law is consistent with
the intent of Congress because I think I could point out a
couple----
Senator Lott. Right.
Mr. Zinser.--of other areas----
Senator Lott. OK.
Mr. Zinser.--where that's not happening.
Senator Lott. OK. Well, Mr. Hoemann, I guess I need to
direct it to you, so we'll get this language to you, and we
hope that you will get more involved in the individual cases.
Mr. Kelly, do you feel that you have the tools you need to deal
with interstate problems? You said that well, you know, it's
only been in effect a year, and therefore you don't really
know. As a matter of fact, it's been on hold for a year.
Mr. Kelly. Yes, sir.
Senator Lott. So just kind of sum up--do you feel like in
the interstate cases you have what you need to protect
consumers against these bad players?
Mr. Kelly. Probably not. I think under the law that was
finally passed, I think it's a little unlikely that our office
would get involved in suing someone in Federal court. I think
there are a lot of obstacles that have to be overcome that
certainly we don't have to overcome when we are looking at
intrastate because we are in our own state.
Senator Lott. You know, as a lawyer and one that used to be
a defense lawyer, but now one who is a plaintiff in a case
against an insurance company, my attitudes have moved around
over the years. But, you know, to have to go to court to get
redress is the--what should be the last resort.
Mr. Kelly. Yes, sir.
Senator Lott. You shouldn't have to go to a state or
certainly not to a Federal court. You ought to have the
authority, and you ought to have the authority to whack these
people upside the head and make them do the right thing quickly
for the consumers. Now, remember, in the beginning, I am a pro-
business, you know, free market capitalist conservative
Republican, but damn, bad behavior is unacceptable----
Mr. Kelly. Well----
Senator Lott.--and I think that the states, whether it's
Arkansas or Florida or Maryland or Mississippi or Missouri,
ought to be able to move aggressively to help the consumers
when they are trapped like Ms. Edge. You can't have that kind
of stuff, and you shouldn't have to hire a lawyer and go to a
Federal court to get redress.
Mr. Kelly. Well, I would agree. There were comments about
handling individual cases. We do handle every individual
complaint that comes into our office. We don't----
Senator Lott. Are you--are your hands tied? Are you limited
when it involves interstate transfer of these goods?
Mr. Kelly. Yes, sir.
Senator Lott. We have got to stop that.
Mr. Kelly. Yes, sir. The first thing, interstate companies
are not even required to respond to my office, so many times,
they don't, and someone mentioned----
Senator Lott. Then the law we passed will--hopefully will
address that, won't it?
Unknown: Once the one-year ban comes off.
Senator Lott. OK. The answer from the very effective staff
back here. Of course, Chris Bertram, who worked with me on
that, says once the ban comes off, and that leads me to my next
question. But before I get to that, one other quick question to
you, Mr. Zinser--two quick questions. Do you think the present
system is working adequately? And if not, is it really just a
basic question of people and money, or do you need this law or
some additional laws to be able to do the job effectively?
Mr. Zinser. I don't think the current system is working
effectively. I think that the--I think SAFETEA-LU has some
provisions that can help fix this, but I think that the states,
as you have heard here this morning, the states need some
guidance from the Federal Government about what they can and
cannot do now with the provisions under SAFETEA-LU.
Senator Lott. All righty. Now, Mr. Harrison, you know, I
started off on this, I guess, a little bit uneducated. In my
years in Mississippi along the Gulf Coast, I found movers to
be--the local people--I knew them, they did a good job. I think
I almost never got any complaints, so I was a little taken
aback when I found what was happening--this type of criminal
misconduct by people. But I--do you feel like we worked with
your association last year fairly and adequately in trying to
develop some language that would provide some relief, but not
mistreat, you know, the actors in your industry that do a good
job--the big companies that generally do well?
Mr. Harrison. Yes, we worked very well with the staff and
everyone involved in trying to fashion the legislation that we
thought was reasonable. Our mantra has always been, you know,
to get rid of these rogue movers.
Senator Lott. They hurt your industry.
Mr. Harrison. Absolutely. We support the legislation as
long as it doesn't economically burden the good guys, while
getting rid of all these rogue movers. We are with you all the
way. We worked with the staff on the majority of the provisions
that are in there. We don't like all the provisions that are in
there, but I would say for the most part, most of the
provisions that were enacted are good provisions. They give us
a little bit of a burden, but nonetheless, I think they will
make a difference in terms of getting rid of these rogue
movers.
Senator Lott. Did you support the last-minute move by the
Appropriations Subcommittee to put these provisions on hold for
a year?
Mr. Harrison. We didn't ask the Appropriations Committee to
do that as an association, but we certainly support the outcome
because our mantra has been, again, that we support getting rid
of these rogue movers. If that means the state needs to go
after these rogues, we won't have a problem with that. A state
like Florida can--could do that. Of course, they have been
doing that under their criminal statutes. And now under the
current legislation, they can do that. We have absolutely no
problem with that. All we would like, as far as the legitimate
industry is concerned, is to be able to have enforcement of
Federal rules in Federal court when it relates to legitimate
movers. These rogue movers that we have been talking about all
morning are a real problem.
Senator Lott. Did you support the delay or not?
Mr. Harrison. Did we support the outcome?
Senator Lott. Delay that was put in that conference report.
Mr. Harrison. Once it was accomplished, we supported it,
yes.
Senator Lott. I just want you to know that's one of the
reasons why you have a problem with me. You can call it process
if you want to, but I considered it an act of bad faith, and
it's turned me--I got my stinger out. Now, you better work with
us to get this fixed. And in that connection, what are your
problems with what we had in the SAFETEA-LU bill? I mean, you
said there are some points you don't agree with. Look, it isn't
going to be good enough to say you have to go to Federal court
to get redress, we are going to have to have some local and
state opportunity here to enforce Federal law. Now, if you got
some specific concerns, I want to hear it because I intend to
put the law that we passed back on the books just like it was
done, and it may make it harder--tougher. But if you have some
legitimate complaints, let me know what it is. But I--you know,
there has got to be some reasonableness here, Mr. Harrison. So
you want to identify a couple of things that you are--is it
just that you don't want to have state courts involved? Look, I
understand. No offense to--some Attorneys General will get a
little carried away with class actions. I mean, they are not
generally--I mean, a lot of them are, you know, plaintiff
lawyers, Democrats, which, you know, make me a little nervous.
[Laughter.]
Mr. Harrison. Until your house----
Senator Lott. I don't want to----
Mr. Harrison. Until your house gets hit by a hurricane.
Senator Lott. Until my house gets wiped away by a hurricane
and my insurance company won't pay, but----
[Laughter.]
Senator Lott.--I am trying to find a balance here. I am not
out to get anybody, but I just--I am thinking, you know, look,
I am thinking about blue-collar shipyard workers in my
hometown. Now, we are all sophisticated. We live in northern
Virginia, Internet, and we can--know how to call the Federal
Government. Look, I want to know how the average blue-collar
Joe Six-Pack gets help, let alone the Assistant Professor of
Architecture----
[Laughter.]
Senator Lott.--at Virginia Tech. Help us solve this problem
for your own industry's sake.
Mr. Harrison. Well----
Senator Lott. You----
Mr. Harrison.--Senator----
Senator Lott. Right.
Mr. Harrison.--you know, I agree with the premise that the
real problem here are rogue brokers, rogue movers, and I think
the current legislation, you know, addresses that adequately.
Now, in terms of our position, in terms of state enforcement in
state court, basically we just simply want a consistent uniform
interpretation and enforcement of the regulations. That's our
goal. That's what we want to maintain. Now, the Attorney
General from Maryland indicated, you know, in his testimony
that they have been able to prosecute some of these bad actors
in Maryland, and that's good, but the State of Maryland doesn't
even have regulations on household goods. In other words, when
you move within the state of Maryland, there are no household
goods regulations. And therefore, absent regulations, a mover
in Maryland could do whatever they want to do. And obviously,
the rogues operate in Maryland just as they operate in other
areas. Now, to have the State of Maryland then try to figure
out what the difference is between what an interstate mover has
to abide by in terms of the regulations and liability versus
Maryland where they have absolutely no regulation, you know,
could be difficult and may end up being in a situation where we
have an inconsistent interpretation of the Federal law.
Senator Lott. I understand this is interstate commerce, and
it makes it difficult for the industry if you have to deal
with, you know, 50 different sets----
Mr. Harrison. Yes.
Senator Lott.--of laws. So I support, you know, a national
set of standards, it's the implementation and the enforcement
ability at the local and state level enforcing the national
standards is what I am interested in. So with all due respect
and appreciation, you know, we are not going to let go of this
bone. We are going to keep chewing on it, and we would like to
have your support in coming up with a good solution that will
protect, you know, the Gallot brothers in Biloxi, Mississippi,
but will give the blue-collar worker a way to get at these
people without having to go through--to hire a damn lawyer and
go to a Federal court. I am one.
