I was reading an article that the new changes have not really stopped the bad brokers from preying on vulnerable carriers and owner operators. It has stopped some smaller mom and pop operations fro being able to get into the brokering business, but it has not stopped the fraud. What really needs to happen is that brokers who fail to pay their outside carriers need to be prosecuted for white collar crimes. This new broker bond requirement has been in effect for quite some time now and drivers and carriers are still being ripped off by predatory brokers who then go out of business. Isn't taking company money and using it for personal expenses considered to be embezzlement? Why are these bad actors allowed to continue to do this sort of thing with impunity? If more drivers sued these scum bags, and if there were strict prison sentences imposed on bad brokers, this kind of behavior would become a thing of the past. There was one carrier/broker who took all of his drivers money and started a new business with it and the guy is still free to walk the streets. Why don't our regulators go after the root of the problem? What do you all think about this matter?
Is the new 75k broker bond requirement working?
- Thread starter blizzard2014
- Start date
Crooks are always going to find ways to cheat a system. We have seen that across our industry in the insurance world. If you have good credit and history the bond is not that expensive at all. If someone cant qualify for a good rate, maybe that keeps people that would have a higher failure rate from becoming brokers? I am sure it has helped some....how much that would be a total guess.
Think of how few shipments it takes to reach the $75,000 figure. One claim could easily wipe out $75,000 as quickly as $10,000.
That I agree with. The bond size should correspond with the amount of business a broker does. A lot of smaller carriers merely have their broker authority so that they can broker out a few loads here and there when they don't have one of their own units in the area. They might not need anything higher than a 75k bond. Other companies might broker out over a million dollars in freight in a single week. I also agree that it should be tied to your personal credit history. If you can't pay your personal bills, you aren't going to pay your professional bills.
I totally agree with you guys on these two issues. I just wish there were stricter laws to force deadbeat brokers to pay their obligations. Also, the article I read stated that most drivers just take their "lumps" and move on. No one ever pursues these brokers for payment once their bond has been exhausted. That is another reason why these crooks continue to get away with this kind of business practice. I personally would not be able to sleep at night if I owed drivers money. I never counted the drivers money as my own. It was their money to paid to them ASAP. You ever hear the saying that a lock keeps an honest man honest; that is all a surety bond does. It will not prevent crooks from taking advantage of drivers and carriers.
I don't think I will be getting back into the brokering industry unless I was an agent for a larger carrier. There are too many things that can go wrong when you're underfunded. I have learned so much about business in the past three years. This site is a wealth of information!
I totally agree with you guys on these two issues. I just wish there were stricter laws to force deadbeat brokers to pay their obligations. Also, the article I read stated that most drivers just take their "lumps" and move on. No one ever pursues these brokers for payment once their bond has been exhausted. That is another reason why these crooks continue to get away with this kind of business practice. I personally would not be able to sleep at night if I owed drivers money. I never counted the drivers money as my own. It was their money to paid to them ASAP. You ever hear the saying that a lock keeps an honest man honest; that is all a surety bond does. It will not prevent crooks from taking advantage of drivers and carriers.
I don't think I will be getting back into the brokering industry unless I was an agent for a larger carrier. There are too many things that can go wrong when you're underfunded. I have learned so much about business in the past three years. This site is a wealth of information!
I agree that it ought to be based on volume but even that is no guarantee if carriers do not practice due diligence necessary to weed out the potential bad players. If a person wanted to they could go into the brokerage business and skip out from town with hundreds of thousands or even millions if they were good - and no-one would be the wiser until 45 days or more.
I think he meant it doesn't take that many loads to exceed the $75,000 level...
Now IF a broker had good credit and could talk a bank into a $500,000 line of credit against the bond....assuring payment to the credit limit....
Now IF a broker had good credit and could talk a bank into a $500,000 line of credit against the bond....assuring payment to the credit limit....