[Senate Hearing 112-764]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-764
 
                      TAKING CONSUMERS FOR A RIDE:

       BUSINESS PRACTICES IN THE HOUSEHOLD GOODS MOVING INDUSTRY
=======================================================================


                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,

                      SCIENCE, AND TRANSPORTATION

                          UNITED STATES SENATE

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 20, 2012

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation





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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
DANIEL K. INOUYE, Hawaii             KAY BAILEY HUTCHISON, Texas, 
JOHN F. KERRY, Massachusetts             Ranking
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 JIM DeMINT, South Carolina
MARIA CANTWELL, Washington           JOHN THUNE, South Dakota
FRANK R. LAUTENBERG, New Jersey      ROGER F. WICKER, Mississippi
MARK PRYOR, Arkansas                 JOHNNY ISAKSON, Georgia
CLAIRE McCASKILL, Missouri           ROY BLUNT, Missouri
AMY KLOBUCHAR, Minnesota             JOHN BOOZMAN, Arkansas
TOM UDALL, New Mexico                PATRICK J. TOOMEY, Pennsylvania
MARK WARNER, Virginia                MARCO RUBIO, Florida
MARK BEGICH, Alaska                  KELLY AYOTTE, New Hampshire
                                     DEAN HELLER, Nevada
                    Ellen L. Doneski, Staff Director
                   James Reid, Deputy Staff Director
                     John Williams, General Counsel
             Richard M. Russell, Republican Staff Director
            David Quinalty, Republican Deputy Staff Director
   Rebecca Seidel, Republican General Counsel and Chief Investigator


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 20, 2012...............................     1
Statement of Senator Rockefeller.................................     1
U.S. Senate Committee on Commerce, Science, and Transportation, 
  Office of Oversight and Investigations, Majority Staff, 
  ``Internet Moving Brokers: A New Consumer Protection Problem in 
  the Household Goods Industry,'' September 10, 2012.............     3
Statement of Senator Lautenberg..................................    57
Statement of Senator DeMint......................................    74
    Prepared statement...........................................    76
Statement of Senator Pryor.......................................    79

                               Witnesses

Hon. Anne S. Ferro, Administrator, Federal Motor Carrier Safety 
  Administration, U.S. Department of Transportation..............    37
    Prepared statement...........................................    40
Timothy M. Barry, Principal Assistant Inspector General for 
  Investigations, U.S. Department of Transportation..............    44
    Prepared statement...........................................    46
Reana Kovalcik, Consumer.........................................    52
    Prepared statement...........................................    54
Linda Bauer Darr, President and CEO, American Moving and Storage 
  Association (AMSA).............................................    58
    Prepared statement...........................................    60
Jason M. Romrell, President and Chief Legal Officer, Budget Van 
  Lines Inc......................................................    64
    Prepared statement...........................................    66

                                Appendix

Budget Van Lines Response to September 12, 2012 U.S. Senate 
  Committee on Commerce, Science, and Transportation Staff Report 
  on ``Internet Moving Brokers''.................................    89
Statement of the UniGroup, Inc. Move Rescue Program..............    91
Aldo DiSorbo, prepared statement.................................    93
Response to written questions submitted by Hon. Jim DeMint to:
    Hon. Anne S. Ferro...........................................   106
    Timothy M. Barry.............................................   108
    Linda Bauer Darr.............................................   109
    Jason M. Romrell.............................................   110


                      TAKING CONSUMERS FOR A RIDE:

       BUSINESS PRACTICES IN THE HOUSEHOLD GOODS MOVING INDUSTRY

                              ----------                              


                      THURSDAY, SEPTEMBER 20, 2012

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John D. 
Rockefeller IV, Chairman of the Committee, presiding.

       OPENING STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    The Chairman. OK, this hearing will come to order. Senator 
DeMint is on the way. Senator Lautenberg, and Senator Udall, 
and others will be coming.
    We are talking today about what, at least those of us who 
have worked on this, consider to be a consumer scam, and we 
have--we do a lot of that in this Committee. The nature of the 
Committee has changed just a bit, and we really look out for 
consumers, whether it is during the healthcare debate or 
whatever. We are consumer-friendly.
    And, it is a scam that takes advantage of American families 
at really one of the most vulnerable times in their lives, 
doing something which they will probably only do once or twice 
in their entire lives. They load all of their worldly 
possessions into a moving truck and move to a place where they 
have found a new job, a new opportunity, a new home, or for 
whatever reason. But, it does not happen very often in 
somebody's life.
    Now, long ago, Congress recognized that a household move is 
a unique category of interstate commerce, a type of commerce 
that requires special consumer protections. American consumers 
are using moving companies, as I indicated, only a few times in 
their lives, and we should not expect them to understand the 
complicated rules governing interstate shipping. That is beyond 
the requirements that they have, but not beyond the 
requirements that the rest of us have.
    And, even if they do their homework before they hire a 
moving company, consumers do not understand all of the fine 
print on the paperwork, the bill of lading. We've got a lot of 
fine print around here, and it is very effective, and can move 
through, and it is used for lots of different reasons, most of 
them not particularly helpful, primarily because people do not 
read them, do not want to read them, cannot read them, do not 
read them. It does not matter. And, the bill of lading there 
has to sign as their possessions are loaded on to a moving 
truck.
    It is an ugly fact that there are some moving companies in 
this country that are willing to take advantage of consumers' 
lack of information and experience. Easy to do.
    Ms. Kovalcik, you will be talking to us about that.
    And, one of our witnesses, and in fact, Reana Kovalcik, is 
going to tell us how dishonest moving companies can turn the, 
already distressful circumstance of a household move, which is, 
in fact, exactly that, into a full scale personal disaster.
    This Committee and others in Congress have been aware of 
the problems of the moving industry for many years. On several 
occasions, we have written laws that we hoped would put an end 
to these abusive practices. It is easy to write laws. Actually, 
it is sort of hard these days to write laws or get them passed, 
but even if we do, it is very hard to stop practices which are 
not the majority of moving, because the majority of moving is 
handled in a proper way, and the minority is not, but the 
minority is enough so that we want to concentrate on that.
    So, just a few months ago, in fact, in the Surface 
Transportation Authority law, called MAP-21--I have never 
really quite figured out why it is called MAP-21, but it really 
does not matter. That is what is called. And, we struggled 
mightily over that bill, for a long time, and finally got a 
bipartisan consensus and passed it, and we adopted some new, 
important consumer protections that Senator Lautenberg, who 
will be here shortly, and others worked very hard to develop. 
We thought we were doing trying to do the right thing.
    Other groups were also working to clean up the moving 
industry. Our witness from the Department of Transportation 
Inspector General's Office, Mr. Timothy Barry--Mr. Barry is 
right there--is going to tell us about the great work that he 
does, well the work that you do is, when you tell us, we will 
think is probably great, with law enforcement agencies across 
the country to track down and prosecute moving companies that 
defraud customers.
    And this, for a small interruption, is something that 
interests me a lot. We are talking about crime here. We are 
talking about crime. And, we are talking about scarce 
resources. We are talking about attorneys general in the states 
that just do not think that they have the time for this, and 
you can go down through all kinds of people who might or could 
be paying attention to this, but, for the most part, they do 
not. It is an interstate commerce matter, pure and simple. AGs 
could go after it, but the feds can do it most effectively, I 
think.
    So, the question is to track down and to prosecute moving 
companies that defraud customers, not those who do not. You 
know, not those who have a proper bill of lading, and it is 
understood, and it has been read, and people have looked over 
the inventory, and had a chance to see all of that.
    But, let us be honest. These efforts are not succeeding to 
put an end to the abuses, and hence, this hearing again today.
    A new Commerce Committee staff report that I released 
today, and I ask you now as a consent to release it, and I 
grant myself that honor.
    [The information referred to follows:]

    
    
                           Table of Contents
Executive Summary
I.  Background
    A.  Overview of the Household Goods Moving Industry

    B.  Estimates and Transport

        1.  Estimates

        2.  Delivery

    C.  Common Abuses and Congressional Responses

    D.  Criminal Enforcement Actions

    E.  Consumer Complaints

II.  The Committee's Review of Consumer Complaints
III.  Internet Moving Brokers and Their Impact on Consumers
    A.  Internet Searches Direct Consumers to Internet Moving Brokers

    B.  Consumer Confusion about Brokers' Role

        1.  Misleading Websites

        2.  Company Names Lead to Confusion

        3.  Use of Multiple Companies and Frequent Name Changes

    C.  Broker ``Deposits'' and Fees

    D.  Price Increases

    E.  Hostage Situations

IV.  Examples of Moves Booked by Internet Moving Brokers
V.  Conclusion

Exhibits
Exhibit 1: Examples of ``Deposits''
Executive Summary
    Each year, an estimated 1.6 million Americans use the services of 
household goods carriers and brokers to assist them with interstate 
moves. While most consumers appear to have a positive experience with 
the companies they hire, a significant number continue to complain 
about the business practices of certain moving companies. These 
consumers describe a ``bait and switch'' scheme where a moving company 
agrees to move their goods for one price, but then dramatically 
increases its charges after it has taken physical possession of the 
consumers' property. In some cases, the moving company will refuse to 
deliver consumers' goods at their new home unless they pay these 
exorbitant extra charges, a practice commonly referred to as holding 
customers' goods ``hostage.''
    In the fall of 2011, Chairman Rockefeller directed Committee staff 
to open an investigation to determine why consumers continue to 
complain about troubling experiences with their moving companies. After 
carefully reviewing five years of consumer complaints filed with the 
Federal Motor Carrier Safety Administration (FMCSA), the investigation 
focused on a small group of moving companies that generated 
disproportionately large numbers of consumer complaints. In particular, 
the investigation examined the troubling practices of a small group of 
household good brokers, companies that arrange household moves, but do 
not actually perform them.
    While policymaking and enforcement efforts have traditionally 
focused on the business practices of household goods carriers, the 
companies that transport consumers' property to their new homes, the 
investigation has found that moving brokers are creating the conditions 
that lead to many of the complaints that consumers make about 
interstate moves.
    Committee staff interviewed dozens of the moving brokers' former 
customers, reviewed hundreds of consumer complaints, and reviewed 
thousands of the companies' customer files. The evidence obtained 
through the investigation showed that the practices of certain types of 
moving brokers regularly harm consumers. The key findings of the 
Committee's investigation are:

        The moving brokers that have 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.