Mr. Harrison. Well, I'd be glad to work with the
Subcommittee as best I can. If you----
Senator Lott. Yes. Well, we'd appreciate that. And we are
running out of time here, but in case we do have to leave
pretty quickly--the vote hasn't started--I want to again thank
you all. I want us to get a good solution here. I want the
Federal Government to do a better job. I want to make sure we
give you the tools to do a better job--people, money. The
gentleman here is also on Appropriations. We'll get more money
in this area if we have to, and I know the Chairman of the
Appropriations Committee by--you know, very closely, very
personally--Senator Cochran. So we can do that, but we want to
work with the states to make sure that their concerns are
addressed. We want to work with the industry. Do not--we don't
want to be unfair to you, but I do think that as an association
representing the entire industry and a lot of good actors, you
need to help make sure we can get at the bad actors.
Mr. Harrison. Absolutely.
Senator Lott. Senator Pryor, you want to get back into
this----
Senator Pryor. I do.
Senator Lott.--activity?
Senator Pryor. Thank you. Thank you, Mr. Chairman, and I
concur with your comments. Mr. Harrison, basically I think what
the Subcommittee wants to do is try to help clean up the
marketplace, and I agree with you that there are these rogue
movers out there. My sense is that your membership--I don't
know how many members you have in your association, but----
Mr. Harrison. About 3,000.
Senator Pryor.--my sense is that by and large, your
members, by the nature of their membership in your association,
they don't hold people's furniture hostage, and----
Mr. Harrison. That's correct.
Senator Pryor.--that's just a business practice that they
don't engage in. It's probably one that you as an association
don't tolerate, but it does go on. And I guess the thing I
don't understand--and I'd like to continue the dialogue with
you and Senator Lott and others--is I don't understand why you
are concerned if what we are going after is activity that your
members don't engage in. To me, it's almost the Do Right Rule.
If you are doing right and you are taking care of your
customers the way you should be and you have a contract--it's
in writing, it's clear, everything is done and paid for and
it's all fair and square, then you don't have any problem in
the world. But by putting a strong law on the books, it allows
us to go after and allows us--I mean along with the states, to
go after the rogue movers or the bad actors, whatever they may
be in the industry, and it allows us to clean up the
marketplace to make it better for your members. Now, do you
have a comment on that?
Mr. Harrison. Sure do. I agree with that premise. I mean,
we want to get rid of these rogue movers and clean it up
because it gives us a bad image. And so, we are with you 100
percent on that. Now, the nuance here is, I think, is the
reason why we prefer a uniform, consistent interpretation in
the enforcement of the Federal role--of the Federal regulations
in Federal court, if it has--if it comes to that, is because
we--yes, we do not hold shipment hostages. But, you know, in
our business, we don't get paid up front, we get paid after we
make the delivery. And in many cases--not many cases, but in
some cases, there are disagreements between the mover and the
customer--have nothing to do with perpetrating fraud, it's just
a disagreement about, you know, the payment. For instance, or--
if I give you a good example that happens--it's not often, but
it happens. We try to deliver a shipment, and we can't find the
customer destination. We have got this truck we have got two
shipments on. We have the customer's shipment, and we have
another shipment that needs to go somewhere else after we
deliver this one. And for whatever reason, we can't seem to
find the customer. We don't have the right phone number, or we
didn't get the right phone number. Whatever the reason, that
driver has to stay there for several hours trying to contact
the carrier, contacting whoever is involved in this move to try
get a hold of the customer. If you can't get a hold of the
customer, we, by law, can put the household goods in storage
until we do find that customer. And then when we find the
customer, we say we had your goods, we put them in storage,
since we haven't been able to find you for two days--whatever
the reason is, then we are ready to deliver, but we charge for
the storage of those goods for maybe two days, three days. Not
a lot of money, but nonetheless, more money than the customer
perhaps thought he would had to pay. So then we have a dispute
as to what is owed that particular carrier. Now, maybe that
customer, and I know it's happened occasionally in the 20 years
I have been doing this, gets irate because they say well, you
didn't tell me you were going to put it into storage and it's
going to cost me more money. All the mover did was exactly what
he is entitled to do, and it cost another $250. That customer
says no, I am, not going to pay, I am going to go get some law
enforcement people or something to get involved in this thing
because you are holding my shipment hostage. Well, the mover is
not holding the shipment hostage, he is just trying to get paid
for the services rendered.
Senator Pryor. Well----
Mr. Harrison. So that's our real problem--the disputes we
have between our customers that have nothing to do with
perpetrating fraud--simply misunderstandings,
miscommunications, bad paperwork on the part of either our
movers or even the customer on occasion results in these
disagreements. And we do not want to have the states come in
and say you are going to be required to do this, and we are
going to, you know, take you to court or take some sort of
action because you are holding the shipment hostage when in
fact we are not.
Senator Pryor. Well, I think under the scenario that you
have given us--first, I would assume your companies would have
that in the contract--that if they move it, and for some reason
the customer is not there, there is a----
Mr. Harrison. Yes.
Senator Pryor.--provision in the contract. So there again,
I think you are automatically acting in good faith, you are----
Mr. Harrison. Yes.
Senator Pryor.--you are complying with the contract. If
there is a dispute, maybe a local Attorney General or someone
will look at it, and they'll say well, look, Mr. Consumer, it's
in the contract right here, and you have to pay the difference
because you didn't comply with your end of the contract.
Mr. Harrison. Right.
Senator Pryor. You weren't there when the goods were
delivered, and they have the right to do this. So all that--
again, that's fair and square because it's under the terms of
the contract. So again, I'd love to work with you on that. I
think you have some fears that quite frankly, when you get down
to the reality of the situation, probably won't come to pass,
and it may be just a fear of the unknown. Let me ask you, if I
may--I know we are about to have a vote here any moment.
Attorney General Curran's deputy came in. Can you identify
yourself please?
STATEMENT OF STEVE SAKAMOTO-WENGEL, DEPUTY CHIEF, CONSUMER
PROTECTION DIVISION, OFFICE OF THE
ATTORNEY GENERAL, STATE OF MARYLAND
Mr. Sakamoto-Wengel. I am Steve Sakamoto-Wengel. I am
Deputy Chief of the Consumer Protection Division in Attorney
General Curran's office.
Senator Pryor. Great, and you have sat in here and heard
most of the testimony. Do you feel confident--speaking for your
Attorney General's Office--and do you feel confident that you
all have the expertise at looking at statutes, interpreting
Federal law? Do you have the confidence that you, the state of
Maryland, will not abuse any authority you are given under
Federal law?
Mr. Sakamoto-Wengel. Yes, I do, Senator, as I believe you
were--that you were an Attorney General, you would know that
the Attorneys General do not have a history of bringing, you
know, frivolous actions. They do take action where there are
serious practices harming our consumers, and that's been the
history. I mean, Maryland, we have brought four actions
involving intrastate movers where we have had egregious
practices like holding goods hostage and unfortunately have not
had the similar authority to take that action where it involves
an interstate move.
Senator Pryor. And let me ask this--you heard Mr.
Harrison's testimony a few moments ago that says basically the
states--the state Attorneys General offices really do not have
the understanding or the ability to interpret and fairly apply
the law in this instance. So, as I understand your testimony,
you are disagreeing with that?
Mr. Sakamoto-Wengel. Correct. I mean, I think that we have
a long history of enforcing our consumer protection laws in the
states. We know what an acceptable practice is when we see it.
And I think, you know, even if we don't have individual
regulations in each of the states, we know that lying and
cheating to customers is a violation of the law in all 50
states. And I think if you treat your customers fairly, you
won't have anything to worry about.
Senator Pryor. And I assume, as in your capacity in the
Maryland office, you work with other sort of equivalent
assistant or Deputy Attorneys General in other states around
the union, and what's your impression of other Attorneys
General offices' Consumer Protection Division or the lawyers
involved there?
Mr. Sakamoto-Wengel. All of the lawyers that I have worked
with, including the wonderful lawyers that were in your office,
have been very professional, very knowledgeable about, you
know, consumer protection laws, consumer protection issues and
are concerned about being able to protect consumers where they
are the subject of egregious practices. And we are not looking
to, you know, get people on technical violations, what we are
looking for is where our consumers are being harmed--to be able
to protect them, and to provide them with the kind of
protection that we provide in other areas.
Senator Pryor. Mr. Kelly, as I understand it, you are not
in the Florida Attorney General's Office, you just have a
different structure there in the state. Is that right?
Mr. Kelly. Yes, sir.
