Consumer Protection
Some Improvements in Federal Oversight of Household Goods Moving Industry Since 2001, but More Action Needed to Better Protect Individual Consumers Gao ID: GAO-07-586 May 16, 2007The Department of Transportation's (DOT) Federal Motor Carrier Safety Administration (FMCSA) is responsible for protecting consumers involved in interstate household goods moves by issuing regulations and conducting oversight and enforcement actions. The Safe, Accountable, Flexible, Efficient Transportation Equity Act--A Legacy for Users (SAFETEA-LU), enacted in 2005, included provisions to enhance consumer protections for household goods moves and mandated that GAO study (1) the protections federal laws and regulations provide to consumers of interstate household goods moves and the effectiveness of federal enforcement efforts, (2) the protections states provide to consumers of intrastate household goods moves and how they have affected consumers and movers, and (3) the potential effects on both consumers and interstate movers if movers were subject to state consumer protection laws. To address these issues, GAO analyzed federal and state legislation, federal complaint and enforcement data, and interviewed federal and state officials.
Federal laws and regulations require FMCSA to provide protections for the 1.6 million consumers who annually hire interstate movers, but FMCSA lacks the information to determine the effectiveness of its efforts. SAFETEA-LU increased licensing requirements for interstate movers, enhanced existing federal authority and expanded it to allow states to bring actions against interstate movers in federal and state courts, although there is no indication that any state has yet exercised this authority. However, states are still prevented from regulating interstate household goods movers. FMCSA took several steps to improve oversight of household goods movers, including increasing compliance reviews from 13 in 2001 to 562 in 2006, increasing enforcement actions from 5 in 2001 to 72 in 2006, expanding consumer education efforts, and establishing a complaint database. However, FMCSA is precluded from resolving individual complaints and, as a regulatory agency, lacks authority to force movers to relinquish goods held illegally. Also, FMCSA has not established a strategy to measure the overall effectiveness of its household goods enforcement efforts. All six states we visited have laws that protect consumers from false and deceptive trade practices and allow consumers to receive compensation from intrastate movers for amounts greater than the cost of the actual lost or damaged goods. For example, consumers in five of the states we visited can receive a monetary award up to three times the amount of the actual damages. Additionally, all six states have laws governing intrastate movers but vary in their licensing, oversight, and enforcement requirements. For example, four of the six states GAO visited have licensing requirements such as background checks and evidence of financial fitness, in addition to the requirement that applicants provide proof of insurance; and two states have changed their laws to allow local law enforcement authorities to aid consumers whose goods are held hostage. State and moving industry officials told GAO that these actions had a positive effect on both consumers and legitimate movers. The application of state consumer protection laws to interstate movers has the potential to enhance protections for consumers, but may not be helpful in addressing the problem of movers who operate illegally and may increase costs. If state consumer protections were applied to interstate movers, consumers would have the opportunity to resolve their disputes in state court. However, industry officials GAO contacted told us illegitimate movers would likely fail to appear in court and may not comply with any judgments. Moving industry officials strongly oppose the application of state consumer protection laws to interstate movers, pointing out such action may increase their costs, which could be passed on to consumers. However, some state officials we interviewed did not think that legitimate movers' costs would increase due to regulation.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-586, Consumer Protection: Some Improvements in Federal Oversight of Household Goods Moving Industry Since 2001, but More Action Needed to Better Protect Individual Consumers
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
May 2007:
Consumer Protection:
Some Improvements in Federal Oversight of Household Goods Moving
Industry Since 2001, but More Action Needed to Better Protect
Individual Consumers:
GAO-07-586:
GAO Highlights:
Highlights of GAO-07-586, a report to congressional committees
Why GAO Did This Study:
The Department of Transportation‘s (DOT) Federal Motor Carrier Safety
Administration (FMCSA) is responsible for protecting consumers involved
in interstate household goods moves by issuing regulations and
conducting oversight and enforcement actions. The Safe, Accountable,
Flexible, Efficient Transportation Equity Act–-A Legacy for Users
(SAFETEA-LU), enacted in 2005, included provisions to enhance consumer
protections for household goods moves and mandated that GAO study (1)
the protections federal laws and regulations provide to consumers of
interstate household goods moves and the effectiveness of federal
enforcement efforts, (2) the protections states provide to consumers of
intrastate household goods moves and how they have affected consumers
and movers, and (3) the potential effects on both consumers and
interstate movers if movers were subject to state consumer protection
laws. To address these issues, GAO analyzed federal and state
legislation, federal complaint and enforcement data, and interviewed
federal and state officials.
What GAO Found:
Federal laws and regulations require FMCSA to provide protections for
the 1.6 million consumers who annually hire interstate movers, but
FMCSA lacks the information to determine the effectiveness of its
efforts. SAFETEA-LU increased licensing requirements for interstate
movers, enhanced existing federal authority and expanded it to allow
states to bring actions against interstate movers in federal and state
courts, although there is no indication that any state has yet
exercised this authority. However, states are still prevented from
regulating interstate household goods movers. FMCSA took several steps
to improve oversight of household goods movers, including increasing
compliance reviews from 13 in 2001 to 562 in 2006, increasing
enforcement actions from 5 in 2001 to 72 in 2006, expanding consumer
education efforts, and establishing a complaint database. However,
FMCSA is precluded from resolving individual complaints and, as a
regulatory agency, lacks authority to force movers to relinquish goods
held illegally. Also, FMCSA has not established a strategy to measure
the overall effectiveness of its household goods enforcement efforts.
All six states we visited have laws that protect consumers from false
and deceptive trade practices and allow consumers to receive
compensation from intrastate movers for amounts greater than the cost
of the actual lost or damaged goods. For example, consumers in five of
the states we visited can receive a monetary award up to three times
the amount of the actual damages. Additionally, all six states have
laws governing intrastate movers but vary in their licensing,
oversight, and enforcement requirements. For example, four of the six
states GAO visited have licensing requirements such as background
checks and evidence of financial fitness, in addition to the
requirement that applicants provide proof of insurance; and two states
have changed their laws to allow local law enforcement authorities to
aid consumers whose goods are held hostage. State and moving industry
officials told GAO that these actions had a positive effect on both
consumers and legitimate movers.
The application of state consumer protection laws to interstate movers
has the potential to enhance protections for consumers, but may not be
helpful in addressing the problem of movers who operate illegally and
may increase costs. If state consumer protections were applied to
interstate movers, consumers would have the opportunity to resolve
their disputes in state court. However, industry officials GAO
contacted told us illegitimate movers would likely fail to appear in
court and may not comply with any judgments. Moving industry officials
strongly oppose the application of state consumer protection laws to
interstate movers, pointing out such action may increase their costs,
which could be passed on to consumers. However, some state officials we
interviewed did not think that legitimate movers‘ costs would increase
due to regulation.
What GAO Recommends:
GAO recommends DOT develop a strategy with performance goals and
measures for its oversight and enforcement of the industry and take
some additional actions. DOT agreed to consider the recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-586].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact JayEtta Hecker at (202)
512-2834 or heckerj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Federal Legislation and FMCSA's Enforcement Efforts Have Enhanced
Protections for Consumers of Interstate Moves, but the Effectiveness of
These Efforts Remains Unclear:
The States We Visited Provide Protections to Consumers of Intrastate
Moves but Vary in Their Industry Oversight and Enforcement:
Applying State Consumer Protection Laws to Interstate Movers May Aid
Consumers and Could Increase Movers' Costs, but Such Action Is Unlikely
to Allow States to Regulate Rates of Interstate Movers:
Conclusions:
Recommendations:
Agency Comments:
Appendix I:Objectives, Scope, and Methodology:
Organizations Contacted:
Appendix II: Consumers of Airline Travel and Household Goods Moves
Overseas Have Added Protections:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: FMCSA Compliance Reviews and Enforcement Actions against
Interstate Movers, Fiscal Years 2001 through 2006:
Table 2: Highlights of Recovery Provisions in Consumer Protection Laws
of the Six States We Visited:
Table 3 : Highlights of Selected State Laws Governing Intrastate
Household Goods Movers:
Table 4: Selected State Licensing Requirements for Intrastate Household
Goods Movers:
Table 5: Selected licensing requirements of FMCSA, FMC, and OAA:
Abbreviations:
BBB: Better Business Bureau:
DMV: Department of Motor Vehicles:
DOT: Department of Transportation:
FMC: Federal Maritime Commission:
FMCSA: Federal Motor Carrier Safety Administration:
FTC: Federal Trade Commission:
GPRA: Government Performance and Results Act of 1993:
HHGCC: Household Goods Consumer Complaint:
ICC: Interstate Commerce Commission:
OAA: Office of Aviation Analysis:
OAEP: Office of Aviation Enforcement and Proceedings:
SAFETEA-LU: The Safe, Accountable, Flexible, Efficient, Transportation
Equity Act--A Legacy for Users:
STB: Surface Transportation Board:
United States Government Accountability Office:
Washington, DC 20548:
May 16, 2007:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Ted Stevens:
Vice Chairman:
Committee on Commerce, Science and Transportation:
United States Senate:
The Honorable James L. Oberstar:
Chairman:
The Honorable John L. Mica:
Ranking Republican Member:
Committee on Transportation and Infrastructure:
House of Representatives:
The Department of Transportation (DOT) has responsibility for
protecting consumers involved in interstate household goods moves,
which includes issuing regulations, conducting oversight activities,
and taking enforcement actions. Within DOT, the Federal Motor Carrier
Safety Administration (FMCSA) carries out these duties. In 2001, we
reported that DOT had not taken steps to understand the nature and
extent of problems in the household goods moving industry nor had it
made more than minimal efforts to provide information to consumers that
would assist them in making more informed choices. At that time, DOT
had few resources with which to oversee the industry, creating a vacuum
in which unscrupulous movers could flourish.[Footnote 1] Consumers
complained about a broad range of problems, including lost and damaged
goods for which the carrier refused to compensate them, and goods held
"hostage" until the consumer paid fees greatly in excess of the agreed-
upon estimate. We recommended, among other things, that DOT examine
whether legislative changes were needed to supplement its efforts,
including legislative authorization for the states to enforce federal
statutes and regulations.