    As more Americans feel comfortable arranging their household moves 
online, Internet-based moving brokers will have more opportunities to 
harm consumers. Policymakers, regulators, and law enforcement officials 
will need to spend more time understanding how Internet moving brokers 
operate and how they are changing the household goods industry.
I. Background
A. Overview of the Household Goods Moving Industry
    All moves that occur within the United States are either intrastate 
or interstate. An intrastate move is within one state and never crosses 
state lines. These moves are regulated, if at all, by the state in 
which the move occurs and the cost is generally determined on a per-
hour basis.\1\ Interstate moves cross at least one state line and are 
regulated by federal law. The cost of an interstate move is typically 
based upon the weight of the goods to be shipped and the distance 
travelled.\2\ Until 1995, the interstate moving industry was regulated 
by the Interstate Commerce Commission. Today, it is regulated by the 
Federal Motor Carrier Safety Administration (FMCSA), a division of the 
Department of Transportation.
---------------------------------------------------------------------------
    \1\ American Moving and Storage Association, Make a Smart Move, 
Consumer Handbook: A Practical Guide to Interstate Moving (2007) at 
1(online at www.moving.org).
    \2\ Some interstate movers will charge based upon volume, or the 
cubic feet that goods fill in the truck. FMCSA requires that all 
interstate moves with a non-binding estimate be based upon the actual 
weight of the shipment. The regulations require that the shipment be 
weighed on a certified scale and weight tickets be provided to the 
shipper to substantiate the final charges. 49 C.F.R. Sec. 375.507.
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    The interstate household goods moving industry is comprised of 
three players: individual shippers, household goods motor carriers, and 
household goods moving brokers.
    Shippers An individual shipper is a person who is paying to move 
household goods.\3\ Shippers are the consumers of the household goods 
moving industry.\4\ They employ the services of either a carrier or 
broker to arrange their shipments.
---------------------------------------------------------------------------
    \3\ 49 U.S.C.A. Sec. 13102(13); 49 C.F.R. Sec. 365.105.
    \4\ The terms ``consumers'' and ``shippers'' will be used 
interchangeably throughout this report.
---------------------------------------------------------------------------
    Carriers A household goods motor carrier transports household 
goods. Carriers also regularly offer additional services to consumers, 
including providing estimates, packing household goods, and loading and 
unloading household goods.\5\ Companies operating as carriers range 
from national moving companies and their local agents, such as United 
Van Lines, Mayflower Transit, and North American Van Lines, to smaller 
independent moving companies. The national moving companies, or van 
lines, ``handle dispatching, shipment routing and monitoring, paperwork 
processing, and claims settlement'' and rely upon their local agents to 
facilitate the moves.\6\ The local agents are full-service moving and 
storage companies that are either owned by a van line or are 
independently owned and operated, but affiliated with a van line. The 
independent moving companies are also full-service moving and storage 
companies, but have no affiliation with the national moving companies.
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    \5\ 49 U.S.C.A. Sec. 13102(12).
    \6\ The Moving and Storage Industry in the U.S. Economy: 
Facilitating Economic Growth by Making Residential Mobility Easier, 
Creating Opportunities for Small Businesses, and Stimulating Other 
Industries throughout the Economy, Robert Damuth, Vice President, 
Nathan Associates Inc. (Oct. 8, 2008) at 6 (online at http://
www.promover.org/files/msi/msi_report.pdf).
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    Brokers Household goods moving brokers provide moving estimates and 
coordinate moves between a shipper and carrier.\7\ Brokers often do not 
own trucks and do not perform any moving services. Brokers charge 
shippers a fee to provide an estimate and locate a carrier who will 
pick up and transport the shippers' goods. Over the past decade, the 
increased use of the Internet by consumers has increased the presence 
and use of Internet moving brokers, which will be discussed further 
below.
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    \7\ According to the regulations, a household goods broker means a 
person, other than a motor carrier or an employee or bona fide agent of 
a motor carrier, that as a principal or agent sells, offers for sale, 
negotiates for, or holds itself out by solicitation, advertisement, or 
otherwise as selling, providing, or arranging for, transportation of 
household goods by motor carrier for compensation. 49 C.F.R. 
Sec. 371.103.
---------------------------------------------------------------------------
    To operate as either a carrier or broker a company must register 
and apply for operating authority with the FMCSA. To register as a 
household goods motor carrier, federal law requires a company to meet 
the following requirements:

   It must offer shippers an arbitration process through which 
        they can resolve disputes over charges and damage claims;

   It must publish its rates in a tariff and make this tariff 
        available to its shipper customers;

   It must be familiar with and observe federal consumer 
        protection laws that apply to household goods moving; and

   It must disclose any business or family relationships with 
        other carriers, freight forwarders, or brokers.\8\
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    \8\ 49 U.S.C.A. Sec. 13902(a)(2).

    Provisions included within the new surface transportation law (MAP-
21) will impose additional requirements on carriers applying for 
operating authority, including passing an examination intending to 
ensure that they understand all applicable federal consumer protection 
laws and that they will comply with them.\9\
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    \9\ Moving Ahead for Progress in the 21st Century (MAP-21), Pub. L. 
No. 112-141 (July 6, 2012).
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B. Estimates and Transport
    For a shipper planning an interstate move, the two most important 
phases of the move are the estimate, which is provided by the broker or 
carrier, and the actual transport of the shipper's household goods, 
which is solely provided by carriers. Congress has passed laws that 
govern the interactions between shippers, brokers, and carriers during 
these two phases in order to protect the rights of all parties. In 
creating rules for these interactions, Congress has specifically noted 
the vulnerabilities of shippers in interstate moves. For example, in 
passing the Household Goods Transportation Act of 1980, the House 
Committee on Public Works and Transportation noted:

        [S]hippers usually move only once or twice in their lives and, 
        consequently, lack a thorough understanding of the industry and 
        sufficient clout to negotiate with it. Their situation is made 
        more vulnerable by the fact that the moves involve all of their 
        personal possessions, which often are of a fragile nature.\10\
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    \10\ House Committee on Public Works and Transportation, Household 
Goods Transportation Act of 1980, 96th Cong., at 2 (1980) (H. Rept. No. 
96-1372).
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1. Estimates
    FMCSA requires movers to prepare written cost estimates for every 
shipment. Both carriers and brokers are authorized to provide 
estimates. If a broker is providing an estimate on behalf of a carrier, 
the broker must have a written agreement with the carrier whereby the 
carrier agrees to accept and honor that estimate.\11\ Every estimate 
must be signed by both the carrier or broker and the shipper, and a 
dated copy must be provided to the shipper.\12\
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    \11\ 49 C.F.R. Sec. 371.115 and 49 C.F.R. Sec. 375.409.
    \12\ 49 C.F.R Sec. 375.401.
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    Estimates can be either ``binding'' or ``non-binding.'' A binding 
estimate is ``an agreement made in advance with [an] individual 
shipper. It guarantees the total cost of the move based upon the 
quantities and services shown on [the] estimate . . .'' \13\ In 1980, 
Congress created the authority for binding estimates in order to 
provide the shipper with ``price certainty'' for moving costs.\14\ A 
House Committee report explained its reasoning for supporting the 
creation of binding estimates:
---------------------------------------------------------------------------
    \13\ 49 C.F.R Sec. 375.401(b)(1).
    \14\ House Committee on Public Works and Transportation, Household 
Goods Transportation Act of 1980, 96th Cong., at 7 (1980) (Report No. 
96-1372).

        An estimate is a price quote for performance of transportation 
        services by a household goods carrier. Under existing law, an 
        estimate is based upon an assessment of the weight of the 
        shipment, plus other incidents of the service, such as distance 
        and the amount of accessorial work that is to be performed. The 
        estimate is not binding. The actual charge for the 
        transportation service is based on the actual weight of the 
        shipment and the cost for that weight. Therefore, if a 
        household goods carrier gives a consumer an estimate of $1,200 
        for its service, and after weighing the shipment, the charge is 
        $1,800, the carrier must charge the shipper $1,800. This 
        requirement has resulted in a great deal of consumer 
        dissatisfaction. In order to address this problem, these 
        subsections create a foundation for written binding 
        estimates.\15\
---------------------------------------------------------------------------
    \15\ Id.

---------------------------------------------------------------------------
    With the new provision, the Committee report explained that:

        [A] carrier may give a written binding estimate of $1,200, and 
        regardless of the weight of the shipment, the carrier can 
        charge the consumer the quoted price of $1,200. The benefit to 
        the shipper is that he or she achieves price certainty. . . 
        \16\
---------------------------------------------------------------------------
    \16\ Id. at 2.

