washingtonpost.com  > Business > Columnists > The Regulators

Phony Internet Moving Brokerages Take Consumers for a Ride

By Cindy Skrzycki
Tuesday, March 8, 2005; Page E01

Besides death and divorce, one of the more stressful life experiences is moving. Though Americans do it frequently, it can be disruptive and costly under the best of conditions. Even reputable movers admit it's often not a positive experience -- even for educated consumers.

Take Kay F. Edge. She tapped onto the Internet when she was looking for a mover to get her furniture from New Haven, Conn., to Blacksburg, Va. Edge said she thought she was being an astute consumer by using the Internet to find a mover and to get an estimate. "I thought I was doing everything right," she said in an interview.

_____Previous Columns_____
Questioning the Cattle Call (The Washington Post, Mar 1, 2005)
Strapped Automaker Appeals NHTSA Rule on Air Bags (The Washington Post, Feb 22, 2005)
Antiperspirant Makers Sweat Out FDA's Data Request (The Washington Post, Feb 15, 2005)
Salt Institute's Case Shakes Up Preliminary Rulemaking (The Washington Post, Feb 8, 2005)
More past columns
_____Regulations on the Web_____
Government Printing Office provides the text of rules.
The Federal Register lists new rules and proposals daily.
The General Accounting Office offers cost-benefit analyses of major rules.
OMB Watch is a public interest group that monitors the Office of Management and Budget.
The Mercatus Center at George Mason University provides conservative analysis of rules.
Regulation.org is the conservative Heritage Foundation's rules site.
The AEI-Brookings Joint Center for Regulatory Studies offers scholary rules analysis, including its $100 Million Club.

After she gave all her information about the size of her move to a broker online and got an estimate of $2,230, she got calls from movers wanting to do the job. The mover she thought she had hired subcontracted the job to another mover in New York City. When the truck arrived, with her things still locked up on it, she was presented with a bill for $4,700. After contacting law enforcement authorities, including the FBI, she ended up paying the bill a week later, in cash, to get her possessions unloaded.

Edge said she complained to the company but it refused to provide her with any verification of the load's weight and gave her no reason for the cost increase.

As it turned out, both moving companies became subjects of federal investigations by the Department of Transportation inspector general, the FBI and local law enforcement agencies that resulted in indictments in 2002 and 2003 against a number of movers, according to DOT's Federal Motor Carrier Safety Administration, which regulates the industry. One of those cases produced $410.95 in compensation for Edge.

Problems like Edge's appear to be increasing, as Web sites' advertising of easy, cheap moves has multiplied. Consumers have turned to this new breed of arrangers to handle everything from estimating the price of the move to sealing the deal. Many have no idea where the broker is located, if it is licensed, or if it's a moving service itself.

Legitimate brokers perform a valuable service to shippers and smaller carriers, and about 535 meet federal registration requirements. But as many as 1,000, a number that is increasing, operate outside the rules, according to industry and agency estimates. These brokers may be operating the equivalent of moving industry "boiler rooms," where they use multiple names and promise deals too good to be true.

"It has grown and there are some heavy hitters in that part of the industry," said Tim Walker, founder of MovingScam.com, a Web site that collects complaints about moves, offers advice to consumers and posts a "black list" of companies that consumers should avoid. "Most moving companies are honest. Where these [scam] companies flourish is on the Internet. The first thing I tell people is, 'Get off the Internet.' "

The Federal Motor Carrier Safety Administration is charged with overseeing the moving industry, a job a predecessor agency took on in 1995 when the Interstate Commerce Commission was closed. Until recently, it had two investigators who looked into consumer complaints about movers or brokers -- and there were 3,631 of those last year. Moreover, the number of complaints has been increasing. Since 2002, the agency has fined 29 movers for violations of the rules, totaling more than $945,000. But it readily admits that many times the agency doesn't collect anything because the mover or broker simply vanishes.

The moving industry, represented by the American Moving and Storage Association, is leery of any kind of legislation or new regulation that would change how movers arbitrate disputes or give more enforcement authority to the states. But it is concerned about rogue brokers and movers because they tarnish the reputation of the industry.

In 2003, it asked FMCSA to require that brokers identify themselves with a location and phone number, use only registered motor carriers and provide full and written estimates. The group also wants the agency to monitor sites and shut down those that are ripping off consumers.

The agency is considering whether more regulation is necessary, if the states should handle the problem or there is some other alternative.

Annette M. Sandberg, FMCSA administrator, said the agency will begin this spring to target problem brokers by analyzing reports from its consumer-complaint database. It also has seven new investigators and will use some of its regular staff members for investigations. It now requires brokers to have agreements in place with movers before making estimates and to disclose that actual charges may differ from estimated ones.

"This is a problem that has manifested itself because of indifference to enforcing consumer regulations by DOT, more people use the Internet, and the closing of the Interstate Commerce Commission," said Joe Harrison, president of the American Moving and Storage Association.

The AMSA was influential in fighting a bill last year that would have given the states authority to use their own consumer-protection laws to address problems between movers and shippers. Consumer groups and the state attorneys general supported handing more authority to states to work with the agency in enforcing the rules. Shortly after the legislative initiative died, the moving industry said it would address the problem by asking the agency for more rules on disclosure.

Provisions in the House version of the highway reauthorization bill would allow civil penalties of up to $10,000 per violation if a shipment of goods is held hostage.

© 2005 The Washington Post Company