Updated FMCSA Guidelines for Broker-Dispatching Services
New interim guidelines for brokers/dispatch services were issued on Tuesday by the Federal Motor Carrier Safety Administration.
The guidelines aim to crack down on companies that engage in truck brokering without proper authority from FMCSA, which brokers claim illegally undercuts their business.
FMCSA acknowledges that dispatch services can help ensure that motor carriers have a steady stream of shipments allowing carriers to focus on moving freights. The only difference is if the dispatch service is under FMCSA authority and the requirement that they have a $75,000 bond to protect their motor carrier customers from nonpayment or not.
FMCSA listed six factors to help determine if a dispatch service needs broker authority.
A dispatch service needs such authority if they;
Interacts or negotiates a freight shipment directly with the shipper or a representative.
Accepts or takes compensation for a load from the broker or factoring company or is involved in any part of the monetary transaction between any of those entities.
Arrange a freight shipment for a motor carrier with no written legal contract with the motor carrier that meets the criteria above.
Accepts a shipment without a truck/carrier, then attempts to find a truck/carrier to move the shipment.
It is a named party on the shipping contract.
Is soliciting the open market of carriers to transport a freight shipment.
Dispatchers operating as unauthorized brokers carry civil penalties of up to $10,000 for each violation, as clarified in the FMCSA's guidelines.
Federal regulators have attempted to clarify the differences between brokers, bona fide agents, and dispatch services as Congress mandated that FMCSA clarify what defines a “broker” versus a “bona fide agent” that works specifically for or on behalf of a motor carrier.
According to most of those providing comments on the proposed guidelines, they don't see the need to change the current definition of 'broker,' but FMCSA felt the need to clarify the relevance of handing funds in shipper-motor carrier transactions.
FMCSA stated that handling money exchanged between shippers and carriers is a factor that suggests the need for broker authority; however, it is not an absolute requirement for one to be considered a broker.
FMCSA also noted that multiple commenters contended that to be considered a bona fide agent, one can only represent one carrier, which FMCSA disagreed with, stating that “representing more than one motor carrier does not necessarily mean one is a broker rather than a bona fide agent.”
FMCSA stated, “Any determination will be highly fact specific and entail determining whether the person or company is engaged in allocating traffic between motor carriers.”
FMCSA emphasized the interim guidelines do not have the force of law and are nonbinding. The public has 60 days to comment, with possible updated guidance from the agency based on comments received.
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