The Safe, Accountable, Flexible, Efficient Transportation Equity Act -
A Legacy for Users (SAFETEA-LU),[Footnote 2] the federal surface
transportation reauthorization legislation passed in 2005, included
provisions that increase the amount of consumer protection provided
under federal law. In addition, SAFETEA-LU gave state authorities the
capability to enforce these federal consumer protection laws and
regulations against interstate movers. This legislation also mandated
that we study the current consumer protections that DOT provides and
the possible effects on consumers and movers involved in interstate
moving if state attorneys general were allowed to apply state consumer
protection laws to such moves. Accordingly, this report discusses the
following:
* The protections that federal laws and regulations provide to
consumers of interstate household goods moves and the extent to which
information is available on the effectiveness of current enforcement
efforts at the federal level;
* The protections that states provide to consumers of intrastate
household goods moves and how they have affected consumers and
intrastate household goods movers; and:
* The potential effects on both consumers and interstate movers of
household goods if interstate movers were subject to state consumer
protection laws, including the potential for states to regulate the
rates of interstate household goods movers.
Lastly, in response to the mandate's request that we compare household
goods consumer protections to consumer protections for other modes of
transportation, we are providing information on how consumer
protections provided by federal regulation of interstate household
goods movers compare with consumer protections provided by federal
regulation of airline travel and the shipment of household goods
overseas (see app. II).
Our overall approach to addressing these topics was to (1) analyze
federal and state laws and regulations pertaining to consumer
protections for the household goods moving industry; (2) interview a
wide variety of representatives and review pertinent documentation from
federal and state governments, the household goods moving industry, law
enforcement and consumer groups, and an alternative dispute resolution
organization to understand and assess FMCSA's oversight and enforcement
efforts; and (3) conduct site visits to six states to review their
consumer protection policies and procedures and obtain their views on
the authorities granted to them under SAFETEA-LU and the potential
effects of applying state consumer protection laws to interstate
household goods movers. The six states--California, Florida, Georgia,
New York, Texas, and Virginia--were selected to include a cross-section
of characteristics, including states that have had problems with
interstate household goods movers, according to motor carrier
administration and industry officials, and/or had enacted recent
legislative changes to address problems with household goods movers. We
performed our work from February 2006 through May 2007 in accordance
with generally accepted government auditing standards. See appendix I
for further details about our scope and methodology.
Results in Brief:
Federal laws and regulations require FMCSA to provide some protections
for the approximately 1.6 million consumers who annually hire
interstate movers, but FMCSA lacks the information to determine the
effectiveness of many of its enforcement and oversight efforts and
lacks authority to force movers to relinquish goods to their owners, a
situation referred to as holding goods hostage. Both the increased
oversight and enforcement provided by the SAFETEA-LU legislation in
2005 and by FMCSA since our 2001 report[Footnote 3] have expanded
protections for consumers hiring interstate household goods movers. The
protections provided by SAFETEA-LU include increased licensing and
registration requirements for movers and authorization of state
governments to enforce federal law and bring action against interstate
movers in federal or state court.[Footnote 4] However, it is too soon
to determine the effectiveness of the authority given to the states
because it was restricted by amendment to federal court until September
2006, and to date, it appears no state has yet exercised it. SAFETEA-LU
also mandated that DOT develop and implement an outreach plan to
enhance cooperation and enforcement of federal laws between federal and
state law enforcement and consumer protections authorities. Thus far,
no plan has yet been developed, although FMCSA officials have hired a
contractor to begin developing the plan. With regard to oversight since
2001, FMCSA has increased the number of inspectors who conduct
household goods compliance reviews from 2 to 8 while training almost
100 inspectors who conduct truck safety reviews to also carry out
inspections of household goods movers. FMCSA has also increased the
number of compliance reviews conducted, from 13 in 2001 to 562 in 2006,
and increased the number of enforcement actions taken from 5 to 72.
FMCSA officials told us that they believe this current level of
oversight and enforcement is adequate within the resources available,
pointing out that of the approximately 1.6 million interstate moves
handled annually by interstate movers, only about 3,000 result in
complaints made to FMCSA. FMCSA has also expanded its consumer
education efforts by launching a consumer education campaign and
developing a Web site dedicated to preventing moving fraud, which
provides guidance on how to have a successful move and avoid falling
victim to dishonest movers. FMCSA has also developed a "consumer
outreach and education logic model" that the agency plans to use to
determine the effectiveness of their outreach and education efforts.
This model outlines the program areas in which FMCSA is planning to
develop metrics for evaluating the effectiveness of its outreach and
education activities. FMCSA officials expect to complete a report
assessing their consumer outreach and education efforts, including this
model, by January, 2008. In addition, FMCSA has established a complaint
hotline, compiled a complaint database, and is in the process of making
complaint information about specific movers available to the public.
However, FMCSA officials told us that if consumers, whose goods are
held hostage, call FMCSA for help, FMCSA has no authority to force the
mover to release the goods. FMCSA officials also told us they are
precluded from resolving individual complaints,[Footnote 5] thereby
leaving consumers with arbitration as the main option to resolve
disputes with interstate movers about loss and damage. In addition,
other than their logic model for evaluating consumer education and
outreach activities, FMCSA lacks information to determine the
effectiveness of any of its oversight and enforcement efforts,
including arbitration; and its draft strategic plan for 2006 through
2011[Footnote 6] contains very little information about FMCSA's efforts
in providing oversight and enforcement of the household goods industry.
All six states we visited have consumer protection laws that safeguard
consumers of intrastate household goods moves against false,
misleading, and deceptive practices and allow consumers to receive
compensation for amounts greater than the cost of the actual lost or
damaged goods. For example, consumers in five of the states we visited
can receive a monetary award up to three times the actual economic
damages. Additionally, all six states have laws governing intrastate
movers but vary in their licensing, oversight, and enforcement
requirements. For example, four of the six states we visited have
licensing requirements (i.e., background checks, evidence of financial
fitness, etc.) in addition to the requirement that applicants provide
proof of insurance. With regard to aiding consumers whose goods are
held hostage, two states (California and Florida) have changed their
laws to allow local law enforcement authorities to intervene in these
situations. In the states we visited that have enacted legislation to
improve their consumer protections, officials told us that these laws
and regulations--such as the additional licensing requirements and
increased enforcement efforts--have helped to reduce consumers'
problems with illegitimate[Footnote 7] intrastate movers and that the
situation for consumers and legitimate intrastate movers had
improved.[Footnote 8]
Applying state consumer protection laws to interstate movers has the
potential to enhance protections for consumers, but it may not be
helpful in addressing the problem of illegitimate movers and may
increase costs. If state consumer protections were applied to
interstate movers, consumers would have the opportunity to resolve
their disputes with interstate movers in state court, and consumers
could potentially recover damages greater than the value of their lost
or damaged goods. However, industry officials we contacted believe
illegitimate movers would fail to appear in court and may not comply
with any judgments. In addition, applying these laws would likely
adversely affect interstate movers by increasing legitimate movers'
operational expenses. The moving industry officials we contacted
strongly oppose applying state consumer protection laws to interstate
movers, pointing out that such action may increase costs. Furthermore,
basic economic reasoning suggests that some of those increased costs
may be passed on to consumers. However, some state officials we
interviewed did not think that legitimate movers, who are already
complying with states' consumer protection laws, would incur increased
costs due to regulation. Finally, on the basis of our work in the six
states, if interstate movers were subject to state consumer protection
laws, the attorneys general of the five states that commented did not
believe that applying state consumer protection laws to interstate
movers would give the states additional authority over rate regulation.
We are recommending that the Secretary of Transportation direct the
Administrator of FMCSA to take several actions to improve oversight of
the household goods moving industry, including developing a strategy,
with performance goals and measures, that explains how FMCSA's
oversight and enforcement activities related to household goods movers
will improve consumer protection. We sent a draft of this report to DOT
and to the Federal Maritime Commission (FMC). DOT generally agreed with
the information provided in the report and both DOT and FMC provided
technical clarifications, which we have incorporated as appropriate.
DOT agreed to consider our recommendations.
Background:
Each year, commercial moving companies transport household goods of
approximately 1.6 million Americans to other states. Over 3,000 of
these moves result in complaints made annually to FMCSA. Additionally,
the Council of Better Business Bureaus (BBB) reports that it received
nearly 9,800 complaints against movers in 2005, of which approximately
6,800 were settled.[Footnote 9]
Approximately 4,000 moving companies actively transport household goods
across state lines. These moving companies represent a small percentage
of the approximately 677,000 interstate carriers engaged in all aspects
of interstate commerce. Household goods movers are of three types:
national van lines, independent movers, and short-haul movers. These
companies use agents that perform the actual moves on behalf of the van
lines. Agents are local moving companies that own the moving equipment
and storage facilities used in interstate moves. Independent movers
lease or own their equipment and storage facilities and often share
storage facilities and some equipment in an effort to provide enough
capacity and flexibility to compete with the national van lines. Short-
haul movers typically undertake moves of around 500 miles or less.
Until 1996, the Interstate Commerce Commission (ICC) had regulatory
responsibility for interstate household goods movers, including issuing
regulations, conducting oversight activities, and taking enforcement
actions. The ICC Termination Act of 1995 dissolved ICC and transferred
the consumer protections for those hiring interstate household goods
movers to DOT, which DOT further assigned to the motor carrier safety
office within the Federal Highway Administration. The Motor Carrier
Safety Improvement Act of 1999 transferred these consumer protection
functions to a new organization within DOT, FMCSA. Furthermore, the
Federal Trade Commission is barred from regulating common carriers
including movers of household goods. In addition to its headquarters
facilities, FMCSA maintains a field office structure consisting of 4
service centers and 52 division offices-one in each state, Puerto Rico,
and the District of Columbia.
FMCSA's oversight activities for interstate household goods movers
include, among other things, education and outreach to consumers, and
collecting information on the state of the industry, such as complaints
lodged against registered movers. FMCSA also reviews compliance with
regulatory requirements (called "compliance reviews") at a moving
company's base of operations. When it identifies instances of
noncompliance, FMCSA can rely on a variety of enforcement activities.
For example, it can issue orders to compel compliance, impose civil
monetary penalties, revoke a mover's operating authority, or seek
federal court orders to stop regulatory violations. FMCSA can also seek
a temporary restraining order or injunctive relief (i.e., a court order
to prevent a carrier from engaging in a specific action) against a
carrier that is suspected of operating illegally, although FMCSA
officials told us they are not aware of an instance in which FMCSA has
sought to issue a temporary restraining order or injunctive relief
against a household goods carrier in a court of appropriate
jurisdiction. As a regulatory agency, FMCSA does not have authority to
arrest movers who violate the criminal provisions applicable to
household goods moves.
While consumer protections have been expanded in recent years under
SAFETEA-LU, a long-standing federal statute known as the Carmack
Amendment imposes limits on consumers' actions against interstate
movers.[Footnote 10] The Carmack Amendment imposes a uniform scheme of
liability for loss or damage, which eliminates the uncertainty
associated with conflicting state laws regarding interstate shipments.