Senator Pryor. But you do basically the consumer
protection. Your office does the consumer protection in
Florida, and you heard Mr. Harrison's testimony as well that
basically--not to misquote him or misconstrue what he said, but
basically that he has concerns that states may not be able to
understand, interpret, or enforce these Federal regulations
fairly. Do you share that concern?
Mr. Kelly. No, sir, I don't. I think that both our office
and the Attorney General's Office in Florida would enforce the
law fairly, equitably. In addition, we are part of the
education effort that FMCSA is doing now. And certainly, as in
any partnership, I am certain we would call upon their
expertise when we were looking to interpret the laws to help
us--to help guide us. So no, sir, I don't share those concerns.
Senator Pryor. Ms. Edge, let me ask you--best-case scenario
from your standpoint--you mentioned these new DOT numbers and
some of the games that some of these rogue carriers can play to
manipulate the system. You also mentioned the Carmack
Amendment. Best-case scenario, would we find ways to stop these
practices by these rogue carriers in terms of new DOT numbers,
et cetera? And also, best-case scenario, should we, the
Congress, repeal the Carmack Amendment?
Ms. Edge. I think so and offer state enforcement authority.
Senator Pryor. All right. Mr. Chairman, I think our vote
starts in about five or ten minutes. Do you have any other
questions? I may have just one or two more. Let me review my
notes here for just a moment please because Senator Inouye was
unable to join us today, and I think I have covered most of his
questions. Let me ask just this. I just want to make sure that
Senator Inouye's questions were covered.
Senator Lott. I do want to make sure you understand that
Senator Stevens asked for a specific action within 30 days.
Please let us know you did that because he----
Mr. Hoemann. Mr. Chairman, we will follow through
expeditiously.
Senator Lott.--good because he will remember that.
Senator Pryor. Believe me, he will remember that. Let me
say this, Mr. Chairman, thank you again for doing this. I think
I have covered all of Senator Inouye's questions. But in the
event I haven't, could we leave the record open just for a
couple of days?
Senator Lott. Certainly. We'd be happy to do that. We'll
keep the record open for 2 days for additional questions and
the response from the panel of witnesses.
Senator Pryor. Great. Mr. Chairman, again, thank you for
your leadership on this and your determination to try to help
people all over this country. I want to thank all the witnesses
for coming today as well. Thank you.
Senator Lott. And I again thank you, and this hearing is
concluded.
[Whereupon at 11:30 a.m, the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
This Committee worked diligently on the Highway bill last year. We
fought to develop stronger Federal protections for consumers who hire
moving companies to ship their belongings across state lines. Our
provisions addressed a variety of fraudulent practices that some movers
use to take advantage of consumers. Most notably, some companies take
consumers' goods ``hostage'' and request excessive fees in exchange for
the release of their possessions.
The Federal Motor Carrier Safety Administration (FMCSA) oversees
household goods carriers. Its standards were inadequate, and its
resources limited, leaving the interstate moving industry essentially
without any Federal oversight. The FMCSA has received nearly 20,000
consumer complaints since January 2001, and yet until last year, it had
only two employees dedicated to household goods regulation and
enforcement for the entire Nation.
This is precisely why the provisions we introduced in the Highway
bill granted limited authority to state Attorneys General and other
state agencies to enforce Federal household goods laws. By empowering
the states to help consumers, we provided an effective way to address
consumer complaints.
I understand that some in the moving industry were opposed to
strong oversight, preferring to maintain the Federal oversight vacuum.
Unfortunately, the industry sought, and succeeded, in forestalling any
enforcement as part of this year's Transportation Appropriations bill.
I consider those changes temporary and will work with my colleagues to
ensure that the protections granted in the Highway bill are restored.
Moving is stressful, whether it is around the corner or across the
country. By providing consumers protection against fraudulent
practices, we are helping to make it less so. I hope that we can work
together to ensure that this package is fully reinstated, so that
American consumers receive the protection they deserve.
______
Prepared Statement of the U.S. Chamber of Commerce
On behalf of the U.S. Chamber of Commerce (U.S. Chamber), the
world's largest business federation representing more than three
million business and organizations of every size, sector and region, we
appreciate this opportunity to provide the Subcommittee with a
statement for today's hearing on ``Protecting Consumers from Fraudulent
Practices in the Moving Industry.''
Each year, approximately 1.5 million households use commercial
moving firms to move their household goods to another state, according
to industry estimates. There are approximately 3,000 motor carriers
that transport household goods across state lines that are registered
with the United States Department of Transportation.
We recognize the actions of rogue movers have come to this
Subcommittee's attention. There is no place for these unscrupulous
movers in the household good moving industry, and we urge law
enforcement officials to use existing Federal law to fully prosecute
these companies.
We support the efforts of the American Moving and Storage
Association in proactively undertaking a campaign to educate consumers
about their rights and provide consumers a list of companies that do
business the right way. Use of the ``Mover Referral Service'' can
provide consumers with valuable information when choosing a moving
company.
We understand illegitimate movers that scam customers exist in the
industry; however, we do not believe that further regulating the entire
industry will more successfully protect consumers from scams. Federal
consumer protective regulations currently exist that, if adequately
enforced by the Federal and state governments, provide protection to
consumers without detrimentally affecting licensed, legitimate moving
companies. We feel that more regulation placed on the legitimate movers
in the industry would only open the door to frivolous lawsuits and
additional complications for reputable movers, resulting in increased
costs that would be passed on to the customer.
To increase enforcement of current Federal law for the household
goods industry, we were supportive of provisions included in the Safe,
Accountable, Flexible, Efficient Transportation Equity Act: A Legacy
for Users or SAFETEA-LU (Pub. L. 109-59) to allow state authorities to
provide assistance to the Federal Motor Carrier Safety Administration
in this area.
We also were supportive of a provision in the Fiscal Year 2006
Transportation Appropriations bill (Pub. L. 109-119) clarifying that
state attorneys generals and other state regulatory agencies should
bring all enforcement actions in Federal courts, not state courts. We
supported this provision for several reasons. First, Federal courts are
experts on Federal law and have the resources and experience to handle
these cases. Second, having one standard for interpretation of Federal
law allows the industry to know that there will be a consistent
interpretation and application of Federal law, as they complete each
interstate move.
States have full authority to regulate and enforce state law over
all moves taking place solely within their state. However, Federal law
applies to the regulation of all interstate moves. Thus, we believe
that Federal courts must have jurisdiction over enforcement actions
involving Federal law, while state courts will maintain jurisdiction
over enforcement actions involving state law.
The U.S. Chamber has tong been concerned about bringing actions
into state court where the law is far more likely to be subject to
differing interpretations depending on the state. These differing
interpretations would cause uncertainty within the household goods
moving industry and will lead to state-by-state differences in the
interpretation and application of Federal law, which was never the
intent of Congress.
The U.S. Chamber also believes that plaintiffs' trial lawyers will
use state courts because of a belief that state judges are generally
unsympathetic to out-of-state business defendants.
We hope that this Subcommittee will work to maintain the
requirement of state attorneys general and other state authorities to
bring interstate household mover infractions to Federal authorities for
Federal prosecution.
The U.S. Chamber strongly supports increased enforcement of Federal
law against rogue moving companies. We believe positive steps have been
taken in adding additional enforcement resources. We expect these added
resources to result in increased enforcement and prosecution. Most
moving companies are honest and provide a vital service, and increased
education from industry and increased enforcement against unscrupulous
companies are the best courses of action in dealing with these issues.
The U.S. Chamber thanks the Subcommittee for holding this hearing
and allowing us to provide our perspective.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Todd J. Zinser
Question 1. In your testimony, you state your support for the
SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation
Equity Act: A Legacy for Users) provisions allowing states to help
enforce Federal law and regulations relating to interstate moving
companies and that this authority could help individual consumers find
more immediate relief from the fraudulent acts of bad movers. In
granting such authority to the states, you suggest that action should
be taken to ensure consistent enforcement by state authorities. Do you
have some suggestions on how to do that?
Answer. We believe that the Federal Motor Carrier Safety
Administration (FMCSA) can take a number of steps to help conform State
enforcement of Federal laws and regulations within a generally accepted
range and minimize the possibility of disparities. For example, FMCSA
could:
Identify which statutes and regulations can be enforced by
States under Title 49, Sections 14710 and 14711, and determine
if additional interpretative guidance is required to address
potential ambiguities.
Reach out to States and national organizations, such as the
Association of Attorneys General and the American Moving and
Storage Association, to develop practical and uniform
enforcement strategies and model approaches. Conduct periodic
reviews of State enforcement efforts to ensure that Federal
laws and regulations are being interpreted correctly and
enforced consistently and, as necessary, determine whether
additional guidance is needed to address any resulting
disparities.
