The Interstate Commerce Commission has proposed that the estimates household movers give individual customers be made binding.
The change in regulations was prompted by a recent investigation revealing an "intolerable" number of underestimates furnished by common carriers, the ICC said. Last year nearly one-third of all shipments for individual households were underestimated by more than 10 percent, the investigation showed.
The change in regulation, which the ICC calls "one of the most important consumer protection actions" it has ever undertaken, is aimed at producing lower moving costs for individuals.
However, Welby Frantz, president of the American Movers Conference, the largest industry trade organization, accused the ICC of "taking a steamroller to bread dough."
"It will be a devastating thing for the consumer," he said. "It will put mom-and-pop-type movers out of business. They won't be able to stand up to low bidders." He also protested that the ICC forgot to mention in its release that 25.9 percent of shipments delivered last year were overstimated.
The proposed regulation was also prompted by the failure of customers to understand the so-called 110 percent rule, the ICC said. This provides that a carrier may collect no more than 10 percent above the estimated price when the goods arrive. However, the carrier has the right to collect within 15 days the difference between the sum paid on arrival and the actual amount it claims is due.
The ICC feels few customers realize that movers can charge more than 110 percent of the estimate. Shoppers choose a company on the basis of the lowest estimate, it was noted.
The 110 percent rule was intended to protect the individual household goods shipper from abusive estimating practices. It has not had that effect," the ICC concluded in its report.
"Rather, that rule has permitted carriers to hold out the illusory promise of competitive pricing without requiring them to meet the expectations generated."
The report added, "Whether an underestimate is deliberate (in order to ontain a particular shipper's business) or inadvertent (as the misquotation of the applicable rates), the harm is the same."
The ICC declined to set a penalty for inaccurate estimates, however.
The proposed regulation does not apply to so-called "national account shippers" such as corporations or the armed services that pay for transport of their employes' goods. The ICC said it believes binding estimates would be detrimental to competition between movers because the large ones would be able to underbid the small ones. Large shippers would be able to "extract undue favors from carriers in return for the furnishing of 'low-ball' estimates."
According to Frantz, the issue of national accounts would become academic. As a result of binding estimates for individuals moves, he said, national accounts would cease to exist.