The Carmack Amendment limits claims filed by consumers and preempts a
broad range of state law remedies related to loss and damage in
interstate shipment. A household goods mover's maximum liability for
loss or damage can only be equal to the replacement value of the lost
or damaged goods. Plaintiffs cannot recover damages in excess of their
replacement value in federal court.
For moves within a state, state laws govern the actions of household
goods movers and state regulating agencies and possibly the state
offices of attorneys general may work with the consumers to resolve
issues related to an intrastate move. Federal laws apply to moves of
household goods across state lines, and FMCSA is the only agency that
accepts complaints from consumers involved in an interstate move.
However, FMCSA was directed by a House Report not to become involved in
assisting consumers in resolving individual disputes regarding an
interstate household goods move.
Federal Legislation and FMCSA's Enforcement Efforts Have Enhanced
Protections for Consumers of Interstate Moves, but the Effectiveness of
These Efforts Remains Unclear:
Consumers who contract with interstate movers are protected by federal
laws and regulations. These laws were recently strengthened by SAFETEA-
LU, which passed in 2005, and increased licensing and registration
requirements at the federal level. SAFETEA-LU also increased consumer
protections by enhancing states' abilities to enforce laws against
interstate movers in both state and federal court but it appears states
have not yet used this new authority. In addition, SAFETEA-LU also
required that FMCSA implement an outreach plan to enhance the
coordination among federal and state law enforcement and consumer
protection authorities. Since 2001, FMCSA has increased its oversight
and enforcement activities against illegitimate movers as well as its
consumer education outreach to prevent consumers from being victims of
such movers. However, the effectiveness of its efforts is unknown, and
FMCSA currently has no process in place to determine the effectiveness
of its enforcement efforts; currently has no information on the
usefulness of arbitration in resolving disputes consumers have with
carriers; and has limited authority to help consumers whose goods have
been lost, damaged, or are being held hostage by a mover.
Federal Laws, Recently Strengthened by Congress, Provide Protections
for Consumers of Interstate Household Goods Moves:
Federal statutes provide protection for consumers who hire interstate
household goods movers through licensing and registration requirements
as well as other specific household goods laws designed to protect
consumers.[Footnote 11] Current federal laws, including SAFETEA-LU,
require movers of household goods to register with DOT and be licensed
as a carrier of household goods. To be registered with DOT, carriers
must pay a registration fee, provide evidence of insurance coverage and
of participation in an arbitration program, and disclose any
relationship involving common stock, common ownership, common
management, or common familial relationship between themselves and
other movers or brokers. The information which companies provide on
their application about insurance coverage and participation in an
arbitration program is confirmed by FMCSA within 18 months of the
carrier's receiving a license.[Footnote 12] However, the agency does
not perform any sort of background check on applicants.
Federal laws specifically formulated to provide consumer protections
require that household goods movers must charge reasonable rates, must
maintain rates and rules in published tariffs, must provide consumers
with written estimates, and must relinquish goods upon payment of no
more than 110 percent of the estimated charges.[Footnote 13] If a mover
refuses to release a consumer's goods when the consumer has paid either
100 percent of the charges contained in a binding estimate or 110
percent of the charges contained in a nonbinding estimate, then the
mover is, in effect, holding the goods hostage. For such action, the
mover faces civil penalties of at least $10,000 for each violation and
criminal penalties of up to 2 years in prison. Additionally, should a
mover refuse to comply with any federal rules, DOT is authorized to
assess civil penalties, bring a civil action in federal court, and/or
revoke the carrier's license.
SAFETEA-LU also required FMCSA to take three further actions, among
others, to enhance protections for consumers of household goods. First,
the legislation required FMCSA to modify its regulations for brokers of
household goods services, so that brokers will be required to provide
consumers with their license number, a pamphlet on consumers' rights,
and a list disclosing the moving companies for which the broker is
providing services.[Footnote 14] Second, SAFETEA-LU required FMCSA to
implement an outreach plan to enhance the coordination and enforcement
of federal laws and regulations with respect to transportation of
household goods between and among federal, state, and local law
enforcement and consumer protection authorities. Third, the legislation
required FMCSA to establish a working group, by November 2005, composed
of state attorneys general, state consumer protection administrators,
and federal and local law enforcement officials to develop practices
and procedures to enhance federal-state relations in enforcement
efforts with respect to interstate transportation of household goods.
SAFETEA-LU Expanded Enforcement Authority at the State Level, but
States Have Not Yet Used the New Authority and FMCSA Has Not Fully
Implemented an Outreach Plan:
The several provisions intended to enhance consumer protection at the
state level contained in the SAFETEA-LU legislation were temporarily
restricted by a subsequent amendment. However, the amendment expired in
September 2006, restoring the full authorities granted to states under
SAFETEA-LU.[Footnote 15] SAFETEA-LU enacted two separate provisions to
enhance states' abilities to enforce laws against interstate movers.
The first SAFETEA-LU provision allows state agencies to enforce federal
consumer protection laws and regulations that apply to individual
movers and that are related to the delivery or transportation of
household goods in interstate commerce, in either federal or state
court. The expired amendment restricted this enforcement to federal
court only, but state regulatory authorities are now able to utilize
either federal or state court under the authority granted by SAFETEA-
LU. This provision applies to state agencies that regulate intrastate
household goods movers, authorizing the regulatory agency to impose
penalties on interstate movers for violating federal laws and
regulations. This section also contains an added incentive for the
state agencies, by allowing the penalties to be paid to and retained by
the state. Penalties collected under this authority are not paid to the
consumer.
The second SAFETEA-LU provision grants state attorneys general the
right to bring civil actions on behalf of individual consumers or
impose civil penalties in U.S. federal district courts to enforce the
federal consumer protection laws and regulations whenever the state
attorneys general have reason to believe that the interests of their
residents are being threatened or adversely affected by an interstate
mover.[Footnote 16] The expired amendment placed temporary restrictions
on these civil suits by limiting them to apply only to movers who were
unregistered, newly licensed, poorly rated, or who had their license
revoked, but these limitations no longer apply, and state attorneys
general may now bring suits against any mover.[Footnote 17] If a
resident of a state is adversely affected by the actions of a carrier
or broker, the state attorney general may sue on the resident's behalf
to enforce the federal laws and regulations with which the carrier or
broker was required to comply. Penalties imposed and collected by these
lawsuits would be paid to the federal government, not to the state or
the individual consumer.
For any civil action initiated by a state attorney general, the state
must serve written notice to DOT or the Surface Transportation Board
(STB),[Footnote 18] whichever agency has jurisdiction. DOT or STB must
review the action if (1) the carrier or broker is not registered with
DOT; (2) the license of the carrier or broker is pending for failure to
file proof of required bodily injury or cargo liability insurance, or
the license has been revoked for any reason by DOT; (3) the carrier is
not rated or has received a conditional or unsatisfactory rating by
DOT; or (4) the carrier or broker has been licensed with DOT for less
than five years. DOT or STB has the authority to intervene in a civil
action, to be heard on all matters arising in the action, and to file
petitions for appeal of decisions in such actions.
SAFETEA-LU also required that FMCSA identify for states the federal
statutory provisions and FMCSA regulations that states may enforce
through either the attorney general provision or the state agency
provision. In November 2006, FMCSA published a notice in the Federal
Register, identifying the federal consumer protection laws and
regulations that states may immediately enforce. The statutory
provisions enforceable by states include laws regarding requirements
and penalties for tariffs, written binding estimates, registration
requirements, full value protection, binding arbitration, falsifying
documents, and holding goods hostage. The federal regulations
promulgated by FMCSA that are enforceable by states include the
consumer protection regulations in 49 C.F.R. Part 375, which involve
bills of lading for freight forwarders, investigations of loss and
damage claims, records kept by brokers, and insurance requirements.
Furthermore, as noted earlier, SAFETEA-LU required that DOT establish a
working group of state attorneys general, consumer protection
authorities, and federal and local law enforcement agencies, and
implement an outreach plan. FMCSA established the working group which
has met several times since October 2005, with the last meeting
occurring in April 2007. The working group established a charter
specifying that the group, which is to meet every quarter, would
develop practices and procedures to enhance the federal-state
partnership, exchange information and coordinate enforcement efforts,
and submit legislative and regulatory recommendations to the Secretary
of DOT regarding such enforcement efforts. While the group's meeting
notes do not mention the development of an outreach plan to help states
use and enforce federal laws at the local level pertaining to household
goods matters, in March 2007, FMCSA officials shared with us documents
that indicate a contractor has been hired to work with the group to
begin formulating such a plan and develop milestones. Two of the
group's participants told us that in past meetings, the group had
focused on FMCSA's efforts to improve its public education via its Web
site. At the meeting held on November 28, 2006, which was led by FMCSA,
state officials said that they would like clearer guidance from FMCSA
on using authority granted to the states. This request that FMCSA
provide some guidance to the states on implementing the authority
granted to them by SAFETEA-LU was reiterated in April, 2007, by one of
the participants of the working group.
The effectiveness of SAFETEA-LU's provisions granting states authority
to pursue interstate movers in federal and state court remains unclear
because, as of March 2007, it appears that no state had yet used this
authority, according to officials of the National Association of
Attorneys General and the National Association of Consumer Agency
Administrators. Officials in four states that expressed an opinion on
the SAFETEA-LU authority told us that prosecuting cases in federal
court was either too expensive or not an efficient use of state
resources.
FMCSA Has Updated Regulations and Increased Oversight and Enforcement:
Since our 2001 report,[Footnote 19] which recommended improving
oversight of the household goods industry, FMCSA has updated its
regulations, increased its oversight activity, and taken steps to
enhance its consumer education and outreach activities. Current
regulations include specifying the information that movers must include
in their advertisements, the information that they must provide to
consumers who contract with them, the manner in which they provide
estimates to consumers, and criteria for establishing and maintaining
an arbitration program. FMCSA has increased its oversight activity,
including increasing the number of full-time household goods
investigators from 2 to 8, training nearly 100 truck safety
investigators to review companies' compliance with regulatory
requirements, and recently updating an electronic field office training
manual for investigators carrying out household goods compliance
reviews. Over the past 5 years, this expanded work force has enabled
FMCSA to increase the annual number of compliance reviews it conducts
from 13 in 2001 to 562 in 2006. FMCSA has also increased its
enforcement actions against movers through the use of strike forces.