Have those state and local authorities that wish to enforce
Federal laws involving household goods execute a formal
document such as a Memorandum of Understanding (MOU) with
FMCSA. The MOU would define the scope and limitation/
coordination of the authority to be exercised, as well as
certain standard operational areas such as officer selection
criteria, training, standards of conduct and the coordinated
complaint/inquiry process governing officer conduct with regard
to HHG enforcement activities.
Question 2. Could the Federal Motor Carrier Safety Administration's
(FMCSA) Outreach Plan to state authorities, required by SAFETEA-LU, be
a means to accomplish this?
Answer. We do believe that intergovernmental coordination and
information-sharing among the key entities is critical to the success
of State enforcement initiatives. The FMCSA Working Group, established
pursuant to SAFETEA-LU, can be a vital mechanism to accomplish these
objectives.
While still in its incipient stages, the Working Group can help
FMCSA develop model approaches, strategies, and best practices for
State enforcement. It can also assist in identifying and addressing any
Federal laws or regulations which may need to be clarified by FMCSA
through interpretative guidance.
While the two meetings of the Working Group held so far have been
conducted via telephone, we also recommend that FMCSA consider
sponsoring an annual conference that would bring together appropriate
Federal, State, and local law enforcement, regulatory, and consumer
authorities. The Working Group should also consult with interested
parties, such as the public, Congress and industry organizations. The
objectives would be to highlight successful initiatives, facilitate
intergovernmental and industry coordination and cooperation, develop
strategies to address emerging issues, and identify any areas in which
State enforcement has been inconsistent.
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Todd J. Zinser
Question. Based on a 2001 GAO recommendation, the Federal Motor
Carrier Safety Administration told Congress in 2003 that it would
develop a publicly accessible report on the Internet showing the public
what moving companies have the most complaints. Yet, no such database
exists today. What is causing the delay in putting this database
together and will it be done by this summer's peak moving period?
Answer. We have not conducted any audit work examining why FMCSA
has not followed through on its statement to Congress in 2003 that it
would ``develop a quarterly Web-based report that provides the public
basic mover complaint history by mover name, number of complaints, and
by most egregious type of complaint.''
FMCSA officials have informed us that they have hired a contractor
to establish a database that will meet the requirements on consumer
complaint information set forth in Section 4214 of SAFETEA-LU. These
requirements include establishing a procedure for the public to have
access to aggregated information on consumer complaints and a procedure
for carriers to challenge duplicate or fraudulent information. FMCSA
officials have stated that they are on target to meet the August 2006
deadline for establishing the system. However, we have no indication
that this task will be finished before the beginning of the summer,
which is the peak time for moving.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
J. Joseph Curran, Jr.
Question. You make a strong case for why states should be allowed
to not only enforce Federal law, but also use state law to protect
consumers against fraud, extortion and other unfair business practices
in the interstate moving industry. How do you respond to concerns by
the moving industry that applying state law will create a patchwork of
differing requirements and authorities that would make operation of
their business almost impossible? Do you have ideas about how we could
protect against this, while still offering consumers a remedy against
abusive behavior?
Answer. The moving industry's concerns about inconsistent
requirements are unfounded. What the state consumer protection laws in
all 50 states require is that movers not engage in practices that
deceive their customers. Movers are currently required to meet this
standard under the Federal Trade Commission Act as well as when they
perform intrastate moves. Compliance with basic consumer protection
requirements has not, nor should it, have an impact on the business
practices of the significant majority of household goods movers.
When my office and other State Attorneys General have received
complaints about intrastate moves, we have been able to successfully
use our state consumer protection laws to bring enforcement actions to
protect our consumers. My office has entered into settlements with
moving companies that had generated the most complaints from Maryland
consumers, including complaints about:
lowball estimates
refusing to unload consumers' goods when consumers were
being charged amounts on the day of the move that significantly
exceeded estimates
misrepresenting that consumers were being sold insurance,
and
failing to disclose material contract terms.
Under the settlements, my office succeeded in stopping the
deceptive practices and obtaining restitution for consumers who were
the victims of those practices.
We continue to believe that Attorneys General should be able to
enforce state consumer protection laws against interstate movers who
engage in these and other deceptive practices. We have used these laws
to great effect in combating fraud in other interstate industries and
believe it would greatly assist our efforts to protect our citizens
against abusive practices by interstate movers. As noted in the 2001
report from the GAO concerning the need to improve oversight of the
household goods moving industry, ``[t]he Congress has already expanded
state authority in certain other areas of commerce, including
telemarketing and fair credit reporting, in which the Congress has
recognized that the states can contribute to addressing abusive
business practices that extend beyond their borders.'' Additionally,
our state consumer protection laws enable us to obtain relief for
injured consumers, which is not a remedy available under Federal law.
If the Attorneys General are given the authority to enforce our state
consumer protection laws against interstate movers, we would expect any
cases would be similar to those currently brought against intrastate
movers requiring them to provide legitimate estimates, deliver
consumers' goods in their custody, and fairly represent their services
to consumers.
I strongly urge the Committee to support legislation that would
allow State Attorneys General to enforce our consumer protection laws
to address abuses by interstate movers just as we are currently able to
do with respect to intrastate movers.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Warren Hoemann
Question 1. Is FMCSA preparing the Enforcement Outreach Plan, as
required by Section 4206 of SAFETEA-LU? When will this Plan be
completed?
Answer. The enforcement workgroup mandated by SAFETEA-LU Section
4206, comprised of State Attorneys General, State consumer protection
administrators, and State and local law enforcement officials, is
drafting a Charter to assist in the implementation of SAFETEA-LU
requirements. The charter will cover developing practices and
procedures to enhance the Federal-State enforcement efforts as well as
exchanging information related to the transportation of household
goods. The group will also recommend legislative and regulatory
recommendations to the Secretary regarding HHG enforcement initiatives.
The workgroup will also develop an enforcement plan by December 31,
2006. The enforcement plan will include proposed strategies to educate
Federal and State law enforcement agencies regarding the impact of new
and existing commercial regulations governing the interstate movement
of household goods transportation.
Question 2. Do you believe the intervention authority granted to
the Secretary as part of the original State enforcement provisions of
SAFETEA-LU provides the Secretary with an adequate ability to ensure
cases pursued by State Attorneys General against interstate movers are
consistent with the Department's own interpretation of Federal law and
any guidelines promulgated through the Enforcement Plan?
Answer. Yes. SAFETEA-LU requires that the State has to serve
written notice to the Secretary of any civil action prior to initiating
such action. The SAFETEA-LU provision provides the Secretary with the
ability to review State Attorneys General cases against interstate
movers.
Through the requirement of setting up a working group for
enforcement related purposes, the uniformity of enforcement shall be
consistent. This working group will conduct a two-phased approach. The
first phase is to identify our partners and communicate FMCSA's plans
concerning enforcement in this area. Two conference calls have been
completed to initiate this process. Phase I will also include the
working group identifying their needs and coordinating its own
universal plan that identifies proper procedures when involved in HHG
cases.
Phase II will include the implementation and communication of the
aforementioned plan to all involved parties. This working group is
scheduled to last until September 2009.
Question 3. Do you have data on the number of customer-interstate
mover disputes that are resolved by arbitration or civil action each
year? Do you have data on the outcomes of such actions? Have you heard
feedback from consumers about whether they are generally satisfied with
these options as the main way to resolve disputes?
Answer. No, FMCSA does not currently gather data regarding the
number of customer-interstate mover disputes that are resolved by
arbitration or civil action each year. SAFETEA-LU requires quarterly
reporting from carriers covering the number of shipments, number of
claims for loss and damage in excess of $500, number of claims
resolved, number of claims declined, and the number of claims pending.
FMCSA is coordinating a project that will include sending surveys to
different parties involved in HHG arbitration.
Question 4. I understand that the Federal Motor Carrier Safety
Administration (FMCSA) has stated in the past that it does not believe
that it has the authority to intervene on behalf of individual
consumers who have a complaint against a mover based on an
interpretation of House report language accompanying the Interstate
Commerce Commission Termination Act. Do you agree with this
interpretation?
Answer. Yes. The Interstate Commerce Commission (ICC) assisted in
resolving consumer HHG complaints, although the ICC had no statutory
authority to resolve these complaints. The ICC Termination Act House
report language stated that it does not believe that DOT should
allocate scarce resources to resolve private disputes and directed that
DOT should not continue the dispute resolution function in these areas,
since private parties may bring actions in court.
Question 5. From your testimony, I understand that FMCSA conducts
two types of enforcement activities: ``strike-forces'' that focus on
areas with large numbers of consumer complaints and household goods
carrier compliance reviews, which focus on specific movers with
numerous complaints. In either of these cases, is FMCSA investigating
specific complaints on behalf of consumers or looking at general non-
compliance with Federal statute or regulations? Have these
investigations resulted in restitution or damages to consumers who
filed complaints with FMCSA? Are punitive damages available?
