Moving Fraud - Overview

1. Moving Fraud - Overview

2. What is Moving Fraud? • Deceptive Business Practices by predatory Movers, Auto Transporters and Brokers upon American Consumers. • Moving Fraud manifests itself through many different schemes, in mostly via the Internet.

3. The Most Serious Moving Fraud Schemes how they work

4. The Hostage Load Scheme

5. The Chicago Hostage Load Scheme

6. The Broker-Carrier Hostage Scheme

7. Moving Fraud is more than just a Civil Dispute Other state and federal laws are violated to perpetrate moving fraud

8. The Rogue Mover Problem(s) Theft Shipments Held Hostage Safety Violations Credit Card Fraud Fraudulent Documents False Advertising Tax Evasion Internet and Wire Fraud Rogue Mover False Identities Labor Law Violations

9. The Impact of Moving Fraud • Hundreds of American Consumers are swindled out of cash and property; • Rogue movers are parasites on the Industry depriving legitimate movers of business, often permanently; and • Rogue movers are often noncompliant of state and local laws including tax laws creating a burden on municipal and state governments.

10. Moving Fraud Complaints in Calendar Year 2011 • 2851 Complaints overall • 588 Complaints of Property held Hostage (Approximately 21%) • 1538 Complaints of Deceptive Practices concerning Estimates and Charges (Approximately 54%)

11. The Profile of the Moving Fraud Victim • Full Spectrum of the Middle Class • Educated to Well Educated • Fluent in the use of the Internet • Accustomed to high quality customer service: • Expectation that demands will be quickly met; and • Highly susceptible to patronization and social engineering.

12. Noteworthy Victims of Rogue Movers • An NBA Player • A Detective Lieutenant from a large city police department • Husband and Wife, both Prosecuting Attorneys • A Math Professor from an Ivy League University

13. States with the Highest Number of Moving Fraud Complaints – CY2011* • Florida • California • Texas • New York • New Jersey • Illinois • Georgia • Indiana • Virginia • Nevada *Based on Complaints submitted to the National Consumer Complaint Database

14. Metropolitan Areas were Rogue Movers are the most Prevalent • Los Angeles • Miami-Fort Lauderdale • New York (including Northern New Jersey) • Chicago (including Eastern Indiana) • Houston • Dallas • Atlanta

15. Metropolitan Areas where Rogue Mover Activity is Present and Emerging • Las Vegas • Washington-Baltimore • Denver • Seattle-Tacoma • Kansas City • Boston

16. A Surge of Moving Fraud Complaints is Anticipated to Occur in the Hurricane Sandy Disaster Area

17. Consumer Protection and Taking on Moving Fraud

18. Evolution of Consumer Protection in Interstate Household Goods

19. The Household Goods Movers Oversight and Reform Act of 2005 • Increased the penalties for violations of certain statutes and regulations, specifically holding a HHG shipment hostage and operating without authority • Allowed FMCSA to delegate some of its authority to state enforcement agencies and state attorneys general

20. The FMCSA Household Goods Compliance and Enforcement Program

21. Enforcement Investigative and enforcement strategies and challenges

22. Understanding the Authority of FMCSA • What FMCSA CANDo: • Enforce very specific Federal Statutes and Regulations; • Initiate civil enforcement actions that result in fines; • Suspend or Revoke a motor carrier or broker’s authority to operate interstate; and • Share Information with other agencies to support investigations • What FMCSA CAN’TDo: • Initiate a criminal prosecution on its own; • Act as an advocate for victims; • Detain individuals or seize property; • Liberate and Recover Personal Property on behalf of Victims; or • Physically shut down a business.

23. Rogue Moving Operations does harm to Consumers, Industry, Communities, big and small, and cannot be solved by FMCSA alone

24. Partnerships and Information Sharing FMCSA Working with others to combat moving fraud

25. Household Goods Enforcement Partnerships • The United States Congress recognized that it would take a Joint Effort to combat Moving Fraud and addressed it in Household Goods Mover Oversight and Reform Act of 2005 part of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) legislation.

26. Household Goods Enforcement Partnerships • SAFETEA-LU legislation gave state enforcement agencies (49 U.S.C. § 14710) and state attorneys general (49 U.S.C. § 14711) the authority to enforce the Federal household goods consumer protection statutes and regulations. • Working with FMCSA states can use this authority to better combat moving fraud and address the negative impact of rogue movers in their communities.

27. Summary of 49 U.S.C. § 14710 • States have authority to enforce Federal consumer protection statutes and regulations that apply to individual shippers of household goods. • States can initiate enforcement actions for violations of the Federal statutes and regulations using their adjudication systems in their states. • States keep fines and penalties from those enforcement actions.

28. Information Sharing • 49 U.S.C. § 14710 also gave FMCSA a mandate to establish and implement an Enforcement Assistance Outreach Plan allowing the sharing of information and enhancing the coordination and effective enforcement of Federal laws and regulations between and among Federal and State law enforcement and consumer protection authorities.

29. Summary of 49 U.S.C. § 14711 • The State Attorney General, as “parens patriae”, can initiate a civil enforcement case in Federal District Court against interstate movers and brokers in violation of Federal consumer protection statutes and regulations

30. Working with FMCSA • Contributing Partners • Agencies given access to the National Consumer Complaint Database to forward complaints and other information directly into the system • Enforcement Partners • State agencies with written agreements allowing access to FMCSA systems to enforce Federal statutes and regulations • Federal agencies with written agreements to work together on enforcement efforts • Information Sharing with Law Enforcement • Federal, State, and Local law enforcement agencies and prosecutors can receive information from FMCSA via USDOT OIG to support criminal investigations

31. Contributing Partners • An agency that wants to become a Contributing Partner need only register with FMCSA, there is no cost to register • That agency is then issued a User ID and Password to access the System to submit complaints and other data by upload • FMCSA offers training at no expense to the Contributing Partner how to access the System and submit complaints and data • Training is in Webinar format and takes approximately one to two hours

32. The FMCSA – State Household Goods Enforcement Partnership How the Partnerships works

33. What does FMCSA bring to the Partnership? • Training • HHG Enforcement Course and In-Service training • Training on FMCSA Systems • Access to FMCSA Systems • NCCDB • MCMIS and Licensing & Insurance (L&I) database • Query Central • FMCSA Compass Portal

34. State Agencies Define their Role in an Enforcement Partnership through the Memorandum of Agreement with FMCSA

35. Current Enforcement Partners

36. New Enforcement Strategies Using Partnerships • Improved Information Sharing through the Moving Fraud Working Group • Forming Task Force Groups that conduct major investigations targeting specific rogue operations • Joint Investigations involving FMCSA and other agencies focusing on Moving Fraud and other noncompliance

37. The Task Force Groups and Joint Investigations Complies with the Mandate for an Enforcement Assistance Outreach Plan

38. Objective of the Task Force Group • The Task Force Group, coordinated by FMCSA and composed of FMCSA investigators, enforcement partners, and other agencies as needed, can attack the problem of rogue movers from different directions simultaneously.

39. Targeting Rogue Mover Activity

40. Questions ?

41. Contacts • General Inquiries: • Brodie Mack, Team Leader, Commercial Enforcement and Investigations Division • brodie.mack@dot.gov • 202-366-8045 • To Become a Partner with FMCSA: • Monique Riddick, Transportation Specialist, Commercial Enforcement and Investigations Division • monique.riddick@dot.gov • 202-385-2313