Strike forces focus on states that have reported a high number of
complaints about household goods movers and bring together FMCSA and
state law enforcement officials to make site visits to the carriers
that have generated the greatest number of complaints. FMCSA also
partners with state law enforcement agencies to conduct "roadside"
audits in an effort to locate and remove from the road, drivers and
trucks that are operating in an unsafe or illegal manner.[Footnote 20]
FMCSA's enforcement actions against interstate movers from fiscal year
2001 to 2006 resulted in over $950,000 in fines being
collected,[Footnote 21] and 28 moving companies being put out of
business, as shown in table 1 below.
Table 1: FMCSA Compliance Reviews and Enforcement Actions against
Interstate Movers, Fiscal Years 2001 through 2006:
FMCSA actions: Compliance reviews;
2001: 13;
2002: 20;
2003: 30;
2004: 52;
2005: 381;
2006: 562;
Total: 1,058.
FMCSA actions: Enforcement actions;
2001: 5;
2002: 11;
2003: 6;
2004: 12;
2005: 46;
2006: 72;
Total: 152.
FMCSA actions: Amount fined;
2001: $78,000;
2002: $481,000;
2003: $396,180;
2004: $150,360;
2005: $312,120;
2006: $467,905;
Total: $1,885,565.
FMCSA actions: Amount collected;
2001: $61,500;
2002: $226,000;
2003: $40,180;
2004: $56,910;
2005: $245,420;
2006: $323,775;
Total: $953,785.
FMCSA actions: Carriers put out of service;
2001: 1;
2002: 5;
2003: 1;
2004: 3;
2005: 11;
2006: 7;
Total: 28.
Source: GAO analysis of FMCSA compliance reviews and enforcement
actions.
[End of table]
In addition, in response to our 2001 report highlighting the need to
centralize household goods complaint data, FMCSA officials told us they
created, in 2001, the Complaint Management System and set up and made
available the Safety Violation and Household Goods Consumer Complaint
Hotline at 1-888-DOT-SAFT, which consumers can call to complain about
an interstate household goods mover. The data provided by FMCSA staff
indicate there have been over 3,000 complaints annually, since 2004,
about household goods movers.[Footnote 22] The SAFETEA-LU legislation
passed in 2005 required that FMCSA make this complaint data available
to the public by August 2006. FMCSA told us they did not meet the
deadline because developing, testing, and finalizing the National
Consumer Complaint Database for Household Goods Movers was
significantly more complicated than anticipated, but the public launch
date is scheduled for spring 2007.
Our 2001 report also stated that for interstate moving services, as for
other services, the primary responsibility for consumer protection lies
with consumers. To expand its consumer outreach and help educate
consumers, FMCSA launched a consumer education campaign in 2005 called
"Protect Your Memories. Your Money. Your Move." This campaign aims to
provide consumers with information on how to avoid illegal movers and
to raise the visibility of the new Web site developed by
FMCSA.[Footnote 23] This Web site, titled "Protect Your Move," provides
guidance on how to have a successful move and avoid falling victim to
dishonest movers or brokers. The site provides a list of federally
registered and insured movers and brokers, details about current
regulations governing household goods movers, and instructions on how
to file a complaint. The site also provides links to local Better
Business Bureaus, consumer protection agencies, state attorneys
general, and state and national moving associations. Since being
activated in June 2005, the Web site has had more than 5 million hits.
In addition, the agency has partnered with a company that prints yellow
pages to help educate consumers about the Web site. FMCSA officials
also told us that they partnered with the U.S. Postal Service to
distribute approximately 20 million leaflets to states that have the
highest concentration of household goods complaints, i.e., California,
Florida, New Jersey and New York. In addition, officials also stated
that they intend to reach roughly 1.8 million consumers through the
Postal Service's online Change of Address service.
Overall Effectiveness of Federal Efforts to Protect Consumers Is
Unknown:
FMCSA has not established a comprehensive strategy or a process to
fully measure the overall effectiveness of the agency's household goods
enforcement and oversight efforts. FMCSA's draft strategic plan for
2006 through 2011--which as of March 2007 had not been issued in final
form[Footnote 24]--contains very little information about FMCSA's
efforts in providing oversight and enforcement of the household goods
industry.[Footnote 25] For example, the draft plan does not articulate
an overall strategy for overseeing the household goods industry that
identifies each of its major activities--including implementing
legislative changes, addressing consumer complaints, carrying out
compliance reviews, taking enforcement actions, and improving consumer
education and outreach--or explains how those activities collectively
will improve consumer protection. Rather, the draft plan contains very
limited information about FMCSA's efforts, including (1) a statement
that FMCSA has established a partnership with state, local, and private
sector officials to address the problem of illegitimate movers and (2)
an output goal to improve the timeliness of FMCSA's response to
household goods consumer complaints. Additionally, the draft plan does
not contain any performance goals or measures related to FMCSA's major
responsibilities and outcomes in conducting compliance reviews and
strikeforces, taking enforcement actions, or providing consumer
outreach. Under the Government Performance and Results Act of 1993
(GPRA), federal programs should have well-defined strategies to help
align activities, core processes, and resources to support achievement
of strategic goals and missions. Additionally, setting meaningful goals
for performance, and using performance information to measure
performance against those goals, is consistent with the requirements in
GPRA. One of the stated missions of FMCSA's household goods program is
to identify the worst violators of federal rules and regulations and
focus enforcement efforts on reducing their number and making this
information available to the public, but FMCSA does not have
performance goals or measures related to this mission. Without
performance goals that are meaningful, comprehensive, and measurable,
and without evaluation, it is difficult to determine whether FMCSA's
household goods program is accomplishing its intended purpose and
whether the resources dedicated to the program efforts should be
increased, used in other ways, or applied elsewhere. FMCSA's own
internal assessment of its household goods program, reported in May
2006, found (1) a lack of management tools and integrated databases to
track, monitor, and report household goods performance; (2)
inconsistent and unpredictable handling of household goods consumer
complaints and subsequent compliance actions; and (3) unclear goals,
performance measures, and management controls for supporting timely
communications among headquarters, the field, and other entities.
With regard to its consumer education and outreach efforts, we reported
in December 2005 that there was little information on the effectiveness
of FMCSA's education and outreach programs since FMCSA had not
completed many evaluations of its programs.[Footnote 26] In response to
our report, FMCSA has developed a "consumer outreach and education
logic model" that it plans to use to determine the effectiveness of its
outreach and education efforts. This model outlines the program areas
where FMCSA is planning to develop metrics for evaluating the
effectiveness of its outreach and education activities. FMCSA officials
expect to complete a report assessing their consumer outreach and
education efforts, including this model, by January 2008.
Lastly, FMCSA does not know how effective arbitration has been for
consumers to resolve their disputes with movers and, as noted earlier,
the agency was directed in a House Report not to resolve individual
consumer complaints. Consumers of interstate moves who are unable to
resolve a dispute with a mover generally have two choices: they can
take the mover to court or they can select arbitration, in which a
third party is given the facts of the dispute from both the consumer
and the mover and renders a binding decision. In three state attorneys
general offices, officials with whom we spoke told us that to sue a
mover for loss or damage in federal court is costly and not a realistic
option for most consumers. As a result, arbitration is the main option
for those who have a dispute with a mover, and there is currently no
information available on whether this is an option consumers find
equitable and fair. The ICC Termination Act of 1995 mandated that DOT
complete a study of the effectiveness of arbitration as a means of
settling household goods disputes within 18 months of the date of
enactment. FMCSA did not initiate the required study until fiscal year
2004 because of a lack of resources. FMCSA estimates that the study
will be completed in 2007, more than a decade after the study was
mandated, and 6 years after we recommended that FMCSA undertake and
complete the study.
FMCSA officials told us they consider their current level of oversight
and enforcement of the household goods industry adequate within the
resources available. They pointed out that 85 to 90 percent of
complaints were generated in six states--Florida, New York, New Jersey,
California, Texas and Illinois--and they have targeted strike force
activity in these problem states and placed household goods
investigators in several of them. The agency also increased its
performance target of compliance reviews of household goods movers it
conducted, from 300 in fiscal year 2005 to 450 in fiscal year 2006, and
plans to conduct another 450 or more reviews in fiscal year
2007.[Footnote 27]
In five of the six states we visited, however, state regulating agency
officials told us that they do not think FMCSA is providing adequate
protection for consumers. For example, officials in two states told us
that they do not think FMCSA has the resources to adequately address
consumer complaints. Officials in another state told us that current
federal laws are adequate to protect consumers; in their view, the
problem is enforcement by FMCSA. When asked what could be done to
improve protections for consumers of interstate moves, representatives
from two of six state regulatory agencies and one of six local BBBs
told us that FMCSA's licensing requirements should be more stringent.
In addition, a representative from 1 of 10 moving companies, a
representative from one of five state moving associations, as well as
representatives of the national American Moving and Storage Association
told us that in their opinion, one way to reduce the number of
illegitimate movers would be for FMCSA to make its licensing
requirements more stringent. According to these officials, the agency
should conduct background checks to limit market entry; some thought
this was necessary to keep out companies who have previously had their
license revoked.
Hostage Goods Situations Are Frequently Cited as the Most Egregious
Violation Committed by Moving Companies, but Few Resources Exist to Aid
Consumers in Resolving These Situations:
While the number of hostage goods situations reported annually is small
compared with the overall number of interstate moves, the experience
can be quite traumatic. Most of the approximately 1.6 million
interstate moves handled annually by commercial movers are accomplished
in a relatively safe and satisfactory manner. The FMCSA complaint
database indicates that since 2004, FMCSA has received between 3,100
and 3,600 complaints a year; in 2004 and 2005 over 600 complaints were
specifically about goods held hostage; and in 2006, about 450
complaints were about hostage goods. However, as DOT's Acting Inspector
General testified in May 2006, some victims of movers who held their
goods hostage have not seen their belongings again, have not recovered
their damaged possessions until many months after the move, have had
their goods looted and sold, or have had their goods end up in the
homes of the perpetrators. He provided the following examples of the
personal hardship resulting from hostage goods situations:[Footnote 28]
* 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.
Consumers whose goods are being held hostage have few legal resources.
If the move is being made within the state, the consumer can call the
state agency that regulates household goods movers and/or the state
attorney general's office and possibly get some help. For example,
state officials told us that if a consumer complains about a carrier in
Virginia, the Department of Motor Vehicles (DMV) requires the moving
company to respond. If the company does not, DMV can investigate the
carrier. In addition, in Florida and California, consumers can now call
on local police to help them retrieve their goods from movers who
engage in such tactics.