Answer. FMCSA investigates both specific complaints on behalf of
consumers and general non-compliance cases. These investigations may
result in the assessment of civil penalties against the HHG carriers.
In some cases, when a review is conducted on a household goods mover,
specific complaint information is investigated. The commercial carrier
review is the primary tool for addressing non-compliant HHG carriers. A
strike force is a concentrated effort in a confined geographic area
where many commercial compliance reviews are completed in a short time.
These commercial compliance reviews may result in civil penalties based
upon a carrier's overall non-compliance. FMCSA has no mechanism or
authority to provide restitution or punitive damages to customers,
therefore, both the carrier and shipper are advised of their rights and
responsibilities.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Warren Hoemann
Question 1. It appears New Jersey is one of the top four States in
terms of mover complaints, yet not even in the top ten in moves
according to the American Moving and Storage Association. This suggests
that many of the bad actors are operating in New Jersey. What are you
doing to focus your limited resources and enforcement tools on New
Jersey to counter this disparity?
Answer. FMCSA has two HHG Investigators permanently assigned to New
Jersey. This is one-quarter of the entire dedicated commercial
investigators. The investigators conduct HHG compliance operations
daily in New Jersey. In addition, FMCSA has conducted strike force
activities in New Jersey. The strike force is a concentrated focused
effort supported by as many as 20 investigators from around the country
deployed in small geographic areas. FMCSA has conducted as many as 40
investigations during these strike forces. FMCSA will focus our
resources on conducting HHG strike forces in the New Jersey and New
York area during the remainder of FY 2006.
Question 2. Based on a 2001 GAO recommendation, the Federal Motor
Carrier Safety Administration told Congress in 2003 that it would
develop a publicly accessible report on the Internet showing the public
what moving companies have the most complaints. Yet, no such database
exists today. What is causing the delay in putting this database
together and will it be done by this summer's peak moving period?
Answer. FMCSA anticipates completing the Consumer Complaint
Information database system by the end of August 2006. The system will
allow consumers to file, log, and access complaint information lodged
against HHG motor carriers. The database will support analyses of HHG
motor carriers identifying and prioritizing carriers who are most non-
compliant with the commercial regulations for a Commercial Review. The
development and implementation of the database system will meet all the
requirements of Section 4214, Consumer Complaint Information, of
SAFETEA-LU.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Kay F. Edge
Question 1. When you decided to contact a lawyer, after being told
by FMCSA, the FBI, and state and local police that this was your only
option to seek justice, what did the lawyers suggest it would cost you
to pursue a case against the moving company? Did you discuss
arbitration with a lawyer? What was their recommendation about that
possibility?
Answer. The attorneys I contacted did not discuss their fees in
terms of a specific dollar amount but they were all dismissive and
clearly not interested in taking the case. They all indicated that
considering their fees and what I might stand to recover from the
moving company, it would not be worthwhile to go after the moving
company. The attorneys at Virginia Tech advised me that they were not
in a position to get involved and one attorney I e-mailed in a larger
city close to Blacksburg (an attorney whose specialties included
transportation law) did not even bother to return my call.
The extreme economical impracticality (and for most people,
impossibility) of enlisting a lawyer's aid and getting justice through
the civil court system will be demonstrated by what I have subsequently
learned about lawyers' fees and possible actions they could have
undertaken. Remember, as I stated in my testimony, the moving company
was holding my goods hostage for an additional $2,515. (They had
originally quoted me $2,230, but were now demanding $4,745 in cash.)
They were also threatening to assess storage fees for each day that I
did not hand over the money and to sell off my goods at auction.
Had I hired a lawyer at that point to apply for a court order
(preliminary injunction) to get my goods back, and assuming the lawyer
charged a rate of $200 per hour, I could avail myself of less than 13
hours' worth of the lawyer's time before his fees exceeded the moving
company's ransom. Even a layperson could see that the time it would
take to talk with me, talk with the moving company, review
documentation, do even the most cursory research, draft a motion for
the court order, and prepare for and argue at the hearing, would easily
exceed 13 hours. This money I would pay my attorney would be in
addition to the original price quote of $2,230 and/or whatever amounts
I might have ``legitimately'' owed the moving company. If the moving
company continued to litigate after the return of my goods (assuming
the court issued the injunction order), I would have no choice but to
drop the case as I could not afford more legal fees for continued
litigation, and then I would be at risk of having a judgment entered
against me for whatever inflated amount the moving company claimed was
owed to it. This is not even mentioning that I still would have had to
wait additional days or weeks in my empty house pending the processing
of the application for a court order, all the while not knowing whether
the moving company might damage or destroy my property in retaliation.
Of course, I ended up paying the ransom. Had I hired a lawyer after
that, under the Carmack Amendment, the most I could recover through
litigation is the amount of the overcharge (the ransom amount). Again,
the amount of time it would have taken a lawyer to prove to a judge
that the moving company overcharged me would easily--greatly--exceed 13
hours.
As I mentioned earlier, the most I could get back had I sued the
moving company is the amount of the overcharge (pursuant to the Carmack
Amendment). There would be no punitive damages under state fraud laws,
and no treble damages or attorneys' fees under state deceptive trade
practices statutes. In other words, there is no incentive for an
attorney to take this case on a contingency basis. And, regardless of
whether a consumer hires an attorney or decides to go it alone and
represent him/herself in court, there is no penalty for a moving
company to suffer for even the most blatant instances of fraud and
extortion. There is not even a penalty that the consumer can enforce
(as opposed to an understaffed FMCSA who only goes after a moving
company after dozens or maybe hundreds of complaints have been reported
about the company) in the Federal regulations against a moving company
that takes a shipment hostage (i.e., violates the 110 percent rule). A
consumer cannot even call the police to stop a scam-in-progress because
of the Carmack Amendment. Even in those states, such as Florida, which
have enacted statutes allowing the police to intervene in what would on
its face be a ``civil dispute,'' the Carmack Amendment prevents the
states from empowering the police to intervene where the move crosses
state lines. (In other words, the Florida statute applies only to
intrastate moves.)
The reality is that the moving company's only consequence is to
give back what it stole, and that's only if it gets caught. That is a
non-consequence. Indeed, that is an incentive to continue careless,
unethical, and criminal practices. It would be naive to think that
moving companies--including the larger, well-established companies
(more on that later)--are not well aware of this situation.
As for arbitration, during the time of my move in 2001, the
arbitration option as set forth in Federal law provided for arbitration
only in cases of loss or damage to goods, not for disputes about
charges for the moving service itself. SAFETEA-LU, at Section 4208, has
now provided for arbitration for disputes about charges. But there is a
giant loophole. The text reads that arbitration will now be available
to ``determine whether carrier charges, in addition to those collected
at delivery, must be paid by the shipper for transportation and
services related to the transportation of household goods.'' As phrased
in this way, a consumer could compel a moving company to enter
arbitration to settle a dispute over only those additional amounts that
were billed to the customer after delivery, not amounts that were
collected before the moving company relinquished the goods. A moving
company need only ``collect at delivery'' (by holding shipments
hostage) whatever amount it feels it deserves (or wants) from the
customer in order to place itself beyond SAFETEA-LU's arbitration
requirements (as well as to give itself the advantage of not having to
go through the hassle of billing the customer later for whatever
additional amounts it still wants from the customer). In other words,
had my move taken place today, I would still be as powerless and as
without options as I was five years ago.
Question 2. As a volunteer representative of the movingscam.com
website, I assume you have been contacted by other consumers who have
been ripped-off by movers. Do you have a sense whether the problems
facing consumers come from just a few, small ``rogue movers'' or are
more widespread throughout the industry, with some of the more
established companies also involved?
Answer. From my experience with the website, I believe it is
incorrect to attribute the problem to a ``few, small `rogue movers.'''
First, there are many rogue movers, of varying sizes. The movingscam
blacklist has 336 movers listed and it is by no means a comprehensive
list. There are many more companies that we consider ``dubious.'' Rogue
movers are spread out all over the country but we've noticed that they
tend to be clustered in and around large cities like New York,
Baltimore, Atlanta, Miami/Ft. Lauderdale, Chicago and certain areas of
Texas and California. They have gotten quite sophisticated in how they
conceal their true identities. Moreover, some of the companies are not
small at all. One of the most notorious offenders, National Moving
Network (also doing business as Patriot Moving and Premium Relocations)
employs many workers and it appears to be well-organized and well-
established.
Second, my website-related interactions with both moving company
insiders as well as customers have led me to believe that such
practices are not restricted to small, newly-established, no-name
companies. I wish we could tell website visitors that they will be safe
by just going with a more established, large company with a well-known
name, but unfortunately this just isn't so.
