Staff Report on Internet Moving Brokers A MUST READ BEFORE YOU MOVE

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Movinghelper
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Staff Report on Internet Moving Brokers A MUST READ BEFORE YOU MOVE

Postby Movinghelper » Wed Jun 19, 2013 8:14 am

A New Consumer Protection Problem in the Household Goods Moving Industry
Sep 19 2012
WASHINGTON, D.C.— Chairman John D. (Jay) Rockefeller IV released a Committee staff report detailing the results of a year-long investigation into consumers’ complaints about distressing experiences with their moving companies and the potential abuses consumers face when moving across state lines. The investigation found that in many cases, Internet-based moving brokers and household goods carriers quote consumers one rate to move their goods, but then charged an exorbitant markup in order to complete the move—often after the carrier has already taken physical possession of the property. The staff report is available here.

“Thousands of consumers are often stuck at the mercy of abusive moving companies at one of the most vulnerable times in their lives,” said Rockefeller. “This investigation opened the doors to the world of Internet moving brokers and their tactics to mislead and confuse consumers. As more and more Americans feel comfortable arranging their moves online, these brokers will have access to a larger pool of consumers to deceive. We must put a stop to the practices these companies are using to swindle consumers.”

Key findings of the Committee Investigation:

The moving brokers with the most complaints filed with the FMCSA employed similar business practices and relied heavily on the Internet to generate business. Consumers who used the brokers that generated the most complaints filed with the FMCSA described very consistent scenarios. The consumers went online to shop for moving services and through an Internet search, usually conducted via a search engine, the consumers identified and contacted an “Internet moving broker.” Frequently, the business names used by the brokers were often very similar to well-known, reputable brand names, like United Van Lines or Budget Truck Rental.
The business practices that Internet moving brokers use to find customers, provide estimates, and arrange moves regularly confuse consumers. Committee staff has interviewed dozens of the Internet moving brokers’ former customers who repeatedly stated that they were not made aware that they were hiring a broker, and that they were surprised when an entirely different company arrived on the day of their move. Consumer complaints obtained by the Committee also regularly showed that consumers were not made aware they were hiring a broker, rather than a carrier. The websites for Internet moving brokers often failed to clearly disclose the fact that they are merely brokers and that they do not play a role in the interstate moves that consumers are undertaking.
Internet moving brokers have their customers pay “deposits” that are nothing more than their fees. Internet moving brokers provided information to the Committee that showed they labeled their broker fees, which sometimes amounted to thousands of dollars, as “deposits.” Consumers repeatedly stated that they were not aware these “deposits” were not dedicated to the payment of their actual moves. Customers of Internet moving brokers frequently paid thousands of dollars in “deposits” to the Internet moving brokers and these “deposits” were never shared with the carriers performing the moves. Consequently, before the consumers’ belongings were placed on trucks, they had already paid hundreds - and sometimes thousands - of dollars, to companies that played no role in the actual moves.
Internet moving brokers never do on-site visits to catalog consumers’ belongings and determine the price estimates. Without conducting visual inspections of the consumers’ goods the brokers gave the consumers an estimated price for the moves. The brokers’ estimates were usually significantly lower than the prices quoted by other moving companies that conducted on-site visits.
The “binding estimates” that Internet moving brokers provided to their customers frequently provided no price certainty. Although the purpose of a “binding estimate” is to provide price certainty for a consumer undertaking an interstate move, consumers who booked their moves through Internet moving brokers often experienced significant price increases for their moves after the moves had begun. Committee staff found multiple examples of price increases for thousands of dollars with very little justification for the increases.
Internet moving brokers create the conditions for harmful moving experiences. To convince consumers to do business with them, Internet moving brokers frequently provided very low estimates to consumers. Because Internet moving brokers also routinely took substantial fees, labeled as “deposits,” many carriers inevitably attempted to make up the difference by increasing the price once the moves began.
Internet moving brokers should be aware their practices are harming consumers. Committee staff found a significant amount of evidence suggesting that Internet moving brokers should be aware that their practices are harming consumers. Their former customers frequently complained to them about terrible moving experiences, including significant price increases and carriers holding their goods hostage.
###


Related Files:

Staff Report
Staff Report Internet Moving Brokers.pdf (802.7 KBs)
http://www.commerce.senate.gov/public/? ... 29bae0fa52

Exhibit I
Exhibit I.pdf (5.5 MBs)
http://www.commerce.senate.gov/public/? ... 29bae0fa52
For more information on moving or to file a complaint go to http://www.protectyourmove.gov

1..NEVER PAY A MOVER A DEPOSIT FOR INTERSTATE MOVING! IT COULD BE THE START OF THE BIG SCAM
2. GO WITH IN HOME ESTIMATES ONLY.
3. DO NOT USE A BROKER.

MusicMom
Posts: 19323
Joined: Wed Feb 25, 2004 11:51 am
Location: DC Metro

Re: Staff Report on Internet Moving Brokers A MUST READ BEFORE YOU MOVE

Postby MusicMom » Wed Jun 19, 2013 10:46 am

This is awesome to see all the data and conclusions in print.