FMCSA officials told us that consumers involved in moving goods across
state lines, however, have little access to help. The only federal
agency with oversight responsibility is FMCSA. If consumers' goods are
being held hostage at the time of their call, FMCSA officials told us
that it is possible someone with the complaint line will attempt to get
consumers' goods released.[Footnote 29] However, FMCSA officials told
us that they have no legal authority to order a mover to release goods
held hostage. Even though holding goods hostage has been made a felony
by the recent SAFETEA-LU legislation, FMCSA, as a regulatory agency,
lacks law enforcement authority. One federal official we interviewed
told us that it is unrealistic to think federal officers would assist
in retrieving a consumer's goods being held hostage. Movers who hold
goods hostage are often illegitimate operations and may only be in
business for a short time under any given name; thus, once they have
either forced a few consumers to pay them additional money or taken the
consumer's goods to an undisclosed location, they may shut down their
business and set up operations under a new name. The case histories
cited by DOT's Acting Inspector General demonstrate that if consumers
are unable to get movers to release their goods when the movers first
threaten to hold them for additional money, the consumer may be forced
to pay excessive charges or their goods may be permanently lost. In his
May, 2006, testimony before Congress, DOT's Acting Inspector General
noted that "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."[Footnote 30] Three interstate movers as
well as FMCSA officials at headquarters and one of the regional offices
whom we interviewed agreed that one possible solution to the problem of
aiding consumers whose goods are held hostage would be for FMCSA to
partner with the states and local authorities to aid consumers in
retrieving their goods. Officials from several organizations, including
an established mover, one BBB official, and one FMCSA official at a
field office told us they are concerned about illegitimate movers
because they are driving legitimate movers out of business.
Some state, federal, and BBB officials told us that carriers most
likely to hold goods hostage are small operations. In his May 2006,
congressional testimony, DOT's Acting Inspector General also emphasized
that such movers often solicit business through the Internet, using low
prices to attract customers. Consumers today use the Internet to shop
and compare prices for many products and services, including moving
services. But because consumers may only contract for moving services
once or twice in their lifetime, they may not know how to identify a
legitimate mover. Some federal and state officials told us that
interstate movers who advertise on the Internet are a significant
source of consumer complaints. One state official agreed that requiring
movers to have a link to FMCSA's "Protect Your Move" Web site in their
Internet ads could improve a consumer's knowledge about how to conduct
a successful move and could aid consumers in avoiding illegitimate
movers.
The States We Visited Provide Protections to Consumers of Intrastate
Moves but Vary in Their Industry Oversight and Enforcement:
All six of the states we visited have consumer protection laws that
give the consumer the right to bring a suit against an intrastate mover
for recovery or compensation for lost or damaged goods. Consumers can
also receive monetary compensation greater than the actual amount of
the lost or damaged goods if the consumer was harmed by fraudulent or
deceptive practices, which is currently not available to consumers of
interstate moves that are subject to federal consumer protection laws
and regulations. The six states we visited also have laws governing
intrastate household goods movers, but they vary in their licensing
requirements and the level of resources they commit to oversight and
enforcement. In the states we visited that have enacted legislation to
improve their consumer protections, officials told us that these laws
and regulations--such as the additional licensing requirements and
increased enforcement efforts--have helped to reduce consumers'
problems with illegitimate intrastate movers and that the situation for
consumers and legitimate intrastate movers had improved.
States Have Consumer Protection Laws that Allow Consumers to Sue
Intrastate Movers for Amounts over the Valuation of Their Goods:
The states we visited have laws in place that permit consumers to
pursue intrastate movers in court for false and deceptive trade
practices. These laws allow consumers to sue intrastate movers in the
state and local court system for damages in excess of actual property
values, attorney's fees and court costs, but the states differ in the
amount of monetary compensation beyond the actual damages that a
consumer can recover. For example, five of the six states we visited
(California, Georgia, New York, Texas, and Virginia) allow consumers to
recover a maximum up to three times the monetary value of actual
damages.
Table 2: Highlights of Recovery Provisions in Consumer Protection Laws
of the Six States We Visited:
State: California;
State consumer protection laws: Consumers can bring suit under
California's Unfair Practices Act and can recover up to three times the
actual damages sustained.
State: Florida;
State consumer protection laws: Florida specifically authorizes
individual consumers to sue for damages if they have been aggrieved by
unfair and deceptive trade practices. The amount of damages for
individuals is not specified, but if the state imposes a civil penalty
under this section, the mover is liable for up to $10,000 for each
violation.
State: Georgia;
State consumer protection laws: Georgia authorizes individual consumers
to sue under the state's Fair Business Practices Act to recover general
damages, as well as exemplary damages when the violation was
intentional. The statute directs the court to award three times the
damages when the violation is intentional.
State: New York;
State consumer protection laws: New York consumer protection law
prohibits deceptive acts and practices and authorizes consumers who
have been injured by violation of the section to bring an action in
their own name "to enjoin such unlawful act or practice, an action to
recover actual damages or fifty dollars, whichever is greater, or both
such actions. The court may, in its discretion, increase the award of
damages to an amount not to exceed three times the actual damages up to
$1,000, if the court finds the defendant willfully or knowingly
violated this section. The court may award reasonable attorney's fees
to a plaintiff." New York law also allows consumers to take action for
false advertising where consumers can receive damages up to $1,000
meaning that consumers can potentially recover up to $2,000 if the
mover has engaged in both false advertising and deceptive practices.
State: Texas;
State consumer protection laws: Texas law allows individual consumers
who sustain damages from deceptive acts to recover economic damages and
damages for mental anguish, as well as court costs and attorney's fees.
If the conduct of the mover was committed knowingly, the plaintiff may
recover mental anguish damages up to three times the cost of the
economic damages. Texas defines a knowing act as one in which the
person is aware that his/her conduct is reasonably certain to cause the
result. If the conduct was committed intentionally, the plaintiff may
recover mental anguish damages up to three times the cost of the
economic damages plus mental anguish damages. Texas defines an
intentional act as one in which the person has a conscious objective or
desire to engage in the conduct or cause the result.
State: Virginia;
State consumer protection laws: Virginia law authorizes individual
consumers whose goods are damaged by deceptive or fraudulent practices
to recover $500 or actual damages, whichever is greater. If the
violation was willful, the consumer can recover up to three times the
actual damages or $1,000, whichever is greater.
Source: GAO analysis of state consumer protection laws.
[End of table]
While consumers in the six states have the ability to obtain
compensation in excess of their lost and damaged goods for intrastate
moves, they do not have this option if making an interstate move that
is subject to federal consumer protection laws and regulations. As
previously discussed, the Carmack Amendment limits consumers of
interstate movers to recovering only the value of their lost or damaged
goods in federal court.
States Have Laws Governing Intrastate Household Goods Movers but Vary
in Their Licensing Requirements, Oversight, and Enforcement:
All six states we visited have laws and regulations specific to
intrastate household goods movers, but the state laws differ in their
requirements of intrastate household goods movers. Five of the six
states have requirements for intrastate movers to provide consumers
some form of written estimate, but the states have different provisions
on what should be in the estimate. For example, Florida requires
estimates for a move to be signed by both the mover and the consumer,
and the mover cannot charge anything more than the signed estimate. New
York requires that if the actual shipping cost exceeds the estimate by
more than 10 percent, the mover must notify the consumer. Georgia, on
the other hand, requires movers to provide either a binding or
nonbinding estimate if requested by the consumer. All six states also
have laws that allow the state regulating agency to fine intrastate
movers for violations of state laws or regulations. Five of the six
states have fines up to $5,000 per violation, and one state can fine a
mover up to $20,000 for violating intrastate mover laws.
Some of the laws or requirements resulted from problems that states
have had with movers. Three states have made changes to their
intrastate household goods mover laws or requirements due to recent
problems with illegitimate movers. State officials in Florida told us
that problems with intrastate movers in their state resulted in a new
intrastate mover law in 2002 that, among other things, makes holding
goods hostage a third-degree felony. New York state officials stated
that they tightened their entrance requirements in the mid-1990s as a
result of rising complaints against intrastate movers and began
disconnecting telephone lines of moving companies that were violating
state laws. Officials in California stated that increased problems with
movers in their state led to changes in the law that included
automatically revoking the license of movers in violation of
regulations and giving local police the authority to intervene in
situations involving goods held hostage. Table 3 highlights some of the
intrastate household goods mover laws in the six states we visited.
Table 3: Highlights of Selected State Laws Governing Intrastate
Household Goods Movers:
State: California;
State regulating agency for intrastate movers: Public Utility
Commission;
Cost estimates for moving household goods: A mover must provide either
a written estimate of the total cost of the move or a written maximum
rate for the cost of the move;
Maximum fines that can be imposed per violation: $30,000;
Provision in state law for hostage goods situations: Gives local peace
officers authority to intervene.
State: Florida;
State regulating agency for intrastate movers: Department of
Agriculture and Consumer Services;
Cost estimates for moving household goods: Estimate must be in writing
and must include an itemized breakdown; description; and total of all
costs and services for loading, transporting, and unloading goods. The
estimate must also be signed by the mover and the consumer;
Maximum fines that can be imposed per violation: $5,000;
Provision in state law for hostage goods situations: Makes hostage
goods situations a third-degree felony and gives law enforcement
authority to intervene.
State: Georgia;
State regulating agency for intrastate movers: Public Service
Commission;
Cost estimates for moving household goods: At the request of the
consumer, movers must provide either a binding or nonbinding estimate.
For nonbinding estimates, a mover cannot collect more than 110 percent
of the estimate at the time of delivery;
Maximum fines that can be imposed per violation: $5,000;
Provision in state law for hostage goods situations: No state
provision.
State: New York;
State regulating agency for intrastate movers: Department of
Transportation;
Cost estimates for moving household goods: At the request of the
consumer, more than 72 hours before pick- up, a mover must provide a
written estimate.[A] If the mover determines that the actual shipping
cost will exceed the estimate by at least 10 percent, the carrier must
inform the consumer by telephone or telegram;
Maximum fines that can be imposed per violation: $5,000;
Provision in state law for hostage goods situations: No state
provision.
State: Texas;
State regulating agency for intrastate movers: Department of
Transportation;
Cost estimates for moving household goods: Movers must provide a
written estimate prior to loading a consumer's household goods. The
estimate must have the maximum amount the consumer could be required to
pay;
Maximum fines that can be imposed per violation: $5,000 for each
violation and up to $15,000 for knowingly committing a violation;
Provision in state law for hostage goods situations: A mover must
release the household goods to a shipper at destination if the shipper
pays the maximum price listed on the moving services contract.
State: Virginia;
State regulating agency for intrastate movers: Department of Motor
Vehicles;
Cost estimates for moving household goods: At the consumer's request,
the mover must provide a written nonbinding estimate of charges after a
visual inspection of the goods. The estimate must contain language
stating that the estimate is not a guarantee that the actual charges
will not exceed the estimated amount;
Maximum fines that can be imposed per violation: $5,000;
Provision in state law for hostage goods situations: No state
provision.