Before further explaining this position regarding ``some of the
more established companies''--which I'm taking to mean the major van
lines and their agents/affiliates and independent companies that have
been in business long term--and the industry overall, I would like to
first point out that it is clear to us that the AMSA does not police
its own membership. There are some outright scam companies that belong
to the organization, so a consumer trying to check on a company cannot
rely on membership in the organization as being indicative of
reputability. It is very similar to the BBB in that if dues are paid,
the membership can be maintained. One notorious scam company in
Maryland, Giant Van Lines, was a member of the AMSA for a long time
before they were finally kicked out because Tim Walker of Movingscam
informed the AMSA of their insurance cancellation and the revocation of
their DOT license. The Maryland Attorney General would surely be aware
of this company. Today, it has been reborn as five different scam
companies started by former employees: RSG Relocation Systems, Epic
Relocations, Go West Movers, Dawn, Inc. and Chesapeake Movers; I do not
know if these companies are now members of the AMSA. Another notorious
scam company in Pennsylvania, Maier's Relocation, continued to be an
AMSA member after losing their interstate license and being fined by
the FMCSA. Their membership was revoked only after one of our
Movingscam volunteers produced evidence for the AMSA that Maier's was
doing illegal interstate moves.
In regards to the established companies, we would differentiate
outright criminal behavior and breaking the rules in a deliberate and
premeditated way from gross negligence and ``stretching'' of the rules.
While a few of the major van lines and/or their agents may commit
deliberate fraud occasionally, we do see a difference between them and
the habitual, criminal scam companies that commit fraud on every move.
Often, the problems of major van lines and their agents can be traced
to gross negligence, inefficiency and incompetence on the part of the
agent, coupled with a refusal to own up to a mistake or wrongdoing and
failure to make things right on the part of the major van line itself.
On those occasions when deliberate fraud is committed by a major
van line affiliate, the company seems to be more cautious and less
obvious about it. Instead of doubling or tripling a quote like a scam
company might do, they will charge somewhat more than the estimate (up
to about 50 percent of the estimate, which still typically represents
hundreds to a couple thousand dollars more for the customer) or fail to
refund as much as the customer is entitled to, and hope that the
customer, wanting the move to be over with, will simply say ``close
enough,'' or otherwise just give up. As with the small, rogue movers,
the claim that the shipment is over-weight is often used to ``explain''
the larger bill. Other dishonest and fraudulent practices include
``weight-bumping'' and ``balloon-packing,'' phrases that are well-known
to industry insiders. Weight-bumping is adding additional weight to the
truck after the customer's goods are loaded so as to create a record of
a greater shipment weight (by, for example, filling up the gas tank or
keeping men in the truck cab while the truck is on the scale). Balloon-
packing is using excessive boxes and packing material, all of which is
then charged to the customer.
Another bill-padding tactic is claiming that all sorts of
``additional services'' (requested by the customer or not, performed by
the company or not, required by actual physical conditions or not) are
required to service the shipment. For example, a driver will claim that
the moving van cannot fit on the customer's residential street or a
street corner is too tight to maneuver or a tree has too low-hanging
branches, etc., and that a smaller, shuttle truck is necessary. The
driver may also claim that a certain number of ``long carries'' (where
the goods are carried an excessive distance) are required. He may also
claim that exterior porch stairs, narrow doorways, interior stairs in
the lobby of an apartment building, etc., also necessitate additional
services, and hence, additional charges. And before the shipment will
be unloaded, the customer must sign an ``addendum'' saying that she
agrees to the additional charges.
Although one might think that the 110 percent rule for non-binding
estimates, or getting a binding estimate (for which a moving company
can charge), would protect the customer from being presented with an
unexpected on-the-spot demand for up to a couple thousand dollars
beyond the original price quote--one would think wrong. In fact, it has
been the AMSA's long-standing practice and interpretation of Federal
regulations that charges for these additional services can be collected
in full, on top of the original price quote, before the goods are
unloaded. It does not matter whether the additional amounts cause the
final charges to exceed 110 percent of the original estimate. (This
also makes the protection of the 110 percent rule meaningless, yet this
is how AMSA says it interprets the rule and what it has instructed its
members.) This additional services tactic has been especially popular
in explaining why a customer's so-called ``binding'' or ``guaranteed
not to exceed'' estimate has been un-bound and exceeded at destination.
(Moving company insiders can also tell you that, if the company does
not collect these charges in full on the spot and instead sends the
customer an invoice, the moving company likely will never recoup these
charges. Customers with a binding estimate often balk, understandably,
at paying a bill for additional amounts. Customers with a non-binding
estimate and whose shipment weights were significantly low-balled also
will refuse to pay a mailed invoice; hence, the ``need'' for the moving
company to violate the 110 percent rule.)
One might think that a customer who has been overcharged by the
affiliate of a large van line--a well-known national corporation with a
reputation, presumably, to protect--could simply complain to the van
line at its national headquarters and get some satisfaction, but again,
one would think wrong. The customer complaint is automatically
forwarded to the customer service center at the van line's
headquarters. Typically, this customer service rep will look at the
documentation--including the addendum for additional services signed by
the customer--and tell the customer that he or she agreed that the
additional services needed to be performed and paid for, end of story.
As for the customer's claim that, regardless of the legitimacy of the
additional charges, the company still violated the 110 percent rule by
demanding the full amount of all charges on the spot--the customer
service rep will tell the customer some version of ``Well, you would
have received a bill for the same additional charges anyway and you
would have had to pay it eventually, so you really haven't suffered any
loss.'' If the customer insists that the additional charges are
illegitimate and that he was coerced into signing the addendum, he will
have to complain very loudly and very frequently before the van line,
at best, might decide to refund perhaps a paltry $100 as a ``customer
service gesture'' just to get rid of him. Beyond that, the customer who
is still dissatisfied and threatens to sue is simply informed that he
has the right to pursue that option if he wants to and the company will
no longer respond to him. Of course, the moving company is well aware
of how little liability it faces even if the particularly stubborn
customer actually does take it to court.
The van line can afford to be so dismissive about the customer's
complaint because Carmack protects the company from liability for fraud
and deceptive trade practices under state law. Further, an individual
consumer of interstate moving services is not likely to move frequently
and thus does not represent loss of ``repeat business'' for the van
line, nor does he represent the kind of volume business the way a big
corporation with an account for relocating employees does.
The very structure of the mainstream industry, as seen in the
structure of the major van lines, also leads to a diffusion of
responsibility and a culture of non-accountability and exploitation of
the customer. The major van lines, as corporations, own no moving
equipment and employ no drivers. Instead, similar to a franchisor, they
contract with hundreds of ``agents'' all across the country. These
agents--some relatively large and consisting of facilities in multiple
cities; some small, lone ``mom-and-pop'' operations--are separately
incorporated moving companies which actually own the trucks, employ (or
contract with) the drivers, and do the actual physical moving of a
customer's belongings.
An individual's move with a major van line, unbeknownst to the
individual, typically involves a number of these separately-owned and
incorporated agents, all of whom have interests in conflict with each
other when it comes to dealing honestly with the customer. For
instance, a customer who looks up Major Van Line XYZ in his local phone
book will get the agent located in that city. This ``origin agent'' is
usually responsible for issuing an estimate to the customer and selling
the move. This agent gets paid only if it sells the job, in the form of
a commission based on the estimate given. Obviously, if the agent bids
too high, the customer will hire a different moving company. Once the
job is sold, it is registered in the van line's system, the origin
agent takes its cut, and at this point Major Van Line XYZ itself takes
a cut from the estimate. Major Van Line XYZ then--in the manner of a
broker--assigns the pick-up and hauling of the shipment to a different
agent (a separate entity usually located somewhere closer to the
customer's destination, perhaps hundreds of miles away). The problem is
that this ``hauling agent'' gets its money from whatever is left of the
ever-shrinking pie of the original estimate. The hauling agent is the
entity who employs or contracts with the driver of the van. If the
origin agent's estimator low-balled the estimate, the hauling agent
and/or its driver will end up not making any money, or even losing
money, on that job.
Thus, while the estimator has an incentive to underestimate the
price of the move in order to bait the customer, the hauling agent has
the incentive to find ways to increase the price once the goods are on
the truck (the worse the low-balling, the greater the subsequent price
increase). Significantly, 100 percent of the money collected for
additional services such as long carries and shuttles go to the hauling
agent and/or its driver. The opportunity for abuse is obvious. By the
time the customer complains to Major Van Line XYZ's customer service
center, Major Van Line XYZ has already gotten its cut and does not have
much incentive in determining whether any of its agents committed
negligence, fraud, or extortion during the move. The only way the
customer could get a true refund is if an agent admits to mistakes and
thus agrees to compensate the customer out of its own pocket.