As will be discussed further below, the written binding estimates that 
some Internet moving brokers are giving to shippers do not appear to be 
providing the ``price certainty'' for shippers that Congress envisioned 
when it passed legislation on written binding estimates in 1980.
    In contrast to a binding estimate, a non-binding estimate is merely 
an approximation of the cost. The final price is based upon ``the 
actual weight of the individual shipper's shipment'' \17\ and will be 
determined after the shipment has been loaded and weighed. For all non-
binding estimates, the carrier is required to weigh the shipment prior 
to assessing any charges due. The carrier must be able to furnish 
weight tickets to the shipper to substantiate the charges and provide 
the shipper an opportunity to observe the weighing of the goods.\18\
---------------------------------------------------------------------------
    \17\ 49 C.F.R Sec. 375.401(b)(2).
    \18\ 49 C.F.R Sec. 375.513; 49 C.F.R. Sec. 375.519 .
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    To provide either a binding or non-binding estimate, a carrier or 
broker is required to conduct a physical survey of the goods to be 
moved if the goods are located within 50 miles of the carrier, broker, 
or their agent. If the goods to be shipped are located more than 50 
miles away, or the shipper waives this requirement in writing, then an 
estimate can be based upon an inventory provided over the telephone or 
the Internet.\19\
---------------------------------------------------------------------------
    \19\ 49 U.S.C.A. Sec. 14104; 49 C.F.R. Sec. 375.401(a).
---------------------------------------------------------------------------
    While estimates via the telephone and the Internet are allowed 
under current law, both the Better Business Bureau (BBB) and the 
American Moving and Storage Association (AMSA) advise consumers to get 
multiple estimates based upon in-home visual inspections of their 
goods. Estimates based upon a physical survey of the goods to be moved 
are more accurate. The Better Business Bureau instructs consumers to 
``get at least three in-home estimates,'' and warns consumers that, 
``[n]o legitimate mover will offer to give you a firm estimate on-line 
or over the telephone.'' \20\ In an article written to explain the 
interstate moving process, AMSA warns consumers that ``if a mover you 
are considering refuses to provide you with an in-home estimate and 
tells you he can provide an accurate estimate over the phone without 
ever seeing your home and your furniture--you may want to choose 
another mover.'' \21\ The major van lines provide the majority of their 
estimates based upon a visual inspection of the goods to be shipped.
---------------------------------------------------------------------------
    \20\ Better Business Bureau, May is National Moving Month: BBB 
Advice for A Smooth Move (May 1, 2012).
    \21\ American Moving and Storage Association, Make a Smart Move, 
Consumer Handbook: A Practical Guide to Interstate Moving (2007) at 5 
(online at www.moving.org) (emphasis omitted).
---------------------------------------------------------------------------
2. Delivery
    Federal regulations also outline how carriers are to be paid and 
when they must relinquish possession of shippers' goods in interstate 
moves. Upon delivery, a carrier is required to relinquish possession of 
shippers' household goods upon payment of 100 percent of the charges 
contained in a binding estimate or 110 percent of the charges contained 
in a non-binding estimate. Carriers can charge shippers the amount that 
is in excess of the 110 percent, so long as it is charged after 30 
days.\22\
---------------------------------------------------------------------------
    \22\ 49 U.S.C.A. Sec. 13707(b)(3)(A); 49 C.F.R. 
Sec. 375.403(a)(10); 49 C.F.R. Sec. 375.405(b)(10).
---------------------------------------------------------------------------
    These rules do not apply to any ``post-contract services'' 
requested by the shipper after the contract of service has been 
executed.\23\ This provision allows carriers to include additional 
charges, such as fees for packing services and materials, shuttle 
services, and fees for walking distances exceeding 75 feet, at the time 
of delivery. Charges for ``post-contract services'' can be collected by 
the carrier at the time of delivery prior to unloading the shippers' 
goods.
---------------------------------------------------------------------------
    \23\ 49 U.S.C.A. Sec. 13707(b)(3)(C).
---------------------------------------------------------------------------
    While carriers are permitted to charge for additional services that 
are requested by shippers or are necessary to complete the move, these 
charges need to be agreed upon prior to loading goods onto the truck. 
Federal regulations require that, if additional services are necessary 
or requested by the shipper, the carrier must negotiate a revised 
estimate prior to loading any goods onto the truck. If the shipper and 
carrier have not agreed upon a new estimate, and the carrier begins 
loading goods onto the truck, the carrier has reaffirmed the original 
estimate and therefore cannot demand payment for the additional 
services at the time of delivery.\24\ If additional services are 
necessary after the goods are in transit, then the services need to be 
agreed upon before the carrier performs those services. Charges for any 
additional services not agreed upon prior to loading or performance may 
be charged to the shipper after 30 days.\25\
---------------------------------------------------------------------------
    \24\ 49 C.F.R. Sec. 375.403(a)(7).
    \25\ 49 C.F.R. Sec. 375.403(a)(8).
---------------------------------------------------------------------------
    Each carrier is required to establish an arbitration program 
available for shippers to resolve disputes about loss, damage, and 
disputes over whether additional carrier charges must be paid. Federal 
regulations provide very specific guidelines for what elements the 
arbitration program must include.\26\
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    \26\ 49 C.F.R. Sec. 375.211.
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C. Common Abuses and Congressional Responses
    For years, shippers have complained about dramatic, unexpected 
price increases while their belongings are in transit during interstate 
moves. And in more egregious cases, shippers have complained that 
carriers have held their belongings ``hostage,'' until they pay 
additional fees that sometimes total thousands of dollars. These abuses 
are well-known and over the past several decades, Congress has 
repeatedly passed legislation to address them.
    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.\28\
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    \27\ Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU), Pub. L. No. 109-59, 
Sec. Sec. 4201-4216 (Aug. 10, 2005).
    \28\ In 2009, the Government Accountability Office conducted a 
survey of State Attorneys General and state regulatory agencies to see 
why the offices were not utilizing the powers given to them in SAFETEA-
LU. Some of the reasons expressed were that federal remedies do not 
benefit the states, the penalties were insufficient, and the inability 
to bring cases in state court. Government Accountability Office, 
Household Goods Moving Industry, Progress Has Been Made in Enforcement, 
but Increased Focus on Consumer Protection is Needed (Oct. 2009) at 13 
(GAO-10-38).
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    In 2006, almost one year after the passage of SAFETEA-LU, the 
Senate Commerce Committee held a hearing focused on fraud in the moving 
industry.\29\ Witnesses at the hearing highlighted the frequency of 
situations in which consumers received low estimates, only to have the 
price increase dramatically once the consumers' household goods had 
been picked up by the moving company. Testimony suggested that 
``rogue'' movers that operate without licenses and frequently change 
names to avoid detection were primarily responsible for holding 
consumers' goods hostage and that an increase in the use of the 
Internet had worsened the problem. When describing cases investigated 
by the Department of Transportation, Office of the Inspector General, 
Acting Inspector General Todd J. Zinser stated:
---------------------------------------------------------------------------
    \29\ Senate Committee on Commerce, Science, and Transportation, 
Subcommittee on Surface Transportation and Merchant Marine 
Infrastructure, Safety, and Security, Hearing on Protecting Consumers 
from Fraudulent Practices in the Moving Industry, 109th Cong. (May 4, 
2006) (S. Hrg. 109-529).

        Prior to the advent of the Internet, operators. . .relied 
        primarily on advertising through telephone directories, 
        newspapers, and direct mail. The Internet has broadened the 
        market, and for unscrupulous movers, this enables them to lure 
        customers well beyond their local area.\30\
---------------------------------------------------------------------------
    \30\ Id. at 6 (Prepared statement of Department of Transportation 
Acting Inspector General, Todd J. Zinzer).

    The Government Accountability Office (GAO) has issued two reports, 
in 2007 and 2009, examining the state of consumer protection in the 
moving industry. In these reports, GAO found that FMCSA had made 
progress in implementing the consumer protection initiatives specified 
in SAFETEA-LU, but these improvements had been slow and were still not 
adequately protecting consumers from abusive practices within the 
industry. The 2007 report highlighted that the practice of moving 
companies' holding household goods hostage while demanding excessive 
fees was still a problem, made worse by consumers' lack of familiarity 
---------------------------------------------------------------------------
with the process and the growth of the Internet. The report provided:

        Consumers today use the Internet to shop and compare prices for 
        many products and services, including moving services. But 
        because consumers may only contract for moving services once or 
        twice in their lifetime, they may not know how to identify a 
        legitimate mover. Some federal and state officials told us that 
        interstate movers who advertise on the Internet are a 
        significant source of consumer complaints.\31\
---------------------------------------------------------------------------
    \31\ Government Accountability Office, Consumer Protection: Some 
Improvements in Federal Oversight of Household Goods Moving Industry 
Since 2001, but More Action Needed to Better Protect Individual 
Consumers (May 2007) at 20 (GAO-07-586).