Movinghelper
Posts: 1867
Joined: Tue Nov 10, 2009 6:00 pm
Location: Panama City Florida
Contact:

Re: Staff Report on Internet Moving Brokers A MUST READ BEFORE YOU MOVE

Postby Movinghelper » Wed Jun 19, 2013 11:06 am

Even though it is dated back in Sept I have been waiting for it for a while to be posted. It finally showed up.
For more information on moving or to file a complaint go to http://www.protectyourmove.gov

1..NEVER PAY A MOVER A DEPOSIT FOR INTERSTATE MOVING! IT COULD BE THE START OF THE BIG SCAM
2. GO WITH IN HOME ESTIMATES ONLY.
3. DO NOT USE A BROKER.

MusicMom
Posts: 19323
Joined: Wed Feb 25, 2004 11:51 am
Location: DC Metro

Re: Staff Report on Internet Moving Brokers A MUST READ BEFORE YOU MOVE

Postby MusicMom » Wed Jun 19, 2013 11:14 am

I've been waiting for it, too. The big question is now, WHAT WILL BE DONE?

Movinghelper
Posts: 1867
Joined: Tue Nov 10, 2009 6:00 pm
Location: Panama City Florida
Contact:

Re: Staff Report on Internet Moving Brokers A MUST READ BEFORE YOU MOVE

Postby Movinghelper » Wed Jun 19, 2013 4:21 pm

Excerpts from the PDF link so it is included in the search here in the future.


In 2005, Congress included provisions in the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) aimed at protecting consumers
from abusive practices within the household goods moving industry. 27 In addition to creating
civil and criminal penalties and stricter licensing requirements for carriers, the legislation
included a grant of authority to the states to enforce federal consumer protection law against
interstate movers. These provisions allowed the State Attorneys General and other state
regulatory agencies to enforce the federal consumer protection laws. Despite early praise for this
measure, no State Attorneys General or state regulatory agency has used this grant of authority to
bring a case against an interstate mover



On July 6, 2012, President Obama signed the Moving Ahead for Progress in the 21st
Century Act (MAP-21) into law.32 MAP-21 also included additional requirements for
registration of household goods motor carriers. Specifically, beginning in 2014, applicants will
be required to successfully pass an examination to demonstrate knowledge and intent to comply
with applicable federal laws relating to consumer protection and will be subject to a consumer
protection standards review within the first 18 months of operations.
In addition to these registration requirements, MAP-21 included two initiatives intended
to provide assistance and remedies for consumers. For shippers who find themselves in a
situation where a carrier is holding their goods hostage, a provision in MAP-21 will permit all or
a portion of any civil penalties collected from the carrier to be assigned to the aggrieved shipper.
Additionally, the new law gives the Secretary of Transportation the authority to order the return
of a shipper’s goods, following notice to the carrier and an opportunity for a proceeding