Source: GAO analysis of state household goods mover laws:
[A] Moves of one room that are less than 400 square feet do not have to
have a written estimate.
[End of table]
All six states have laws that require moving companies to obtain a
license to operate. Additionally, all six states require moving
companies to obtain some level of insurance to provide cargo liability
in case of loss or damage to household goods. For example, Georgia
requires intrastate movers to maintain cargo insurance of $10,000 while
California requires cargo insurance of $20,000. Virginia requires
movers to carry $50,000 cargo liability insurance coverage to cover
lost or damaged goods. According to a Florida state official, lack of
adequate insurance is the primary reason for denial of a license.
While all six states have some similar requirements for an intrastate
mover to obtain a license, four states have additional requirements.
For example, three of these states perform background checks of
household goods mover applicants. In California, the state requires
applicants to be fingerprinted and performs criminal background checks
through the FBI and the state Department of Justice. Additionally,
these states have other requirements for intrastate movers to obtain a
license. For example, California and New York require applicants to
meet certain requirements pertaining to financial fitness and industry
knowledge in order to receive a license. In New York, applicants must
submit evidence of (1) at least 2 years experience in the household
goods moving industry, (2) equipment suitable for transporting
household goods, and (3) sufficient moneys or funds to meet start-up
costs. Table 4 provides information on some of the requirements for
obtaining an intrastate mover license in states that we visited.
Table 4: Selected State Licensing Requirements for Intrastate Household
Goods Movers:
State: California;
Proof of cargo insurance: X;
Background checks: X;
Evidence of financial fitness: X;
Evidence of industry knowledge: X.
State: Florida;
Proof of cargo insurance: X;
Background checks: [Empty];
Evidence of financial fitness: [Empty];
Evidence of industry knowledge: [Empty].
State: Georgia;
Proof of cargo insurance: X;
Background checks: [Empty];
Evidence of financial fitness: X;
Evidence of industry knowledge: [Empty].
State: New York;
Proof of cargo insurance: X;
Background checks: X;
Evidence of financial fitness: X;
Evidence of industry knowledge: X.
State: Texas;
Proof of cargo insurance: X;
Background checks: [Empty];
Evidence of financial fitness: [Empty];
Evidence of industry knowledge: [Empty].
State: Virginia;
Proof of cargo insurance: X;
Background checks: X;
Evidence of financial fitness: X;
Evidence of industry knowledge: [empty].
Source: GAO analysis of state household goods mover licensing
requirements.
Note: Florida allows companies with two or fewer trucks to provide a
$25,000 bond in lieu of carrying cargo insurance. Virginia requires a
newly certificated intrastate mover to carry a $50,000 bond for the
first 5 years of operation to protect the consumer against fraud by the
mover.
[End of table]
According to a number of state and moving industry officials, these
additional licensing requirements did not adversely impact legitimate
movers and effectively screened out undesirable illegitimate movers.
Additionally, officials from one state told us that when their state
was not adequately screening movers, illegitimate movers were entering
the marketplace. These officials also stated that one of the traits of
illegitimate movers is that they do not pay the same costs as
legitimate movers (e.g., liability insurance, workman's compensation
etc.) According to a moving industry official, the low rates which
illegitimate movers use to lure customers make it necessary for
legitimate movers to lower their rates, but legitimate movers still
have all the attendant costs of insurance for vehicles, personnel,
workmen's compensation, and decent wages. Some of these officials
stated that illegitimate movers may pay none of these costs, thus
driving out the legitimate, quality movers.
Oversight of intrastate household goods movers varied in the six states
we visited. Three of the states (California, Florida and New York) had
increased the amount of oversight and enforcement due, in part, to the
severity of the problem with intrastate household goods movers. For
example, California officials stated that they had increased the number
of their investigators from 4 to 8 due to the rising problems with
intrastate movers. Florida has 11 investigators it uses for household
goods oversight and other programs. Conversely, Virginia officials
stated that they have no full time staff dedicated specifically to
overseeing household goods movers because intrastate movers have not
been viewed as a problem, in terms of the number of complaints. In
Georgia, the state official responsible for household goods oversight
stated that changes in state agency jurisdiction for household goods
oversight led to a reduction in the number of investigators and
subsequently, increased problems with movers in the state.
Officials in all six states told us that they also receive consumer
complaints on intrastate movers and attempt to resolve them. In
addition, Texas and Virginia have more formal mediation programs
available to consumers to resolve their complaints. Two states we
visited (Georgia and Virginia) make complaint information available to
the public via the Internet. In Virginia, consumers can search moving
companies by name to see if a complaint has been logged against a
company and whether the complaint was resolved favorably or
unfavorably. Consumers in Georgia can view a list of licensed
intrastate movers to determine if a mover has had a complaint filed
against the company. The other four states we visited stated that
consumers can call to inquire if a complaint has been made against a
specific moving company. State officials also told us that many of the
complaints that consumers have are related to small and illegitimate
movers who often advertise on the Internet.
Enforcement activity against intrastate movers in the six states we
visited also varied. According to Florida officials who regulate
intrastate household goods movers, since 2002, over 360 investigations
have been conducted, and over $270,000 in fines have been assessed
against movers. Additionally, the Florida Attorney General's Office has
pursued 22 cases against movers under their consumer protection laws
resulting in civil penalties against movers. Since 2003, California has
performed 541 investigations and fined intrastate movers over $350,000.
An official with the California Office of Attorney General told us that
the office has successfully prosecuted movers under state consumer
protection laws, resulting in companies being put out of service and
deportation. On the other hand, officials with Virginia's Office of
Attorney General stated that they did not remember any enforcement
action brought against intrastate movers in the last 17 years.
States That Took Actions to Improve Consumer Protections Told Us that
These Actions Had a Positive Effect on Both Consumers and Legitimate
Movers:
Officials in three states we visited stated that after the state took
actions to improve protections of consumers of intrastate moves,
problems with intrastate movers decreased, and the situation for
consumers and legitimate intrastate movers had improved. For example,
California and New York state officials said that their additional
licensing requirements of background checks and proof of financial
fitness have helped to screen out illegitimate movers. California state
officials told us that they were surprised by the number of former
criminals applying for licenses to operate as an intrastate mover when
they began performing background checks. New York officials also stated
that disconnecting the telephone lines of moving companies that violate
state laws had been effective in reducing the ability of illegitimate
movers to continue to operate and that complaints against intrastate
movers have gone down as a result of increased compliance efforts and
the additional licensing requirements. In fact, information provided by
New York State officials indicates that consumer complaints against
intrastate movers have declined from a high of 553 complaints in 1997
to 203 complaints in 2005.[Footnote 31] Florida officials stated that
the new enforcement measures, which allow law enforcement authorities
the right to force movers to release hostage goods have reduced the
number of hostage goods situations. Additionally, a California official
stated that the additional laws pertaining to intrastate movers have
not adversely affected legitimate movers. In fact, the official stated
that legitimate movers were happy to have the additional laws because
legitimate businesses are being hurt by illegal operators. Officials
representing the state's moving association also stated that the moving
industry supports the additional state laws California has enacted to
remove illegitimate movers from the industry. Officials representing
New York's moving association stated that their state requirements help
screen out illegitimate movers and help educate movers that receive a
license about what it takes to operate as a legitimate mover.
Applying State Consumer Protection Laws to Interstate Movers May Aid
Consumers and Could Increase Movers' Costs, but Such Action Is Unlikely
to Allow States to Regulate Rates of Interstate Movers:
Applying state consumer protection laws to interstate household goods
movers could enhance protections for consumers but may increase movers'
and consumers' costs and may be ineffective in providing relief to
consumers who pursue legal action against illegitimate movers. Such
application would allow consumers to sue interstate household goods
movers in state court and consumers could recover greater damages than
current federal law allows. However, such application may not improve
protection for consumers hiring illegitimate interstate movers.
Industry representatives we contacted opposed such application, stating
that subjecting interstate movers to states' consumer protection laws
would increase their costs and potentially drive them out of business.
Economic reasoning suggests that if increased regulation raises costs,
rates charged to consumers will increase. However, some state officials
we interviewed did not think that legitimate movers, who are already
complying with states' consumer protection laws, would incur increased
costs due to regulation. Finally, if state consumer protection laws
were applied to interstate movers, it is likely that the responsibility
for overseeing interstate movers' rates would remain with the federal
government because all rate regulation for interstate movers is the
responsibility of the federal government.
Applying State Consumer Protection Laws to Interstate Movers Might
Benefit Consumers, but Not Protect Them from Illegitimate Movers:
Applying state consumer protection laws to interstate household goods
movers has the potential to enhance protections for consumers. Federal
law currently provides consumers with the options of pursuing civil
litigation in federal court or seeking recourse through participation
in the movers' arbitration program to resolve disputes with interstate
household goods movers. Courts have consistently held that the Carmack
Amendment preempts recovery in state courts against interstate movers;
i.e., that the only remedies available for consumers are at the federal
level, and these remedies are limited to a maximum of the replacement
value of the goods.[Footnote 32] Applying state consumer protection
laws to interstate movers would give consumers an alternative to the
current options for resolving their disputes. In the six states we
visited, state consumer protection laws allow consumers to sue
intrastate household goods movers for unfair and deceptive trade
practices and, in some cases, to recover compensation beyond the
replacement value of their goods. Although general consumer protection
laws and the standards for proving their violation vary from state to
state, plaintiffs can often recover other compensatory or punitive
damages in excess of the value of their goods. Officials from four of
the six state attorneys general offices commented on the application of
state consumer protection laws to interstate movers and told us that
such an application would not be problematic.
Several industry officials stated that since illegitimate movers
operate outside of the law, the application of state consumer
protection laws to interstate household goods movers would not
alleviate the problem of illegitimate movers or improve consumers'
options for recourse. According to these officials, illegitimate movers
would not appear in court or would not have assets with which to
compensate the consumer. We highlighted in a previous report similar
situations in which consumers won judgments, but could not collect
damages from illegitimate movers.[Footnote 33]
Applying State Consumer Protection Laws to Interstate Movers Could
Increase Movers' Costs and Increase Rates Charged to Consumers:
A complete evaluation of a regulation should take into account benefits
and costs to all affected parties, even if some of the effects are
unintended. Although some consumers may benefit from increased
protection, applying state consumer protection laws to interstate
movers may also have some adverse consequences. In particular, moving
companies may experience an increase in costs due to increased
regulation. As a consequence, if movers' costs increase, then some of
those costs may be passed on to consumers in the form of higher rates.