As will be discussed below, despite the attention devoted to this issue 
following the passage of SAFETEA-LU, consumer complaints about the 
moving industry have continued to increase.
    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.
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    \32\ Moving Ahead for Progress in the 21st Century (MAP-21), Pub. 
L. No. 112-141 (July 6, 2012).
---------------------------------------------------------------------------
    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.
D. Criminal Enforcement Actions
    As Congress has worked to strengthen consumer protections for 
household goods shippers, the Department of Transportation Inspector 
General's (DOT OIG) office and other law enforcement agencies have been 
pursuing criminal cases against moving companies that overcharge and 
hold their customers' goods hostage. The fact patterns in these cases 
are often very similar to the consumer complaints Committee staff 
reviewed during this investigation.
    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\
---------------------------------------------------------------------------
    \33\ See DOT OIG, Press Release, Three Sentenced in Moving Scam 
Involving Up to 875 Possible Victims (June 26, 2000) (online at http://
www.oig.dot.gov/library-item/3091).
    \34\ Id.
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    In 2001 and 2002, the DOT OIG announced a series of criminal 
actions as part of a two-year 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\
---------------------------------------------------------------------------
    \35\ See DOT OIG, Press Release, Former Moving Company Employees 
Jailed in Fraud Case (Apr. 9, 2002) (online at http://www.oig.dot.gov/
library-item/2958); DOT OIG, Press Release, Moving Company Owner Jailed 
for Defrauding 259 People (July 13, 2001) (online at http://
www.oig.dot.gov/library-item/2845); DOT OIG, Press Release, Four All 
American Van Lines Company Employees Jailed (July 13, 2001) (online at 
http://www.oig.dot.gov/library-item/3092); DOT OIG, Press Release, 
Foreman of Household Goods Moving Company Jailed (May 11, 2001) (online 
at http://www.oig.dot.gov/library-item/2825).
    \36\ See DOT OIG, Press Release, Former Moving Company Employees 
Jailed in Fraud Case (Apr. 9, 2002) (online at http://www.oig.dot.gov/
library-item/2958); DOT OIG, Press Release, Moving Company Owner Jailed 
for Defrauding 259 People (July 13, 2001) (online at http://
www.oig.dot.gov/library-item/2845); DOT OIG, Press Release, Four All 
American Van Lines Company Employees Jailed (July 13, 2001) (online at 
http://www.oig.dot.gov/library-item/3092); DOT OIG, Press Release, 
Foreman of Household Goods Moving Company Jailed (May 11, 2001) (online 
at http://www.oig.dot.gov/library-item/2825).
---------------------------------------------------------------------------
    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 \1/2\ years in 
prison.
---------------------------------------------------------------------------
    \37\ See DOT OIG, Press Release, Three Brooklyn Movers Fined $1.4 
Million for Extortion Scheme (Oct. 16, 2003) (online at http://
www.oig.dot.gov/library-item/3162); DOT OIG, Press Release, Brooklyn 
Jury Convicts Three Household Movers for Defrauding Public (May 9, 
2003) (online at http://www.oig.dot.gov/library-item/3127); DOT OIG, 
Press Release, Three Operators of Household Moving Companies Arrested 
in Extortion Scheme (Feb. 20, 2002) (online at http://www.oig.dot.gov/
library-item/2940).
    \38\ Andy Newman, Movers Convicted of Fraud; Held Clients' Goods 
Hostage, N.Y. Times (May 10, 2003) (online at http://www.nytimes.com/
2003/05/10/nyregion/movers-convicted-of-fraud-held-clients-goods-
hostage.html).
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    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 \1/2\ 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:
---------------------------------------------------------------------------
    \39\ See, e.g., DOT OIG, Press Release, President of moving 
companies involved in moving scheme sentenced to 12.5 years in prison 
(Jan. 31, 2005) (online at http://www.oig.dot.gov/library-item/3307); 
DOT OIG, Press Release, Moving Company Employees Fined $1.1 Million and 
Sentenced to Prison for Extorting Money From Customers (Dec. 30, 2003) 
(online at http://www.oig.dot.gov/library-item/3178); DOT OIG, Press 
Release, One Florida Mover Jailed, Another Pleads Guilty in Household 
Goods Moving Case (Sep. 26, 2003) (online at http://www.oig.dot.gov/
library-item/3158); DOT OIG, Press Release, Miami Household Goods 
Movers Plead Guilty to Defrauding Public (Aug. 8, 2003) (online at 
http://www.oig.dot.gov/library-item/3147); DOT OIG, Press Release, 57 
Arrested to Date in Florida Household Movers Case (Apr. 3, 2003) 
(online at http://www.oig.dot.gov/library-item/3116).

        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\
---------------------------------------------------------------------------
    \40\ DOT OIG, Press Release, President of moving companies involved 
in moving scheme sentenced to 12.5 years in prison (Jan. 31, 2005) 
(online at http://www.oig.dot.gov/library-item/3307).

    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\
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    \41\ DOT OIG, Press Release, Owner and Two Foremen of Interstate 
Moving Company Ordered to Pay $670,000 in Restitution to Victims of 
Household Goods Moving Scam (Sep. 2, 2005) (online at http://
www.oig.dot.gov/library-item/3386); DOT OIG, Press Release, Interstate 
Moving Company Employee Sentenced to Jail in Household Goods (HHG) Case 
Involving Over $1 Million Loss (Jan. 6, 2005) (online at http://
www.oig.dot.gov/library-item/3296).
    \42\ DOT OIG, Press Release, Owner and Two Foremen of Interstate 
Moving Company Ordered to Pay $670,000 in Restitution to Victims of 
Household Goods Moving Scam (Sep. 2, 2005) (online at http://
www.oig.dot.gov/library-item/3386); DOT OIG, Press Release, Interstate 
Moving Company Employee Sentenced to Jail in Household Goods (HHG) Case 
Involving Over $1 Million Loss (Jan. 6, 2005) (online at http://
www.oig.dot.gov/library-item/3296).
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    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:
---------------------------------------------------------------------------
    \43\ DOT OIG, Press Release, Former Moving Company Estimator 
Sentenced for His Role in a Household Goods Scheme (May 25, 2012) 
(online at http://www.oig.dot.gov/library-item/5828); DOT OIG, Press 
Release, Former San Jose Moving Company Employee Sentenced for Her Role 
in a ``Low-ball'' Estimate Household Goods Scheme (Apr. 30, 2012) 
(online at http://www.oig.dot.gov/library-item/5887); DOT OIG, Press 
Release, Florida Moving Brokerage Sales Representative Sentenced to 3 
Years Probation and Ordered to Pay $30,000 in Restitution in Household 
Goods Extortion Scheme (Nov. 26, 2008) (online at http://
www.oig.dot.gov/library-item/3670).

        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\
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    \44\ Matthew Sandomir Guilty Plea, United States v. Ezyani, et al., 
No. 5:07-cr-00788 (N.D. Cal. May 14, 2008) (Doc. 206).

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.
E. Consumer Complaints
    In spite of these legislative and enforcement efforts, thousands of 
consumers continue to complain every year about their interstate moves 
to FMCSA, the BBB, local and state agencies, and various consumer 
complaint websites. Since 2005, FMCSA has reported receiving nearly 
10,000 complaints about shipments being held hostage and price 
increases or overcharges.\45\ The numbers of complaints have risen in 
recent years. In 2011 alone, FMCSA received 2,851 consumer complaints 
about moving companies, up from 2,440 in 2010.\46\ Similarly, in 2011, 
the Better Business Bureau received more than 9,000 complaints about 
moving companies,\47\ which was an increase over 2010.
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    \45\ FMCSA reports that between January 1, 2005 and October 1, 2011 
they received 19,453 complaints. Approximately half of these complaints 
were about hostage shipments and charge disputes. Federal Motor Carrier 
Safety Administration Production (Oct. 21, 2011).
    \46\ U.S. Department of Transportation, FMCSA Helps Consumers 
``Protect Your Move'' with Moving Company Checklist: Checklist offers 
helpful tips during busiest moving season of the year (May 23, 2012).
    \47\ Better Business Bureau, Protect Your Move and Yourself During 
National Moving Month (May 22, 2012).
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II. The Committee's Review of Consumer Complaints
    In 2011, Chairman Rockefeller directed Committee staff to open an 
investigation to better understand why consumers continue to complain 
about troubling experiences with their moving companies. In October 
2011, Chairman Rockefeller and Senator Lautenberg wrote a letter to 
FMCSA requesting the agency's consumer complaint data. Over the next 
several months, Committee staff analyzed these complaints to gain a 
better understanding of how frequently consumers complained to the 
agency about their moves, the types of complaints consumers made about 
their moves, and the moving companies named in the complaints.
    The consumer complaint information that the FMCSA provided to the 
Committee showed that, since 2005, complaints related to hostage 
household goods situations and disputes over price increases accounted 
for almost 50 percent of the complaints that the agency received.\48\ 
Complaints related to hostage situations and price increases were among 
the most frequently reported complaints from consumers. Since 2005, the 
agency has received over 4,000 complaints about hostage household goods 
situations and over 5,000 complaints about price increases.\49\ The 
average number of complaints for price increases across all 1,164 
companies that generated at least one complaint was 5.44.\50\ The 
average number of hostage complaints was 3.22.\51\
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    \48\ Federal Motor Carrier Safety Administration Production (Oct. 
21, 2011).
    \49\ Id.
    \50\ Federal Motor Carrier Safety Administration Complaint Data 
(Oct. 20, 2011) (FMCSA Doc. Attachment 2.2).
    \51\ Id.
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    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 (Able Moving, Inc. and Best 
Price Moving and Storage) and two brokers (Nationwide Relocation 
Services and Budget Van Lines) 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, as seen in Figure I below.\52\
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    \52\ Committee staff analyzed the Federal Motor Carrier Safety 
Administration data for the largest moving companies with over 1,000 
trucks. Committee staff found that the four companies investigated had 
three times the number of hostage household goods complaints and nearly 
twice as many complaints for issues related to estimates and final 
charges when compared to the largest national moving companies.


    In the course of its review of FMCSA consumer complaints, Committee 
staff learned that the owner of Nationwide Relocation Services, Aldo 
DiSorbo, owns and operates several broker companies, all of which use 
the same business model and offer the same services as Nationwide 
Relocation Services.\53\ For the purposes of its investigation, 
Committee staff analyzed Mr. DiSorbo's broker companies as a single 
entity, and will be referred to in this report as the ``DiSorbo Broker 
Companies.'' As a group, the DiSorbo Broker Companies had extremely 
elevated levels of consumer complaints about price increases and 
hostage situations, as seen in Figure II below.
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    \53\ The broker companies identified as being owned and operated by 
Aldo DiSorbo include Nationwide Relocation Services, United States Van 
Lines Relocation Division, All State Van Lines Relocation, American Van 
Lines, Inc. d/b/a American Van Lines of California, Colonial Van Lines 
Relocation Division, and Patriot Van Lines. Mr. DiSorbo also owns and 
operates several companies licensed as carriers. The carriers 
identified are United States Van Lines, Inc., States Van Lines, B and E 
Movers d/b/a Moving Squad, Inc., We-Haul, Inc., and All Coast 
Transporters, Inc.