Obviously, an agent who deliberately abuses the customer will not admit
to anything. And, Major Van Line XYZ will tend to accept its agents'
version of events over the individual customers.' (In the interstate
moving industry, ``the customer is always wrong.'') My guess is that,
were any particular agent to rack up more than its ``fair share'' of
customer complaints of overcharging and hostage-taking, Major Van Line
XYZ would eventually terminate its contractual relationship with this
agent. However, my guess also is that if this agent were located in a
region where Major Van Line XYZ is under-represented or happens to book
a lot of business, this agent is unlikely to be terminated. My further
guess is that, even if the agent is terminated for repeated ``bad
customer service,'' previous customer complaints against this agent are
not re-evaluated and none of these previous victims are issued a
refund.
Lastly, it also happens fairly regularly that a customer's more
valuable possessions will turn up missing after a move. Moving company
representatives sometimes misrepresent themselves as selling
``insurance'' and when a claim is made for damage, they resort to delay
tactics or offer a low-ball settlement when the customer was supposed
to have full replacement coverage. In the traditional insurance
setting, state statutes provide for attorneys' fees and treble damages
as penalties for companies that engage in bad faith claims settlement
practices. These statutes, similar to state fraud and deceptive trade
practices statutes, are what deter the corporate abuse of the
individual consumer and reins in over-reaching business practices.
However, in the interstate moving industry, there is no similar
disincentive for a moving company to treat a loss or damage claim in
bad faith. Again, the Carmack Amendment essentially requires the moving
company to give back only what it stole (or lost or damaged), and
that's only if it gets caught--that is, only if the customer, as the
plaintiff forced to bring the suit, can carry his burden of proof at
trial (a big ``if'') and only if the customer is willing and can afford
to pursue litigation to recover less than what it would take to
litigate (an even bigger ``if'').
These are some examples taken from movingscam's complaint database
to illustrate what I mean:
1) North American Van Lines:
AMSA Member: Yes
S. Smith moved with North American Van Lines between 10/19/
2005-10/27/2005 (actual delivery was on 11/02/2005) with a
Guaranteed Not to Exceed estimate of $4,858.16. However, she
was charged $5,538.53 at destination. Ms. Smith was also
charged for packing material not used in her move. North
American Van Lines has since turned the account over to a
collections agency.
2) American Red Ball:
AMSA Member: Unknown
M. Lescher moved with an American Red Ball agent between 8/30/
2005-9/03/2005. The pickup was a day later than promised.
Lescher lost five boxes during the move, and one mirrorpack
that was supposed to contain a marble table top was delivered
empty. Lescher also chose full-value replacement valuation, and
was charged for it; however, Red Ball failed to purchase the
additional coverage so Lescher was told she was only entitled
to the (then) standard .60/lb coverage. Lescher's original
estimate was for $2,400 but was charged $3,400 at destination.
3) Mayflower Transit:
AMSA Member: Yes
J. Corava moved with a Mayflower agent between 2/11/2006-2/21/
2006 (actual delivery was on 2/23/2006). While Mr. Corava was
not charged any more than what was on his original estimate, he
was missing all of his power tools, several Nikon cameras, a
Sony digital camcorder, and alcohol at destination. This
complaint raises suspicion because of the high value and nature
of the items that Mayflower failed to deliver.
4) Two Men and a Truck:
AMSA Member: Yes
J. Dagostino moved with a Two Men and a Truck franchise on 4/
14/2006. When the movers arrived they demanded additional money
in cash and told Ms. Dagostino that if she didn't pay they
would simply charge her credit card and not perform the moving
services. That is exactly what they did. Ms. Dagostino fought
the charges with her credit card company. The outcome is
unknown.
5) From our message board April, 2003: ``We moved with Bekins
Van Lines in October 2002 from Hillside, IL to Rio Rancho, NM .
. . and our move was a complete nightmare!! The packers and
loaders broke or damaged a number of large furniture pieces and
several small items before we even left Missouri. But we
figured it was no big deal since we purchased the ``for all
it's worth'' insurance coverage and assumed the damages, which
totaled $2,734.33 would be replaced, repaired, and/or we would
be compensated, as was written in our agreement with them. Boy
were we wrong!!! Not only have they not settled the claim, they
don't even have the business integrity to return our numerous
calls, letters, and faxes. Most of the time we are put on hold
for extended periods of time (47 minutes was one memorable
time), other times we were consistently disconnected and when
we called back we get a recording. And no surprise . . . none
of our letters or faxes have been responded to either. It
wasn't until we hired an attorney, that she was able to get a
miraculous answer regarding our claim. Our attorney was told
that our broken items had been repaired and they had a check
paid to D&D Restoration to prove it. Well, we have pictures and
video of our broken items . . . and well if that's not proof
enough . . . we physically have the items still in our
possession . . . broken and still not repaired, but this didn't
matter to Bekins.
Bekins did attempt to send us a check for $177.00, to cover the
missing and ``non-repairable'' items, but to date Bekins still
refuses to settle the remainder of our claim for the broken
items. Plus, despite our (myself and my attorney's) continued
telephone calls, letters, and faxes, Bekins' Claims department
still refuses to respond. If you are moving, you would be smart
NOT to do business with Bekins Van Lines; their packers and
movers are untrained amateurs; their corporate offices and
claims departments are so ridiculously unprofessional, it
amazes me they are still in business; and Bekins fails to stand
by their contractual claims agreement with the customer. I have
moved with several moving companies over the past 20 years and
Bekins is the worst!!''
These five examples are not isolated, unusual complaints but are
representative of the kinds of complaints we receive on a regular
basis.
In closing, strong laws and consumer protections--specifically,
rollback of the Carmack Amendment--enacted to drive out scam movers
from the industry would also serve to clean up the marketplace in
general and eliminate negligence and misconduct perpetrated by the
major van line agents. If a moving company is honest, follows the rules
scrupulously and has a carefully written contract, it has nothing to
fear. It will not be vulnerable to irate customers with scratched
furniture or over-zealous Attorneys General. Ultimately, we are left
with the question: Why are the major van lines, if they do not engage
in fraudulent or negligent behavior, fighting so vociferously against
consumer protections?
Thank you for your work on this important consumer issue.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
J.R. Kelly
Question 1. When you are successful in pursuing an intrastate case
of household goods fraud or other illegal activity in Florida, what
compensation or damages are typically awarded to the wronged consumer?
Answer. First and foremost, our goal is to resolve the consumer's
dispute. We have the ability to suspend or revoke a mover's
registration, as well as impose administrative fines up to $5,000 per
violation. Therefore, we can use our administrative authority as
leverage to satisfy the consumer's complaint. In addition, the
Department has authority to seek civil penalties and restitution for or
on behalf of an aggrieved consumer. Using our administrative and civil
authority, the typical award to the consumer is either a monetary
refund or monetary payment for damages to the consumer's goods.
Question 2. Does your state regulate or provide consumer
protections for customers of other types of businesses that operate in
interstate markets?
Answer. I cannot speak for other state agencies; however, yes, our
agency does provide consumer protections for Florida consumers that
transact business with companies located outside our state. Some
examples are telemarketers; sellers of travel; operators of game
promotions or sweepstakes; sellers of business opportunities; Florida
Do Not Call program; and charitable organizations soliciting donations.
Question 3. Do you believe that you could apply your Florida state
laws protecting moving consumers to interstate movers without
disrupting a legitimate mover's ability to do business in your state?
Answer. Absolutely. This Department has an excellent track record
with respect to our regulatory programs. Our goal is not to close
businesses' down or interfere with a company's operations; our
responsibility is to enforce the rules that are in place to ensure an
even playing field for all companies so that no one enjoys an unfair
competitive advantage. If businesses follow the rules set forth by the
Legislature, then consumers will benefit from better products and
services.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Joseph M. Harrison
Question. Your testimony suggests that only ``rogue movers'' who
fail to register with DOT or otherwise blatantly violate Federal law be
subject to state enforcement of Federal household goods laws and
regulations. But, if a more established moving company, that has
otherwise fulfilled its requirements to become a household goods
carrier, engages in extortion, fraud or other consumer abuse, why
should they not be subject to state enforcement? Why does the victim
deserve fewer options for recourse because the movers may have been in
business for more than 5 years or has an arbitration program?
Answer. ``Any mover that has been in business for more or less than
5 years that extorts money from a consumer shipper or commits some
other fraud upon that shipper can be prosecuted under the States'
criminal statutes. An ``established'' mover that has been operating in
interstate commerce for more than 5 years is not immunized from State
prosecution. The States' ability to prosecute movers under their
criminal statutes has always existed, notwithstanding the length of
time a mover has been licensed by DOT and complies with its other
requirements. The rogue mover amendment currently in place does not
alter the States' jurisdiction. The ``victim'' described in the
Subcommittee's question is no less protected than a consumer who used a
rogue mover described in the statute given the States' authority to
prosecute criminal violations.