While the sizes of these effects are unclear, they should be considered
in evaluating proposals to increase consumer protection.
Moving company and state officials expressed varied opinions about the
cost effects of applying state consumer protection laws to interstate
movers. Industry officials we contacted expressed concerns that
applying state consumer protection laws to interstate movers could
increase mover's costs. Specifically, five of the eight interstate
moving company representatives with whom we spoke believed that it
would be difficult to adhere to all states' consumer protection laws
without incurring additional costs. Several moving company officials
told us that costs associated with increased regulation could drive
some legitimate moving companies out of business. A few industry
officials said that such regulation may disproportionately affect
smaller moving companies due to increased costs. In contrast, some
state officials told us that legitimate movers would not incur
additional expenses due to regulation. These officials stated that
legitimate movers are already complying with the law and would,
therefore, not face increased costs.
Basic economic reasoning suggests that, to the extent they occur, some
of the increased costs from increased regulation would be passed on to
consumers. As regulations increase the cost of compliance, the
willingness of moving companies to move household goods at the existing
rates is likely to decrease. In addition, an increase in the costs
movers face may decrease entry into the moving industries, and thus
decrease the number of movers. Both of these factors would diminish
supply and increase the prices paid by consumers for moving services.
However, the size of the resulting rate change from the proposed
regulation in the household goods moving industry is unclear. For one
reason, as discussed above, it is unclear how much costs will actually
increase. In addition, consumers may have other options for moving
goods across state lines, which makes it difficult for movers to always
increase rates in response to higher costs. For example, some consumers
with smaller loads of household goods may be able to rent vans to move
furniture themselves, or send boxes through the U.S. Postal Service or
private companies. To the extent that these services are substitutes
for moving services, moving companies may lose business to these other
services if they raise rates, which constrains their ability to pass
along costs to consumers.
State Consumer Protection Laws Would Likely Not Regulate the Rates of
Interstate Movers:
It is unlikely that the application of state consumer protection laws
to interstate movers would allow states to regulate their rates. In the
six states we visited, laws pertaining to rates of intrastate household
goods movers are separate from state consumer protection laws. In
general, state consumer protection laws prohibit deceptive trade
practices. These laws do not grant the states authority to regulate
rates of household goods movers. Furthermore, none of the officials in
the state attorneys general offices that responded believed such
application would allow them to regulate the rates of interstate
movers. A few of these officials told us that they did not desire the
authority to regulate the rates of interstate movers.
Conclusions:
While FMCSA has increased its enforcement and other oversight
activities related to interstate household goods movers, the
effectiveness of its actions remains unclear. FMCSA's enforcement
efforts have been taken largely in response to consumer complaints and
have included identifying problem movers by volume of consumers'
complaints, then investigating these movers, and issuing fines and/or
revoking licenses as necessary. According to FMCSA, these actions have
resulted in removing or bringing into compliance some problem movers.
However, under this approach, the agency has focused on measuring the
quantity of its outputs, not on the resulting outcomes, and as a
result, has no information on the overall effectiveness of its
enforcement actions. Without such information, FMCSA does not know
whether or to what extent its actions are improving industry compliance
and reducing the number of illegitimate movers. Thus, it lacks the
information needed to determine whether it should change its
enforcement policies to improve their effectiveness.
FMCSA has done little to prevent illegitimate movers from entering the
marketplace and injuring consumers, expressing concern about creating
barriers for companies entering the marketplace. Some states, however,
have decided that additional licensing and registration requirements
are necessary to improve the chances of screening out illegitimate
intrastate movers.
With regard to aiding consumers in making informed choices, FMCSA has
developed a Web site that provides a lot of information for consumers.
Consumers are increasingly choosing movers over the Internet, based on
price alone, with no knowledge of the quality of service provided. If
consumers become aware of the information available on FMCSA's Web site
while researching moving companies over the Internet, they may make a
more informed choice and avoid being a victim of an illegitimate mover.
Currently, consumers who are victimized by illegitimate movers have few
options for redress. The effectiveness of the authority SAFETEA-LU
granted to the states in August 2005 is unknown because states have not
yet exercised it. It is possible that with the expiration in September
2006, of the amendment limiting state actions, states may make use of
this authority in the near future. If consumers were allowed to pursue
interstate movers under state consumer protection laws, they would have
the option to sue the interstate mover in state court. However, our
research indicates that consumers might not materially benefit as these
movers might not show up in court or, if the consumer should win his/
her case, some of these movers would not have the assets to pay the
penalties. What seems apparent is that once a consumer has been
victimized by an illegitimate mover, it is very difficult to repair the
damage done both financially and psychologically. Thus, consumers would
clearly benefit if illegitimate movers were prevented from ever
entering the marketplace. In states that have made the holding of goods
hostage a felony, consumers who become victims of illegitimate movers
and have their goods held hostage can call on local law enforcement to
come to their immediate aid. Now that SAFETEA-LU has authorized all
states to enforce the federal provision making it a felony to hold
goods hostage, all states could benefit from federal guidance on how to
use this new authority.
Recommendations:
To enhance FMCSA's effectiveness in protecting consumers of interstate
moves, we recommend that the Secretary of Transportation direct the
Administrator of FMCSA to take the following three actions:
1. Develop a strategy with performance goals and measures that
delineates how its oversight and enforcement activities related to
household goods movers will improve consumer protection. The strategy
and performance goals and measures should delineate a method for
monitoring and evaluating FMCSA's performance against set goals and
timelines to improve consumer protection.
2. In developing its strategy, FMCSA should assess the potential
advantages and disadvantages, including the cost-effectiveness, for
consumers and movers of the following:
* Determining whether implementing additional licensing and
registration requirements would be effective in reducing the number of
illegitimate movers performing interstate moves, and:
* Determining whether interstate movers should be required to place a
Web address link to FMCSA's "Protect your Move" Web site in all their
online advertising and place the Web address in all print advertising
to aid consumers in making more informed decisions about choosing and
contracting with a mover.
3. In developing and implementing an outreach plan to enhance
coordination and effective enforcement of federal laws and regulations
between and among federal and state law enforcement and consumer
protection authorities, FMCSA should include guidance to state
officials on what is required to enable them to enforce the federal
laws in this area, including laws regarding holding goods hostage in
their state.
Agency Comments:
We sent a draft of this report to DOT and to the Federal Maritime
Commission. DOT generally agreed with the information provided in the
report, and both agencies provided technical clarifications, which we
have incorporated as appropriate. DOT agreed to consider our
recommendations.
We are sending copies of this report to the appropriate congressional
committees and to the Secretary of Transportation. We will also make
copies available to others upon request. In addition, this report will
be available at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact me at (202) 512-2834 or heckerj@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff that made key contributions to
this report are listed in appendix III.
Signed by:
JayEtta Z. Hecker:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
To determine the protections provided to consumers by federal
regulation of interstate household goods movers, we reviewed key
federal legislation and regulations, including the Interstate Commerce
Commission (ICC) Termination Act of 1995, the Motor Carrier Safety
Improvement Act of 1999, the Safe, Accountable, Flexible, Efficient
Transportation Equity Act--A Legacy for Users (SAFETEA-LU) legislation
of 2005, the amendment to the 2006 transportation appropriations law,
and the Carmack Amendment set forth in 49 U.S.C. 14706. To understand
the Department of Transportation's (DOT) role with respect to the
household goods industry, as delegated to Federal Motor Carrier Safety
Administration (FMCSA), as well as the role of other federal agencies,
including the Surface Transportation Board (STB) and the Federal Trade
Commission (FTC), we reviewed applicable federal regulations, program
guidance, and information provided to consumers through those agencies'
Web sites. We also conducted semistructured interviews with
representatives from DOT and other pertinent federal agencies, state
regulatory and enforcement agencies, consumer groups, interstate
movers, and mover associations--and analyzed pertinent documentation--
to understand how consumer protection for this industry is provided and
to learn how well FMCSA is providing oversight and enforcement of its
rules and regulations. To report the number of consumer complaints
against carriers that FMCSA received, we obtained their Household Goods
Consumer Complaint (HHGCC) database and assessed its reliability by
interviewing knowledgeable agency officials about data collection
processes and performing electronic testing of the data. We determined
the HHGCC database was sufficiently reliable for the purpose of
reporting the number of annual complaints since 2004.
To determine the protections states provide to consumers of household
goods moves, describe their effects on consumers and intrastate movers,
and assess the implications of applying state consumer protections laws
to interstate household goods movers including the potential to
regulate rates, we made site visits to six states (California, Florida,
Georgia, New York, Texas and Virginia). The six states that were
selected were among the top 10 states in terms of the total number of
complaints for calendar years 2004, 2005, and 2006. In addition, four
of these states were reported to have had problems with interstate
household goods movers, according to FMCSA and industry officials and/
or they had enacted recent legislative changes to address problems with
household goods movers. During the site visits to the states, we
analyzed consumer protection laws and regulations pertaining to
household goods movers, and interviewed state agency officials,
intrastate household goods movers, movers' associations, and local
Better Business Bureaus to obtain their views on the potential effects
of applying state consumer protection laws to interstate household
goods movers and learn their processes for investigating and resolving
complaints and conducting enforcement activities. We also interviewed
state officials about the new authorities granted to the states by
SAFETEA-LU.
With respect to the information contained in appendix II, we compared
information on FMCSA's protections for consumers of interstate
household goods moves to the consumer protections provided by federal
regulation of two other transportation modes, aviation and maritime. We
chose these modes because the two federal organizations involved
provide consumer protections involving transport of personal or
household goods, including (1) DOT's Office of Aviation Analysis (OAA)
and the Office of Aviation Enforcement and Proceedings (OAEP), which
are responsible for the only other DOT transportation mode that
promulgates extensive consumer protections and (2) the Federal Maritime
Commission (FMC), which oversees the transport of household goods
across oceans. We interviewed officials at these agencies and reviewed
pertinent documentation to understand each organization's processes for
protecting consumers, including (1) licensing and registration of
carriers, (2) complaint investigation and resolution, and (3)
enforcement activities. We then compared the consumer protection
processes in OAA/OAEP and FMC with the processes used by FMCSA in
protecting consumers of interstate household goods moves.