    In December 2011, Chairman Rockefeller wrote letters to request 
information from these companies to determine why their practices led 
to high levels of complaints with the FMSCA. The letters asked the 
companies to provide information and documents about the number of 
customer complaints they had received, their process for responding to 
customer complaints, their process for creating estimates, and the 
training materials they provide to their employees.
    During this investigation, Committee staff has reviewed tens of 
thousands of pages of documents related to practices in the moving 
industry, including agreements between carriers and brokers, training 
and customer service manuals, estimates, and other documents provided 
directly to customers. Committee staff also reviewed thousands of 
documents related to consumer complaints and interviewed dozens of 
consumers who used the services of those companies investigated.
III. Internet Moving Brokers and Their Impact on Consumers
    The consumer complaints reviewed by Committee staff and the records 
produced by the companies that received information requests from 
Chairman Rockefeller show a strikingly similar pattern. These materials 
show that the business practices that Budget Van Lines, the DiSorbo 
Broker Companies, and other moving brokers use to find customers, 
provide estimates, and arrange moves regularly mislead and confuse 
consumers. While policymakers and law enforcement officials have 
traditionally focused their consumer protection efforts on household 
goods carriers, the evidence reviewed during this investigation shows 
that specific types of moving brokers are responsible for many of the 
complaints that consumers have reported to FMCSA, BBB, or other 
consumer protection organizations in recent years.
    A large number of consumer complaints about moving brokers that 
Committee staff reviewed during this investigation follow the same 
basic fact pattern:

   A consumer begins planning a move and goes online to shop 
        for moving services. Through this Internet search, usually 
        conducted via a search engine, the consumer identifies and 
        contacts a moving broker. The broker often has a business name 
        that is similar to a well-known, reputable brand name.

   Without conducting a visual inspection of the consumer's 
        goods or disclosing to the consumer that it will not be 
        performing the actual move, the broker gives the consumer an 
        estimate price for the move, which is often described to the 
        consumer as a ``binding estimate.'' The broker's estimate is 
        usually significantly lower than the price quoted by other 
        moving companies.

   The consumer makes a payment to the broker that is described 
        as a ``deposit,'' but is actually a fee kept by the broker. The 
        broker then turns over the consumer's move to a household goods 
        carrier. Typically, the consumer is not made aware that a 
        company other than the broker will be conducting their move.

   On moving day, a household goods carrier unknown to the 
        consumer shows up to perform the move. During or after the 
        loading of the goods, the carrier asks the consumer to sign new 
        paperwork and claims that the broker's estimate was too low, 
        sometimes by thousands of dollars. The consumer must decide 
        whether to pay the new fees, or risk having the carrier hold 
        the goods ``hostage.''

Because the moving brokers that employ these practices each rely 
heavily on the Internet to generate customer leads and find new 
customers, they are referenced throughout the remainder of the report 
as ``Internet moving brokers.''
A. Internet Searches Direct Consumers to Internet Moving Brokers
    Consumers who have complained about the business practices of 
Internet moving brokers almost always report that they initially found 
the companies by entering general terms related to household moving 
into an Internet search engine. In spite of the many complaints 
consumers have lodged against them, some Internet moving brokers--in 
particular, the DiSorbo Broker Companies--continue to rank well in 
Internet search results, often landing on the first page of consumers' 
search results.
    According to one of the leading ``Search Engine Optimization'' 
industry analysts, ``the major engines typically interpret importance 
as popularity--the more popular a site, page or document, the more 
valuable the information contained therein must be.'' \54\ Although 
each search engine uses proprietary technology to determine rankings, a 
core principle is that the more links to a website, particularly from 
other trusted websites or sources, the higher the ranking.
---------------------------------------------------------------------------
    \54\ SEOmoz, The Beginners Guide to SEO, at http://www.seomoz.org/
beginners-guide-to-seo (last updated May 22, 2012).
---------------------------------------------------------------------------
    Websites operated by or on behalf of the DiSorbo Broker Companies 
use questionable website and linking strategies that appear to be 
intended to enhance the companies' search engine rankings. For example, 
Mr. DiSorbo operates movingcost.com, a company that purports to provide 
consumers information about ``the most qualified and professional 
relocation experts in the industry.'' \55\ The operators of this 
website have attempted to increase its popularity by embedding text 
that includes hyperlinks to www.movingcost.com in tens of thousands of 
other websites. In many instances, these linked websites are college 
newspapers and student organizations--like the Cornell Gymnastics Club 
and the Yale Democrats--or they are irrelevant link directories such as 
``Muscle-Body Links.'' While these links have little or no relevance to 
the content of the websites in which they are embedded, they help 
increase movingcost.com's popularity with search engines, making it 
more likely that consumers will find the page during an Internet 
search.
---------------------------------------------------------------------------
    \55\ Movingcost.com, Homepage (online at www.movingcost.com) (last 
visited on Sep. 19, 2012).
---------------------------------------------------------------------------
    Once at the website, www.movingcost.com appears to be a legitimate 
tool for consumers to locate reputable moving companies. The homepage 
includes links to social media and a section on ``Moving Tips.'' Upon 
closer review, however, the site is little more than a tool for DiSorbo 
Brokers Companies to attract Internet customers. The site's ``Featured 
Movers''--Moving Squad, MBM Moving Systems, American Van Lines, and 
Nationwide Relocation Services--are all companies owned by Mr. DiSorbo 
or his family members.\56\
---------------------------------------------------------------------------
    \56\ American Van Lines, Inc. is owned by Anthony DiSorbo. See 
Florida Department of State, Division of Corporations Record for 
American Van Lines, Inc. (Doc. No. P95000065434). The President of MBM 
Moving is Anna DiSorbo, MBM Moving Systems, Our Mission (online at 
www.mbmmove.com/our_mission.php) (last visited on Sep. 18, 2012).
---------------------------------------------------------------------------
B. Consumer Confusion about Brokers' Role
    Consumers frequently complained they were confused about the role 
that Internet moving brokers would play in their moves. Consumers 
expressed frustration that (1) they did not learn that a different 
company would actually be handling their move until the company arrived 
to pick up their household goods, and (2) the companies' names were 
confusing.
    Committee staff spoke with dozens of former customers of Budget Van 
Lines and the Disorbo Broker Companies to better understand their 
experiences with the companies. During Committee staff interviews, 
former customers of each company repeatedly stated that they were not 
aware that they were hiring a broker, and that had they been made 
aware, they would have chosen to work with a carrier directly instead. 
For the DiSorbo Broker Companies specifically, of the dozens of 
customers that Committee staff interviewed, more than 75 percent 
reported not being made aware that the company was a broker until a 
different company arrived to pick up their household goods.
    Customers of both Budget Van Lines and the DiSorbo Broker Companies 
repeatedly expressed similar sentiments in complaints filed with the 
Better Business Bureau and the FMCSA.

   An American Van Lines of California customer from Arizona 
        wrote in a complaint to the BBB that she ``[w]as never told 
        that they broker out their business, if I would've [sic] known, 
        I NEVER would have gone with them.'' \57\
---------------------------------------------------------------------------
    \57\ Better Business Bureau, Complaint, Case No. 8846810 (Dec. 22, 
2011) (DiSorbo Doc. DBC 002078).

   A customer of Patriot Van Lines wrote, ``[i]n our many 
        conversations, he NEVER mentioned that PVL would not be the 
        actual movers. I completed research on PVL to read reviews and 
        check their BBB status. I had no idea there was another moving 
        company involved until days before my furniture was to be 
        picked up and therefore did not have an opportunity to research 
        that company.'' \58\
---------------------------------------------------------------------------
    \58\ Better Business Bureau, Complaint Activity Report, Case No. 
90116133 (Sep. 1, 2011) (DiSorbo Doc. DBC 002493).

   A California customer of Nationwide Relocation Services 
        wrote, ``I eventually found out that they were a brokerage 
        service and was enraged, but at this point I had no choice.'' 
        \59\
---------------------------------------------------------------------------
    \59\ Better Business Bureau, Complaint Activity Report, Case No. 
90080915 (Jan. 4, 2011) (DiSorbo Doc. DBC 002304).

   Still another customer wrote, ``I feel that [United States 
        Van Lines] misrepresented their service, it was not clear from 
        their website or speaking with their estimator that USVL was a 
        broker and not actually the carrier.'' \60\
---------------------------------------------------------------------------
    \60\ Customer Complaint to Federal Motor Carrier Safety 
Administration (Feb. 1, 2011) (DiSorbo Doc. DMC 000337).

   In a complaint to the FMCSA, a Budget Van Lines customer 
        wrote that she ``was not informed by budget van line that 
        another carrier would handle my household good[s].'' \61\
---------------------------------------------------------------------------
    \61\ Customer Complaint to Federal Motor Carrier Safety 
Administration (Dec. 7, 2009) (Budget Doc. Exhibit 5--000206).

    Despite regulations that require brokers to disclose their status 
as brokers, customers repeatedly reported that they were not made aware 
that the companies they were dealing with were brokers and not carriers 
with the capability of conducting their moves.
    Federal regulations mandate that ``[a] broker shall not, directly 
or indirectly, represent its operations to be that of a carrier. Any 
advertising shall show the broker status of an operation.'' \62\ The 
regulations provide specific direction for how a broker must notify 
customers of their broker status, stating:
---------------------------------------------------------------------------
    \62\ 49 C.F.R. Sec. 371.7(b).

        You must prominently display in your advertisements and 
        Internet website(s) your status as a household goods broker and 
        the statement that you will not transport an individual 
        shipper's household goods, but that you will arrange for the 
        transportation of the household goods by an FMCSA-authorized 
        household goods motor carrier, whose charges will be determined 
        by its published tariff.\63\
---------------------------------------------------------------------------
    \63\ 49 C.F.R. Sec. 371.107(c).