Past Investigations:
For example, in June 2000, the DOT OIG announced that a U.S. District Court in
California had sentenced three individuals for mail and wire fraud conspiracy, in connection with
a household moving extortion scam involving multiple moving companies in New York, Florida,
and California, that attempted to defraud up to 875 consumers.33 As part of the scheme, the
defendants – who operated through companies named North American Moving, United Interstate
Movers, Strong and Gentle Moving Company, Prime Moving and Storage, and AAA Moving
Systems – would hold consumers’ household goods as ransom unless the victims agreed to pay
huge extra amounts of money. Two men were each sentenced to 33 months in jail and ordered to
pay almost $485,000 to their victims; a third individual was fined $5,000 and ordered to pay
$14,600 in restitution.34
In 2001 and 2002, the DOT OIG announced a series of criminal actions as part of a twoyear investigation into a household moving scam that defrauded 259 victims and cost at least
$1.5 million. 35 As part of the scheme, the owner and employees of All American Van Lines in
Pembroke Park, Florida, induced victims to contract for moving and shipping services and
subsequently charged higher “hidden costs” associated with the shipment of their goods. The
defendants then held the goods as ransom and, in some cases, never returned the victims’
belongings. Three defendants, who were former employees, were sentenced to jail terms of 12 to
20 months and ordered to pay restitution ranging from $5,914 to $780,543. The former president
and owner was ordered to pay $2.5 million in restitution and sentenced to 40 months in prison.36
The DOT OIG, along with the FBI and FMCSA, conducted an investigation into
household goods moving fraud that in 2003 resulted in the convictions of three Brooklyn movers
operating under four different names.37 According to press reports, “the business was a racket ; its modus operandi was to win customers with low estimates, and then, once the goods were on
the truck, to demand up to four times as much. If customers balked at paying, the movers locked
their belongings in a warehouse and demanded even greater sums.”38 The defendants were able
to extort over $400,000 from more than 100 victims. As part of the sentence, two of the
defendants were required to pay more than $1.4 million in fines and each serve more than 12 ½
years in prison.
The DOT OIG also conducted an investigation with the FBI and FMSCA into a fraud by
numerous moving companies that netted $1.8 million from over 1,000 victims during the course
of a two-year conspiracy.39 The investigation resulted in charges being brought against 16
companies and 74 individuals, with numerous defendants paying restitution and serving time in
prison. Defendant Yair Molol, the owner and president of four moving companies at issue, was
sentenced to 12 ½ years in prison and was ordered to forfeit his interest in numerous assets,
including his residence as well as accounts totaling more than $115,000. According to the DOT
OIG:
Malol provided low moving estimates to customers to induce them to hire the companies
to move their goods. Once customers retained the company, the company’s employees
arrived at customers’ homes, packed customers’ belongings in a moving truck, and
rushed customers through the paperwork, causing them to sign blank or incomplete bills
of lading and other documents, and failing to inform them of the total price of the move.
Once the customers’ goods were loaded onto the moving truck, employees fraudulently
inflated the total price of the move, often by thousands of dollars, claiming that
customers’ goods occupied more cubic feet than had been originally estimated and by
overcharging the customers for packing materials. When contacted by customers
requesting the delivery of their goods, Malol demanded full payment of the inflated price
before delivery of the goods. In many cases, Malol and Tafuri-Vakin ignored customers’
repeated complaints about the inflated price and/or provided false information to
customers about the delivery of their goods. When customers refused to pay the inflated
price, company employees arranged to warehouse customers’ goods and refused to
divulge the location of the goods to customers. Employees threatened to sell or auction off customers’ household goods and personal items if payment was not received within a
certain period of time. In some cases, Majesty Moving and Storage, America’s Best
Movers, My Best Movers, and Apollo Van Lines refused to adequately compensate
customers for any damaged or undelivered items.40
In 2005, following a DOT OIG investigation, a U.S. District Court in Washington
sentenced four defendants to jail for a scheme to defraud conducted through Nationwide Moving
Systems, LLC, that involved more than 50 victims and profited Nationwide over $1 million.41
The scheme was to provide “low-ball” moving estimates and later charge large amounts of
money, often after having held consumers’ possessions hostage. The defendants were sentenced
to jail terms ranging from fifteen months to seven years, and were ordered to pay restitution
totally more than $670,000.42
Although most of these criminal investigations have focused on carrier misconduct,
recently DOT OIG announced criminal actions against a moving broker as well.43 A series of
criminal actions in San Jose, California, have focused on National Moving Network (“NMN”), a
moving broker. According to a court transcript in which an NMN employee, Matthew
Sandomir, pled guilty to the charge of theft from an interstate shipment, the scheme went as
follows:
The evidence would show that while working at [NMN], Mr. Sandomir learned that it
was a regular part of [NMN]’s business to purposely provide fraudulently low bids to
customers – or estimates. And the sales representatives were motivated to provide these
artificial and fraudulently low quotes to customers because they received commissions in
connection with the number of bids and were encouraged by management to move as
many bids as possible and also encouraged, and in many ways directed, to provide arduously low bids to get more business. It would be a part of the evidence that there
were discussions with management on the manner in which to manipulate the bidding
process to make sure that customers received these low bids and that this topic was
discussed among the estimators and also among management at NMN. It would also be
part of the evidence that there was knowledge that AY Transport, which was a moving
company that got a large – or a significant number of the moves booked by [NMN],
habitually and systemically demanded amounts of up to two and three and four times the
amounts of these bids as a part of the scheme, and that the consequence to the consumer
was they were being told they had to pay these extortionately significantly greater fees,
and if they didn’t pay these larger fees, they would never get their goods back.
44
As a result of the investigation, Mr. Sandomir and a number of defendants were sentenced to
probation and have paid thousands of dollars in restitution.

The data showed that a small group of companies generated complaints about price
increases and hostage situations at a much higher rate than the rest of the industry. The number
of complaints against these companies was out of proportion to their size. As a result of this
analysis, the Committee staff narrowed the scope of the investigation to focus on two carriers
and two brokers whose complaint volumes were significantly higher
than other moving companies. The practices of these companies produced more complaints than
even the largest national van lines.
http://www.commerce.senate.gov/public/? ... 29bae0fa52

This report is well worth reading for anyone.
For more information on moving or to file a complaint go to http://www.protectyourmove.gov

1..NEVER PAY A MOVER A DEPOSIT FOR INTERSTATE MOVING! IT COULD BE THE START OF THE BIG SCAM
2. GO WITH IN HOME ESTIMATES ONLY.
3. DO NOT USE A BROKER.

MusicMom
Posts: 19323
Joined: Wed Feb 25, 2004 11:51 am
Location: DC Metro

Re: Staff Report on Internet Moving Brokers A MUST READ BEFORE YOU MOVE

Postby MusicMom » Thu Jun 20, 2013 7:44 am

Well, hopefully the evidence found during this investigation will be used a second time.

steavehussey
Posts: 1
Joined: Thu Sep 12, 2013 3:12 am

Re: Staff Report on Internet Moving Brokers A MUST READ BEF

Postby steavehussey » Wed Sep 18, 2013 4:09 am

This is really nice this will help the costumers to make their move hassle free and it's always important to have an authority that can have a check on the companies if they try to do something wrong with the customer.


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