This is clearly confirmed by the 2003 Federal and State
prosecutions of 19 interstate movers and numerous individuals on
charges of fraud and extortion primarily involving the holding of
consumers' shipments hostage following demands for greatly inflated
transportation charges. The prosecutions were the result of Federal and
State investigations led by the FBI, the DOT Inspector General, and
U.S. attorneys in the States of Florida and Washington. The collective
interstate regulatory history of the 19 rogue movers confirms that they
used extortion to prey upon consumer shippers and, in fact, possessed
the indicia of unlawful or rogue movers (e.g., unlicensed by DOT,
failure to maintain required insurance, etc.) referred to in my May 4
statement to the Subcommittee, which are also enumerated in 49 U.S.C.
Sec. 14711(b)(3)(A). Attached is a chart which confirms the accuracy of
this statement. Review of that information indicates that 8 of the
movers operated without interstate operating authority issued by DOT; 2
were placed out of service by FMCSA for violations of the Agency's
safety regulations; the 11 that were issued operating authority by DOT
conducted their operations for an average 22 months before their
authority was revoked by FMCSA. Obviously, this is a record that
supports the need for State enforcement as prescribed by Section
14711(b)(3)(A).
It is AMSA's position that the allocation of enforcement
responsibilities between the States and the Federal Government should
avoid a duplication of their respective efforts and the needless
expenditure of sparse resources. FMCSA and the States acting in a
coordinated manner by separately targeting different movers are more
likely to prove beneficial to the greatest number of consumer shippers.
Experience confirms that so-called established movers (those
holding a DOT license for more than 5 years), as a general proposition,
do not engage in extortion, fraud or other egregious forms of consumer
abuse. If a mover holds its DOT license for more than 5 years, it has
demonstrated that it is in the moving business to perform a legitimate
service, having maintained its license, required insurance, a
satisfactory safety rating and compliance with the FMCSA Consumer
Protection Regulations incurring only minor and no blatant consumer
complaints. Any mover or broker holding a license for more than 5 years
with a documented record of abuse, has more than likely been the
subject of FMCSA enforcement action. As was made clear by the FMCSA
testimony before the Subcommittee, during the past several years the
Agency has conducted compliance surveys of movers and brokers with a
history of complaints, without regard to the number of years they held
their DOT authority. If a shipper encounters a problem with one of
these movers, it is likely that it is a one-time problem that can
readily be resolved by a single FMCSA inquiry. There is no need for
State enforcement in situations such as these.
Experience also confirms that relocating consumers have ample
recourse options available to them when dealing with established
movers. The criminal abusive tactics employed by rogue movers are not
employed by legitimate operators. Obviously, they would not remain in
business if they did not adhere to the recourse process that is
mandated by Federal statutes and regulations. Established movers
routinely pay claims for loss, damage, delay and inconvenience. If an
offer to settle a claim is in dispute, a statutorily mandated
arbitration process is available to the shipper. Established movers
have made significant investments in operating equipment, manpower and
storage facilities. Unlike rogue movers and some small recently
licensed movers, they pay their claims and judgments. They do not
operate sham moving businesses with no recourse available to shippers
that experience difficulties in the moving process.
A significant number of AMSA members have held their DOT operating
authority for less than 5 years (40 percent or 800 of approximately
2,000 members). DOT records indicate they receive approximately 500 to
750 applications for household goods operating authority annually. Of
those that are granted authority, roughly 200 become AMSA members. AMSA
also terminates an average 150 members annually because their license
was revoked, they violated the Consumer Protection Regulations, went
out of business, or failed to pay their membership dues. Each year
there is a constant churning of hundreds of movers who either enter or
exit the interstate moving business. All of these new movers, including
those who become members of AMSA, are now subject to State enforcement
and many are unfamiliar with the Federal Consumer Protection
Regulations, particularly those that do not become AMSA members. AMSA
firmly believes this category of movers should be the subject of State
enforcement. Clearly, as a class, they are potential violators of the
FMCSA regulations, either out of ignorance or disregard of the
necessity of compliance. Unfortunately, operators that fall into the
latter category are not in business to perform a legitimate moving
service. Rather, they are in business solely to take advantage of
consumers, violating the Federal regulations and committing acts of
extortion or fraud. Once again, this is the category of operators that
should be targeted by State enforcement agencies.
AMSA's established mover members transport more than 80 percent of
the 1.5 million interstate shipments transported annually and, to my
knowledge, without prosecutions alleging extortion, fraud or other
egregious conduct. As my testimony indicated, established movers
experience loss, damage and delay-type claims, disputes over pickup or
delivery, payment disagreements and other operation-related issues. To
a large extent this is the nature of the moving business. These issues
existed when the Interstate Commerce Commission regulated the moving
industry and they will continue to exist under the regulatory control
of FMCSA, and they will be resolved by legitimate movers. However, in
the past several years rogue mover abuses have painted established
movers with the same proverbial ``brush'', resulting in more Federal
consumer protection requirements in the form of paperwork, information
to consumers, and operational and consumer recourse requirements. Under
this increased consumer protection process, established movers will
comply with the new regulatory requirements while unlawful operators
will ignore those requirements. So there is no question on the point,
it is the legitimate moving industry's position that consumer shippers
should not have to wait for action through the courts, initiated by
either the States or the FMCSA, to retrieve their household goods from
a rogue mover that is holding their shipment hostage. Immediate action
must be taken to assist those consumers. The States and the FMCSA
should have enforcement personnel dedicated to responding to
allegations of hostage freight to ensure that consumers receive
delivery of their goods upon tender of payment of no more than the
amount lawfully due at delivery.
Based on the foregoing, AMSA, as the representative of the
legitimate moving industry, submits that the current enforcement
structure contained in sections 14710 and 14711 of the Interstate
Commerce Act serves the interests of consumer shippers and results in
the most efficient use of State and Federal enforcement resources. The
essential service performed by the legitimate moving industry should
not be needlessly subjected to enforcement of every aspect of their
operations by 50 States.''
Again, thank you for providing this important and relevant question
for AMSA to respond to.
Attachment
Unlawful Movers Engaged in the Interstate and Intrastate Transportation
of Household Goods
------------------------------------------------------------------------
Date Granted
Mover Interstate Operating FMCSA Action or Status
Authority (period operated)
------------------------------------------------------------------------
Advanced Moving 1/11/01 Revoked 5/8/03 (1 year, 5
Systems Inc. (MC- months)
398043)
Majesty Moving & 4/10/00 Revoked 2/6/03 (2 years,
Storage, Inc. (MC- 10 months)
367882)
Apollo Van Lines, 5/10/00 Revoked 5/7/01, Reinstated
Inc. (MC-367883) 5/30/01, Revoked 5/6/02
(2 years)
America's Best None Operated without FMCSA
Movers authority
First Class Moving, None Application dismissed 2/21/
Inc. (MC-423603) 02; operated without
FMCSA authority
The Movers Express None Operated without FMCSA
authority
Star Movers, Inc. 9/4/01 Revoked 3/20/02 (6 months)
(MC-410682)
All Points U.S.A. 4/23/98 Revoked 1/15/03 (4 years,
Relocation Systems, 9 months)
Inc.
Century Express Van 2/1/02 (common) Revoked 5/30/03 (1 year, 3
Lines, Inc. (MC- months)
389463)
9/11/00 (contract) Revoked 5/30/03 (2 years,
9 months)
Elite Van Lines 8/30/01 Placed out of service 1/8/
Moving & Storage 03 (1 year, 4 months)
Inc. (MC-412141)
Express Van Lines, None Application dismissed 5/8/
Inc. (MC-404952) 01; operated without
FMCSA authority
Moving System, Inc. 7/17/00 Revoked 9/24/01 (1 year, 2
(MC-386956) months)
AAA Van Lines, Inc. None Never granted for lack of
(M-411460) insurance; operated
without FMCSA authority
Ameri Van Lines, 12/5/01 Placed out of service 2/21/
Inc. (MC-420033) 03 (1 year, 2 months)
SI Trucking, Inc. 7/1/99 Revoked 2/2/01 (1 year, 7
(MC-360020) months)
Southeastern Van 1/18/02 Revoked 7/10/03; (1 year,
Lines, Inc. (MC- 7 months); Broker license
396720) revoked 12/29/00
Nationwide Moving None Dismissed 11/7/02;
Systems LLC (MC- operated without FMCSA
442699) authority
Northstar Moving None Operated without FMCSA
authority
American Star Moving None Operated without FMCSA
& Storage LLC (MC- authority
462635)
------------------------------------------------------------------------