    Despite federal regulations designed to prevent consumer confusion 
between brokers and carriers, consumers do not understand the 
distinction. Broker companies are advertising themselves and their 
services in ways that are confusing consumers.
1.  Misleading Websites
    Websites for the DiSorbo Broker Companies and Budget Van Lines 
often portray themselves as full service moving companies seeking to 
service a consumer's move from initial estimate to final delivery of 
goods. The websites of these companies often fail to clearly disclose 
the fact that the companies will likely never move a consumer's goods 
but instead act as a broker and contract with a carrier to complete the 
move.
    In those cases where a website does use the word ``broker,'' 
companies like Patriot Van Lines and Colonial Van Lines Relocation 
Division often did so in ways that could potentially be overlooked by 
consumers. Consumers are often required to check the fine print of a 
website instead of being told up front of the companies' role as a 
broker.
    For example, on the website for Patriot Van Lines, the statement 
that the company is a broker is left off the front page and found 
elsewhere on the site, in the ``About Us'' section. The Patriot Van 
Lines website also includes the statement, ``[o]ur commitment to 
sterling moving help has made us one of the nation's most reputable 
moving companies,'' in the same section.\64\ While ``moving company'' 
is not a defined term, this term is generally associated with carriers, 
not brokers. Patriot Van Lines, which is one of the many DiSorbo Broker 
Companies, is registered with the FMCSA as a broker.
---------------------------------------------------------------------------
    \64\ Patriot Van Lines, About Us (online at http://
patriotvanlines.com/about) (last visited Aug. 28, 2012).
---------------------------------------------------------------------------
    On Budget Van Lines' home page, the company's acknowledgement that 
it is a household goods broker is written in fine print underneath the 
prominently displayed company name. While at the same time the company 
more prominently advertises, ``We provide our customers with Full 
Service Moving at Self-Service Rates.'' \65\
---------------------------------------------------------------------------
    \65\ Budget Van Lines, Homepage (online at www.budgetvanlines.com) 
at 70 (last visited Sep. 19, 2012).
---------------------------------------------------------------------------
2. Company Names Lead to Confusion
    AMSA has reported that one of the trademarks of a problematic 
moving company is that it uses names that are similar to well-known 
companies. A recent report written about the current state of the 
moving industry, states:

        . . . [R]ogue operators are unique, and they have benefitted 
        from emergence of the Internet. Rogues prey on consumers who 
        seek the lowest cost service. They often fail to register as 
        required with the U.S. Department of Transportation and state 
        departments of transportation. Their practices include using a 
        name and mark similar to those of a reputable company, offering 
        low-price services only to hold the consumer's goods captive 
        until consumers pay a higher price, and changing the name of 
        their business once consumer complaints result in a lowering of 
        the company's rating with the Better Business Bureau.\66\
---------------------------------------------------------------------------
    \66\ The Moving and Storage Industry in the U.S. Economy: 
Overcoming the Challenges of the Great Recession, Robert Damuth, 
Economist and Principal Consultant, Nathan Associates Inc. (Apr. 5, 
2012) (online at http://www.promover.org/files/msi/msi_report.pdf).

    While the broker companies analyzed in this investigation are not 
considered to be ``rogue'' operators because they are registered and 
licensed with FMCSA, many of their marketing techniques appear to be 
very similar to those used to describe the activities of ``rogue'' 
operators. Both Budget Van Lines and many of the DiSorbo Broker 
Companies use names similar to well-known companies in the moving and 
transportation industry.
    Repeatedly, consumers reported that they believed the brokers to be 
different well-known companies, and that is what caused them to choose 
the broker. For example, during one conversation with a customer of 
Budget Van Lines, the customer stated that she chose Budget Van Lines 
because they are a ``recognizable name'' and ``you see the trucks 
everywhere,'' so she felt more comfortable using them than a ``mom and 
pop'' company.\67\ Another customer reported that the sales person 
reinforced her assumption that they were a well-known company. She 
alleged that the sales person told her, ``you know our big trucks that 
you see, well sometimes those have space so we are able to fill that 
space with your stuff.'' \68\ She went on to say that she would have 
never used them had she understood that they were a broker, but instead 
would have called the carrier directly. The trucks with ``Budget'' on 
their paneling belong to Budget Truck Rental, LLC, a completely 
different company that is not affiliated with Budget Van Lines in any 
fashion. Budget Van Lines informed the Committee that it operates 
solely as a broker and not a motor carrier, and its registration with 
FMCSA is as a broker only and lists that Budget Van Lines owns no 
trucks.\69\
---------------------------------------------------------------------------
    \67\ Committee staff interview with Budget Van Lines customer (Mar. 
8, 2012).
    \68\ Committee staff interview with Budget Van Lines customer (Mar. 
15, 2012).
    \69\ Federal Motor Carrier Safety Administration, Company Snapshot 
for Budget Van Lines (accessed Sep. 19, 2012); Letter from Jason M. 
Romrell, President and Chief Legal Officer, Budget Van Lines, to 
Chairman John D. Rockefeller IV (Jan. 27, 2012).
---------------------------------------------------------------------------
    Similarly, customers of the DiSorbo Broker Companies reported that 
they too were led to believe that the companies were affiliated with 
more well-known companies. One customer of United States Van Lines 
reported that throughout the estimate process the estimator continually 
referred to the company as ``United Van Lines.'' He believed that he 
was dealing with United Van Lines and that, coupled with the fact that 
they had the lowest estimate, is why he chose them.\70\
---------------------------------------------------------------------------
    \70\ Committee staff interview with United States Van Lines 
Customer (Mar. 6, 2012).
---------------------------------------------------------------------------
    This confusion on the part of the consumer is not unknown to the 
companies. In a note provided by Budget Van Lines, a Budget Van Lines 
representative wrote, ``she though[t] we were affiliated with Budget 
Truck Rental . . . Hmmmmm.'' \71\ In another note, a Budget Van Lines 
representative reported being yelled at by a customer who told him that 
``she was mislead [sic] not knowing we were a broker and we should'nt 
[sic] be using the name budget. . .'' \72\
---------------------------------------------------------------------------
    \71\ Budget Van Lines Representative Notes, Job No. 938325 (Nov. 9, 
2011) (Budget Doc. Exhibit 3-B 330623).
    \72\ Budget Van Lines Representative Notes, Job No. 899649 (Aug. 
18, 2011) (Budget Doc. Exhibit 3-B 282564).
---------------------------------------------------------------------------
3. Use of Multiple Companies and Frequent Name Changes
    Mr. DiSorbo owns and operates several different companies, both 
brokers and carriers, under different names. Committee staff has seen 
evidence that suggests all of his broker companies are run out of the 
same office in Florida, despite having different addresses listed on 
the websites and with the FMCSA. For example, Colonial Van Lines 
Relocation Division is registered with FMCSA as being located in 
Indianapolis, Indiana.\73\ However, the website lists the same address 
in Margate, Florida, that Mr. DiSorbo uses to run several other 
brokerage companies.\74\ Similarly, American Van Lines Relocation 
Division lists a San Francisco, California address with FMCSA, but the 
Margate, Florida address on its website.\75\ Patriot Van Lines lists a 
Richmond, Virginia address with FMCSA, but the Margate, Florida address 
on the company's filing with the Florida Secretary of State.\76\
---------------------------------------------------------------------------
    \73\ Federal Motor Carrier Safety Administration, Licensing and 
Insurance Information for Colonial Van Lines Relocation Division 
(accessed Sep. 11, 2012).
    \74\ Colonial Van Lines Relocation Division, Homepage (online at 
www.colonialvanlinesrelo.com) (last visited Aug. 29, 2012).
    \75\ Federal Motor Carrier Safety Administration, Licensing and 
Insurance Information for American Van Lines Relocation Division, Inc. 
(accessed Sep. 11, 2012); American Van Lines Relocation Division 
Homepage (last visited on Sep. 11, 2012) (online at www.americanvan
linesrelo.com).
    \76\ Federal Motor Carrier Safety Administration, Licensing and 
Insurance Information for Patriot Van Lines (accessed Sep. 11, 2012); 
Florida Department of State, Division of Corporations Record for 
Patriot Van Lines, Inc. (Doc. No. P02000042793).
---------------------------------------------------------------------------
    In addition to operating several companies that all offer the same 
services, these companies change names often. For example:

   On January 20, 2012, Brown Van Lines changed its name to 
        Colonial Van Lines. This name change was accompanied by a 
        letter from Aldo DiSorbo's Executive Assistant acknowledging 
        that Brown Van Lines, Inc., Colonial Van Lines, Inc., Colonial 
        Van Lines, LLC, and Colonial Van Lines Relocation Division, 
        Inc. are all owned by the same incorporators.\77\
---------------------------------------------------------------------------
    \77\ Florida Department of State, Division of Corporations Record 
for Colonial Van Lines, Inc. (Doc. No. P03000044519).

   On January 14, 2000, Mr. DiSorbo incorporated Moving Cost, 
        Inc. On September 16, 2009, the name was changed to United 
        States Van Lines Relocation Division, Inc. On July 20, 2012, 
        the name was changed to All State Van Lines Relocation, 
        Inc.\78\
---------------------------------------------------------------------------
    \78\ Florida Department of State, Division of Corporations Record 
for All State Van Lines Relocation, Inc. (Doc. No. P00000005128).

   On August 7, 2012, United States Van Lines changed its name 
        to States Van Lines.\79\
---------------------------------------------------------------------------
    \79\ Florida Department of State, Division of Corporations Record 
for States Van Lines, Inc. (Doc. No. P03000045335).

   On November 14, 2002, Mr. DiSorbo incorporated GG Moving, 
        Inc. On December 5, 2002, the name was changed to Golden Gloves 
        Moving and Storage, Inc. On April 9, 2010, the name was changed 
        to Champion Moving and Storage. Finally, on May 28, 2010, the 
        name was changed to Moving Squad Inc. of Fort Lauderdale.\80\
---------------------------------------------------------------------------
    \80\ Florida Department of State, Division of Corporations Record 
for Moving Squad Inc. of Fort Lauderdale (Doc. No. P02000121957).

   On February 24, 2005, We Haul Moving Inc., changed its name 
        to WeHaul International, Inc. On May 3, 2011, WeHaul 
        International, Inc. changed its name to Patriot Van Lines, 
        Inc.\81\
---------------------------------------------------------------------------
    \81\ Florida Department of State, Division of Corporations Record 
for Patriot Van Lines, Inc. (Doc. No. P02000042793).