Organizations Contacted:
Federal Agencies:
Department of Transportation:
Federal Motor Carrier Safety Administration Headquarters:
FMCSA Southern Service Center (Georgia):
FMCSA Division Offices (California, Florida, Georgia, New York, Texas,
and Virginia):
Office of Aviation Analysis:
Office of Aviation Enforcement and Proceedings:
Office of Inspector General:
Surface Transportation Board:
Federal Maritime Commission:
State Agencies:
California:
Office of the Attorney General:
Public Utility Commission:
Florida:
Office of the Attorney General:
Department of Agriculture and Consumer Services:
Georgia:
Office of the Attorney General:
Public Service Commission:
New York:
Office of the Attorney General:
Department of Transportation:
Texas:
Office of the Attorney General:
Department of Transportation:
Virginia:
Office of the Attorney General:
Department of Motor Vehicles:
Industry Associations:
American Moving and Storage Association:
California Moving and Storage Association:
Florida Movers and Warehousemen's Association:
New York Movers' and Warehousemen's Association:
Southwest Movers Association:
Virginia Movers and Warehousemen's Association:
Law Enforcement and Consumer Associations:
National Association of Attorneys General:
Council of Better Business Bureaus:
The Better Business Bureau of Metro Atlanta, Athens, and Northeast
Georgia:
The Better Business Bureau of Metropolitan Dallas, Inc.
The Better Business Bureau of Metropolitan New York,
The Better Business Bureau of Northeast Florida:
The Better Business Bureau of Northern California:
The Better Business Bureau of Central Virginia:
Alternative Dispute Resolution Association:
National Arbitration Forum:
Moving Companies:
Adams Transfer and Storage Company:
Arnoff Moving and Storage:
Atlantic Relocation Systems:
Clark Moving and Storage, Inc.
Crown Moving and Storage:
Gabriel's Moving:
Hilldrup Moving and Storage:
Northstar Moving and Storage:
Texas Moving Company, Inc.
UniGroup, Inc.
[End of section]
Appendix II: Consumers of Airline Travel and Household Goods Moves
Overseas Have Added Protections:
In two areas, licensing requirements and resolving individual consumer
complaints, other federal entities provide additional protections to
airline travelers and/or consumers of household goods moves overseas,
compared with those provided by DOT's FMCSA. Two offices within DOT--
OAA and OAEP--have responsibility for airline consumer protections. OAA
is responsible for, among other things, licensing airline carriers, and
OAEP handles consumer complaints against airline carriers. FMC is
responsible for, among other things, licensing nonvessel-operating
common carrier (NVOCC) overseas movers that are used to transport
household goods and resolving consumer complaints.
First, OAA and FMC require applicants to meet greater licensing
requirements as compared with FMCSA. For example, both of these
agencies require proof of financial fitness as part of the licensing
process: airline carriers must generally submit information to OAA
demonstrating financial fitness, while FMC requires a surety bond and
evidence that an applicant is in good standing as a business. As
another licensing requirement, the agencies require applicants to prove
that management personnel possess industry experience before they
receive a license. For example, OAA ensures that management personnel
have an adequate background to oversee an airline before issuing a
license, while FMC requires a minimum of 3 years experience in ocean
transportation of goods to obtain a license. In contrast, FMCSA does
not require applicants to meet financial fitness or management
competency standards. The following table compares selected licensing
requirements of FMCSA, FMC, and OAA.
Table 5: Selected licensing requirements of FMCSA, FMC, and OAA:
Federal agency: FMCSA;
Requires evidence of industry experience: [Empty];
Requires evidence of financial fitness: [Empty];
Requires proof of insurance: X;
Requires filing/publication of tariff: X.
Federal agency: FMC;
Requires evidence of industry experience: X;
Requires evidence of financial fitness: X;
Requires proof of insurance: X;
Requires filing/publication of tariff: X.
Federal agency: OAA;
Requires evidence of industry experience: X;
Requires evidence of financial fitness: X;
Requires proof of insurance: X;
Requires filing/publication of tariff: X.
Source: GAO analysis of DOT and FMC laws and regulations.
[End of table]
Assistance in resolving individual complaints is another area in which
additional protections are provided to consumers. For example, FMC
responds to every consumer complaint against NVOCC overseas movers. The
office receives 300 to 500 consumer complaints each year that require
staff assistance. Furthermore, FMC invites consumers using its Web site
to contact FMC with any problem the consumers might have. For consumers
of airline services, OAEP will contact an airline carrier on behalf of
consumers to help resolve legitimate complaints. OAEP also invites
consumers on their Web site to file complaints by e-mail. Finally, it
publishes monthly an Air Travel Consumer Report that lists, by carrier,
complaints it has received; on-time performance; lost, damaged, or
delayed baggage; and oversales[Footnote 34] information. In comparison
to FMC and OAEP, FMCSA aids individual consumers only in hostage goods
situations, and this aid is limited since FMCSA is unable to enforce
the release of goods held hostage.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
JayEtta Z. Hecker, 202 512-2834 or heckerj@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Rita Grieco, Assistant
Director; Amy Abramowitz; Ashley Alley; Benjamin Bolitzer; Jay Cherlow;
Andy Clinton; Colin Fallon; N'Kenge Gibson; Sara Ann Moessbauer;
Beverly Ross; Laura Shumway; and Nancy Zearfoss made key contributions
to this report.
FOOTNOTES
[1] GAO, Consumer Protection: Federal Actions Are Needed to Improve
Oversight of the Household Goods Moving Industry, GAO-01-318
(Washington, D.C.: Mar. 5, 2001).
[2] SAFETEA-LU, Pub. L. No. 109-59, Title IV, Sec. 4201-4305, 119 Stat.
1751 (Aug. 10, 2005).
[3] GAO-01-318.
[4] SAFETEA-LU does not allow a consumer to sue an interstate carrier
in state court nor does it allow the consumer to sue for an amount
greater than the declared value of the transported goods, even if the
consumer's goods are damaged or lost and the mover is at fault.
[5] While the Congress provided DOT with the authority to regulate the
interstate household goods moving industry, a House Committee report
accompanying the Interstate Commerce Commission (ICC) Termination Act
of 1995 directed DOT not to intervene and help resolve individual
disputes. A DOT official told us that when it undertakes enforcement
actions, it focuses on patterns of behavior (e.g., multiple complaints)
by a carrier.
[6] As of March 2007, this draft plan has not yet been finalized, even
though it covers a year (2006) that is already completed. FMCSA
officials told us that they have not yet set a date for issuing a final
plan.
[7] Throughout this report, we use the term "illegitimate" mover to
include movers that are unlicensed, unregistered, or operating in an
illegal manner.
[8] Of the three states, only New York provided data showing a
reduction in problems with intrastate movers subsequent to increased
enforcement actions by the state. We did not perform any analysis of
this data.
[9] Council of BBB officials told us that they do not differentiate
between interstate and intrastate movers.
[10] The Carmack Amendment is set forth in section 14706 of title 49,
U.S. Code.
[11] The laws are contained in Title 49 of the U.S. Code.
[12] In 2003, at the direction of Congress, FMCSA implemented the New
Entrant (NE) Program. Under this program, the agency established
partnerships with the states (allowing safety audits to be conducted by
either a state or federal auditor) to ensure that all NE carriers
understand their safety responsibilities and demonstrate acceptable
safety performance before receiving permanent operating authority. U.S.
DOT, FMCSA, Report to Congress on the New Entrant Program
Implementation Plan, (Washington, D.C.: December 2004, p. 3).
[13] An estimate is binding if it guarantees the total cost of the
move. An estimate is nonbinding if the final charges are based upon the
actual weight of the individual consumer's goods and the carrier's
lawful tariff charges.
[14] FMCSA published a Notice of Proposed Rulemaking on these broker
regulations in the Federal Register in February 2007, 72 Fed. Reg. 5947
(Feb. 8, 2007).
[15] Pub. L. No. 109-115, Title I, § 173, 119 Stat. 2426 (Nov. 30,
2005).
[16] 49 U.S.C. § 14711 (2005).
[17] Pub. L. No. 109-115, Title I, § 173, 119 Stat. 2426 (Nov. 30,
2005).
[18] The Surface Transportation Board (STB) was created in the ICC
Termination Act of 1995 and is the successor agency to the Interstate
Commerce Commission. The STB serves as both an adjudicatory and
regulatory body and has jurisdiction over certain trucking company rate
matters, among other duties.
[19] GAO-01-318.
[20] FMCSA funds and oversees this program through its Motor Carrier
Safety Assistance Program. It is designed primarily to carry out
enforcement activities at the state level related to truck safety.
[21] FMCSA officials told us that currently, the Uniform Fine
Assessment Tool, which has been used to make uniform across the states
fines levied against trucking companies for safety violations, is not
being used to assess fines against interstate movers. FMCSA is
developing a uniform fine assessment tool to be applied to household
goods movers and expects to have it completed in 2007.
[22] FCMSA officials noted that since 2004, consumer complaints to
FMCSA about household goods movers have declined by about 9 percent,
from 3,631 in 2004 to 3,333 in 2006.
[23] This Web site is www.protectyourmove.gov.
[24] A FMCSA official told us that FMCSA's strategic plan is in final
concurrence and a draft copy is available on the agency's Web site.
[25] GAO, Results-Oriented Government: GPRA Has Established a Solid
Foundation for Achieving Greater Results, GAO-04-38 (Washington, D.C.:
Mar. 10, 2004).
[26] GAO, Federal Motor Carrier Safety Administration: Education and
Outreach Programs Target Safety and Consumer Issues, but Gaps in
Planning and Evaluation Remain, GAO-06-103 (Washington, D.C.: Dec. 19,
2005), p. 7.
[27] FMCSA actually conducted 562 compliance reviews in fiscal year
2006.
[28] Statement of Todd J. Zinser, Acting Inspector General, U.S.
Department of Transportation before the Committee on Commerce, Science,
and Transportation, Subcommittee on Surface Transportation and Merchant
Marine, United States Senate, May 4, 2006, Household Goods Moving Fraud
CC-2006-044, p. 3.
[29] On the nongovernmental side, consumers can contact the Move Rescue
program, a nationwide network of volunteer attorneys that provides help
with securing court orders and providing volunteer moving agents that
send crews to pick up goods held hostage and deliver them to consumers.
This program is endorsed by two of the large interstate moving
companies.
[30] CC-2006-044, p. 8.
[31] Of the three states that told us their actions had led to improved
conditions for consumers and legitimate movers, only New York provided
data to substantiate this claim. We did not perform any analysis of the
data provided by New York state.
[32] For plaintiffs suing in federal court, the court does have the
discretion to award reasonable attorney's fees and costs to the
prevailing party.
[33] Consumers have complained that, in some instances, even when they
have won judgments against carriers in court, they have been unable to
collect damages because the carrier has hidden its assets. GAO-01-318,
p. 9.
[34] Oversales occur when flights are overbooked, e.g. with boarding
priority rules and issuing travel vouchers.
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