    Customers appear to be unaware of the relationships between the 
various companies, and the DiSorbo companies appear to make efforts to 
conceal these relationships. In several examples provided to the 
Committee, in moves where a DiSorbo Broker Company brokers the job to a 
carrier also owned by DiSorbo, the companies' responses to consumers 
who have complained attempt to disguise the relationship. For example, 
a customer who moved from Colorado to Texas complained to FMCSA that 
she received a binding estimate from American Van Lines of California 
for $2,290.60.\82\ When the carrier, Moving Squad, arrived to deliver 
her goods, he was provided a new price of $3,311.75.\83\ In Moving 
Squad's response to FMCSA it wrote:
---------------------------------------------------------------------------
    \82\ Customer Complaint to Federal Motor Carrier Safety 
Administration, Complaint No. 100048054 (Apr. 12, 2011) (DiSorbo Doc. 
DMC 000279-000280).
    \83\ Id.

        Our company was contracted to provide coordinated relocation 
        services to [customer] for her move from Colorado to Texas. . . 
        . [Customer]'s estimate was prepared by American Van Lines of 
        California; a moving broker.\84\
---------------------------------------------------------------------------
    \84\ Response from Moving Squad to Federal Motor Carrier Safety 
Administration (DiSorbo Doc. DMC 000281).

Both American Van Lines of California and Moving Squad are owned and 
operated by Aldo DiSorbo, yet this fact was apparently not disclosed to 
the customer.
C. Broker ``Deposits'' and Fees
    Both Budget Van Lines and the DiSorbo Broker Companies collect a 
deposit at the time of arranging the move. These deposits are collected 
up front, prior to performing any moving services. These ``deposits'' 
are actually the fee that the consumer pays to the broker for its 
services. According to AMSA:

        Professional movers generally don't require a deposit before 
        moving you, and if they do it is generally just a small ``good 
        faith'' deposit. However, some scam movers or Internet brokers 
        frequently require a large deposit. So, if a mover you are 
        considering requires you to pay a big deposit to ``hold your 
        dates'' or to insure ``prompt service'' you may want to choose 
        another mover.\85\
---------------------------------------------------------------------------
    \85\ American Moving and Storage Association, Make a Smart Move, 
Consumer Handbook: A Practical Guide to Interstate Moving (2007) at 5 
(online at www.moving.org) (emphasis omitted).

    Committee staff found examples of ``deposits'' paid to broker 
companies that were well over a thousand dollars. These ``deposits,'' 
which were nothing more than fees that went directly to the brokers, 
were not shared with carriers. Consequently, before any of the 
consumers' items had been picked up, they had often paid hundreds--
sometimes thousands--of dollars to an Internet moving broker. These 
substantial fees likely contribute to the price increases during the 
move process, which are discussed further below, as the amount of money 
left over for the carrier is likely not enough for the expense of the 
move.
    Budget Van Lines charges each customer a booking fee, the amount of 
which is up to the discretion of the Budget employee arranging the 
move. In training materials provided to its employees, Budget Van Lines 
defines a booking fee as:

        [O]ur fee which we charge the customer as a broker for using 
        our service. The booking fee is in addition to the percentage 
        charge (our cut) for the total job. . .Note, as a sales person 
        you are able to increase this fee if the customer is willing to 
        pay it but it should never be below $195.'' \86\
---------------------------------------------------------------------------
    \86\ Budget Van Lines, Estimate Guidelines, Version 4.0 (Oct. 31, 
2011) (Budget Doc. Exhibit 4--000072).

In addition to the booking fee, Budget Van Lines collects 25 percent of 
the initial estimated price as a ``deposit.'' Budget Van Lines 
explained to the Committee that it ``charges customers who sign 
estimates and book moves a `booking fee,' separately itemized on the 
estimate, and a deposit for the transportation services as quoted in 
the estimate. This deposit is equal to the broker fee or commission.'' 
\87\ The payment for this charge is collected at the time of booking. 
The remainder of the estimate is due to the carrier at the time of 
delivery.
---------------------------------------------------------------------------
    \87\ Letter from Jason M. Romrell, President and Chief Legal 
Officer, Budget Van Lines, to Chairman John D. Rockefeller IV (Jan. 27, 
2012).
---------------------------------------------------------------------------
    The DiSorbo Broker Companies also charge a sizeable ``deposit'' at 
the time of booking.\88\ The DiSorbo Broker Companies call these 
initial payments ``deposits,'' but none of the money actually goes to 
the carrier as a deposit on the move. This deposit is collected by the 
DiSorbo Broker Companies as their fee for performing the services of 
providing an estimate and attempting to locate a carrier. The DiSorbo 
companies explained that ``the deposit fees paid to the broker to 
secure the move is the only portion of the total customer payments that 
the broker companies receive. All charges and monies paid for the move 
after the deposits are received by the moving company.'' \89\
---------------------------------------------------------------------------
    \88\ Exhibit I includes examples of deposits paid by customers to 
several DiSorbo Broker Companies.
    \89\ DiSorbo Broker Companies response to Chairman John D. 
Rockefeller IV Dec. 19, 2011 letter (Jan. 27, 2012).
---------------------------------------------------------------------------
    In addition, the DiSorbo Broker Companies have what they call a 
``Quality Assurance Department'' that contacts customers a few days 
prior to the move. Many former customers have complained that, at this 
point in the process, the cost of their move is increased and an 
additional deposit is due to the broker. DiSorbo Broker Companies 
described the Quality Assurance process, stating:

        Approximately 5 to 7 days before the move, the DiSorbo Broker 
        Companies' Quality Assurance Department calls and emails the 
        customer to again confirm the customer's property list, the 
        move dates, and to review the estimate with the customer for 
        accuracy. The DiSorbo Broker Companies take this extra step to 
        alleviate any potential confusion on the customers' end that 
        may result from the customer receiving multiple estimates, 
        which occurs when a customer changes their move plans after the 
        initial estimate.\90\
---------------------------------------------------------------------------
    \90\ Id.

    Former customers describe the Quality Assurance process 
differently. Customers routinely complained that, at this point in the 
move, a new, much higher estimate is generated, resulting in the 
requirement of an additional ``deposit'' for the shipper to pay.
    This quality assurance process causes two problems for shippers. 
First, shippers are contributing more money to what they believe to be 
a ``deposit,'' when it is in fact nothing more than additional broker 
fees. Second, these calls too often occur once it is too late for the 
shipper to cancel and be refunded the original deposit paid. Therefore, 
the shipper has a choice to either accept the new estimate and pay the 
additional deposit or cancel and forfeit the money already paid.\91\
---------------------------------------------------------------------------
    \91\ The DiSorbo Broker Companies will not refund any deposits paid 
unless notice is received ``at least 5 business days (Saturdays, 
Sundays and Holidays not included) prior to the pack or load date.'' 
Copy of United States Van Lines Relocation Division estimate (DiSorbo 
Doc. DBC 004581).
---------------------------------------------------------------------------
D. Price Increases
    Committee staff found abundant evidence showing that consumers who 
used Internet moving brokers for their moves repeatedly faced price 
increases after carriers arrived at their residence or after their 
belongings were loaded onto carriers' trucks. These price increases 
were often dramatic. Numerous examples in documents provided to the 
Committee showed increases over $3,000, and they happened even though 
the consumer had received a ``binding estimate'' from the Internet 
moving broker.
    However, when Chairman Rockefeller asked Internet moving brokers 
for information about price increases, the companies claimed they had 
none. Both Budget Van Lines and the various companies owned by Mr. 
DiSorbo responded that they do not keep track of what happens to the 
price once the move is transferred to a carrier. Budget Van Lines 
responded:

        Budget Van Lines conducted no interstate moves; it operates 
        solely as a broker, not a motor carrier. It has no data 
        available in its files that would allow it to calculate the 
        number of interstate moves it arranged that resulted in price 
        changes to the original estimates. The underlying motor 
        carriers do not normally inform Budget Van Lines when the 
        prices or freight charges listed in the original estimates are 
        subsequently adjusted.\92\
---------------------------------------------------------------------------
    \92\ Letter from Jason M. Romrell, President and Chief Legal 
Officer, Budget Van Lines, to Chairman John D. Rockefeller IV (Jan. 27, 
2012).

Similarly, the DiSorbo Broker Companies responded that ``[t]he fact 
that the DiSorbo Broker Companies do not link their fees to the moving 
companies' final cost means that the DiSorbo Broker Companies are not 
given comprehensive records of price variations between the initial 
estimate and the final move price.'' \93\
---------------------------------------------------------------------------
    \93\ DiSorbo Broker Companies response to Chairman John D. 
Rockefeller IV Dec. 19, 2011 letter (Jan. 27, 2012).
---------------------------------------------------------------------------
    Because neither of the broker companies could answer the question 
of how often the cost of their customers' moves increases after 
carriers arrive, Committee staff found alternative methods to determine 
what was happening to the price once the moves were transferred from 
Internet moving brokers to carriers.
Bills of Lading
    Committee staff reviewed over 1,000 customer files produced by Able 
Moving and Best Price Moving and Storage. The customer files contained 
bills of lading, which showed shippers' original estimates and the 
price they actually paid for the moves. The majority of the estimates 
for these moves appeared to be performed by Internet moving brokers and 
a significant percentage of the estimates were ``binding estimates.'' 
In 90 percent of the moves, the bills of lading showed that the 
shippers experienced a price increase. In 35 percent of the moves, 
shippers experienced a price increase greater than $500 and in 15 
percent of the moves consumers experienced a price increase greater 
than $1,000.
Company Logs
    The Internet broker companies informed the Committee that there are 
two instances in which a broker could become aware of price changes 
after the carrier arrived: (1) if a customer complains directly to the 
broker about a change in the price or to another agency that is then 
forwarded to the broker for a response, or (2) if a carrier alerts them 
to the price increase.\94\ Both of these scenarios are generally 
recorded by the companies in notes that accompany each customer file. 
Committee staff reviewed thousands of pages of documents that included 
these notes. This review showed that a large number of customers are 
calling the broker companies to complain about price increases.
---------------------------------------------------------------------------
    \94\ DiSorbo Broker Companies response to Chairman John D. 
Rockefeller IV Dec. 19, 2011 letter (Jan. 27, 2012); Letter from Jason 
M. Romrell, President and Chief Legal Officer, Budget Van Lines, to 
Chairman John D. Rockefeller IV (Jan. 27, 2012).
---------------------------------------------------------------------------
    Budget Van Lines provided copies of estimates that included 
employee notes about activity on the file. In 2011, at a minimum, at 
least 1,400 customers contacted Budget Van Lines to complain about an 
increase in the cost above the estimate or to question additional 
charges being added by the carrier.\95\ This equates to approximately 
four customer calls each day about price increases. Examples from the 
call log notes include:
---------------------------------------------------------------------------
    \95\ The calculation of 1,400 customer contacts likely 
underrepresents the total number of calls that Budget Van Lines 
received about price increases or to question additional charges in 
2011. The call logs are maintained by Budget Van Lines employees; 
accuracy depends upon the specific employee who is handling the call 
and requires that the employee make a note in the file that the 
customer called as well as the reason for the call.

   ``Customer wife called stated that weight is over by 10,000 
        pounds and is gonna cost another 6,000 dollars . . .'' \96\
---------------------------------------------------------------------------
    \96\ Budget Van Lines Ticket Log (Job #884608) (Aug. 8, 2011) 
(Budget Doc. Exhibit 3-B 270920).

   ``Cust upset that he came in over weight . . . says our 
        system was off [b]y 20 percent doesn't feel like he should have 
        to pay for that weight . . . advise cust system not perfect but 
        he is responsible for additional weight and he must pay 
        carrier.'' \97\
---------------------------------------------------------------------------
    \97\ Budget Van Lines Ticket Log (Job #885329) (Aug. 4, 2011) 
(Budget Doc. Exhibit 3-B 271523).

    The DiSorbo Broker Companies provided the Committee with a smaller 
sampling of similar notes, yet they too showed frequent calls from 
customers about price increases. The notes reviewed were representative 
of approximately 484 completed moves. The call logs showed that almost 
25 percent of those customers called to complain about an increase in 
the price of their moves once the carriers arrived.
Customer Interviews
    Throughout the investigation, Committee staff interviewed dozens of 
consumers who had used the services of the companies from whom Chairman 
Rockefeller had requested information.\98\ In interviews with dozens of 
customers of Budget Van Lines and the DiSorbo Broker Companies, all but 
four reported that the price increased at some point after the carrier 
arrived for pick-up.\99\
---------------------------------------------------------------------------
    \98\ Committee staff called hundreds of customers of the four 
companies investigated. The customers contacted were selected from the 
customer files provided by the companies without regard for whether it 
appeared that the customers had encountered a price increase. As 
discussed earlier in Section C, the information provided by Budget Van 
Lines and the DiSorbo Broker Companies gave no indication whether the 
customer experienced a price increase.
    \99\ Of the four that did not report a price increase, one customer 
cancelled the move prior to pick-up, forfeiting the deposit paid after 
reading negative reviews online. One customer reported that no carrier 
ever showed up to pick up his goods, so his deposit money was returned. 
Two customers had estimates that were based upon a minimum weight. The 
consumers who alleged that they had a minimum weight requirement 
reported moving far less weight than the minimum but still paid for the 
minimum weight.
---------------------------------------------------------------------------
    Customers of the moving carriers also reported increases in price. 
Able Moving did not arrange any interstate moves directly during the 
time period examined by the Committee. All of Able Moving's interstate 
moves were arranged by a broker.\100\ Every customer of Able Moving 
that Committee staff interviewed reported having the price increased by 
Able Moving.
---------------------------------------------------------------------------
    \100\ Letter from Rory K. McGinty, Counsel to Able Moving, Inc., to 
Chairman John D. Rockefeller IV (Feb. 3, 2012).
---------------------------------------------------------------------------
    Unlike Able Moving, Best Price Moving and Storage arranges some 
interstate moves directly and also receives some from brokers.\101\ 
Several customers of Best Price Moving and Storage reported that the 
price either did not increase or did not increase significantly. These 
customers reported that they did not use the services of an Internet-
based broker, but rather worked directly with Best Price Moving and 
Storage.
---------------------------------------------------------------------------
    \101\ Letter from Elliot S. Berke, Counsel to Best Price Moving and 
Storage, Inc., to Chairman John D. Rockefeller IV (Jan. 26, 2012).
---------------------------------------------------------------------------
    Best Price Moving and Storage was unable to recreate complete 
moving files for the Committee that included whether each move was 
arranged by Best Price directly or through a broker. However, based 
upon customers' best recollections of which company arranged their 
moves, it appears that those customers who worked directly with Best 
Price Moving and Storage reported having a better experience and less 
often reported price increases than those customers who arranged the 
move through a broker who then transferred the move to Best Price 
Moving and Storage.
E. Hostage Situations
    Price increases that occur late in the moving process, especially 
after pick-up has occurred, force consumers to make difficult 
decisions. Consumers can either agree to pay the inflated fees, whether 
they are justified or not, or refuse and face the possibility that the 
carriers will not return their household goods and hold their goods 
``hostage.''
    Committee staff obtained numerous examples of consumers who faced 
hostage situations due to price increases late in the process. In one 
example, a Budget Van Lines customer from Missouri complained that she 
had a non-binding estimate from Budget Van Lines for $1,799 to move her 
mother's furniture. However, ``when they arrived they demanded more 
than twice the agreed upon price. When she did not have it they drove 
off with her furniture and [she] was not informed who had the items 
until 5 months later when they demanded three times the agreed upon 
price.'' \102\ Budget's documents showed that the customer's original 
estimate was for 3,150 pounds, and the carrier alleged that she 
actually had 5,920 pounds.\103\
---------------------------------------------------------------------------
    \102\ Better Business Bureau Complaint (Apr. 19, 2010) (Budget Doc. 
Exhibit 2-h 000053).
    \103\ Budget Van Lines Binding Estimate (Dec. 12, 2010) (Budget 
Doc. Exhibit 2-h 000054).
---------------------------------------------------------------------------
    Another customer hired American Van Lines of California for a move 
from Missouri to New York. American Van Lines of California then 
brokered the move to Able Moving, Inc. The customer was provided an 
estimate of $1,346.67 to move 2,000 pounds. The customer paid a deposit 
of $560.66 to American Van Lines of California, leaving a balance of 
$786.01 due upon delivery. Two days after pick-up, ``a representative 
from [American Van Lines] left a message on [his] cellphone stating 
that [the] total for the move was $1,400.40 . . . When we reached the 
carrier the next morning, they claimed that our shipment was 800 pounds 
overweight (despite our having given them less to move than on the 
original agreement with AVL).'' \104\ After Able Moving arrived for 
delivery, they refused to deliver the customer's belongings unless he 
paid the additional money. The customer stated:
---------------------------------------------------------------------------
    \104\ Customer Complaint to Federal Motor Carrier Safety 
Administration, Complaint No. 100037676 (Nov. 7, 2009) (produced by 
Able Moving without Bates Number).

        . . . When we couldn't immediately pay them the additional 
        $614.39, they said they were going to put our possessions in 
        storage, and that we'd have to pay them $350 (then $325, then 
        $250, then $350 again) to release it, and that we'd have to 
        arrange to move it ourselves because they would not 
        redeliver.\105\
---------------------------------------------------------------------------
    \105\ Id.

As of the date of the complaint, the customer had still not received 
their goods.
    In these situations, the absolute worst case scenario is when the 
shippers are unable to acquire the necessary funds to get their 
possessions back, and the carrier resorts to auctioning them off. In 
one example, a Budget Van Lines customer from Idaho complained to the 
FMCSA, stating:

        Budget Van Lines brokered Executive Relocation. Executive 
        Relocation is holding my, and my 3 year old's personal effects 
        hostage. Our estimate from Budget was $1400, now Budget Van 
        Lines and Executive Relocation want $9400. Neither Budget, nor 
        Executive Relocation will provide me with any disclosures or 
        documents as to how they went from a quote of $1400 to now 
        $9400--I have requested this paperwork in writing to them, 
        twice and there is no response from either company. Executive 
        Relocation is telling me that if we do not pay them this $9400 
        that in 90 days they will SELL ALL OF OUR BELONGINGS! Please 
        help?? \106\
---------------------------------------------------------------------------
    \106\ Consumer Complaint to Federal Motor Carrier Safety 
Administration, National Consumer Complaint Database (Jan. 20, 2011) 
(Budget Doc. Exhibit 5 000696).

Documents show that the original binding estimate provided by Budget 
Van Lines was for $1,399 to move 1,000 pounds.\107\ The customer paid 
$571 to Budget Van Lines as a deposit. At pick-up, the customer paid an 
additional $414. Once the carrier had picked up her belongings, she was 
informed that the carrier was charging her for 7,020 pounds, instead of 
the 1,000 pounds that Budget Van Lines had estimated.\108\ The customer 
was unable to come up with the increased fees at delivery, so her 
belongings were placed in storage. The call logs provide that ``all 
[customer] has is $2200, may be able to get up to $2400 and that's all 
she has to work with.'' \109\ The carrier refused to deliver for $2400, 
requiring at least $3,000 to deliver. After many months of negotiating, 
a Budget Van Lines representative wrote, ``this is between customer and 
carrier, customer has paid nothing to date with the exception of pick 
up amount, that is it since December, nothing more we can do, closed.'' 
\110\ It is unclear from the documents whether this customer ever 
received her household goods.
---------------------------------------------------------------------------
    \107\ Budget Van Lines Binding Estimate (Nov. 13, 2010) (Budget 
Doc. Exhibit 5 000698).
    \108\ Budget Van Lines Agent Log (Feb. 7, 2011) (Budget Doc. 
Exhibit 5 000706).
    \109\ Budget Van Lines Agent Log (Feb. 9, 2011) (Budget Doc. 
Exhibit 5 000706).
    \110\ Budget Van Lines Agent Log (May 13, 2011) (Budget Doc. 
Exhibit 5 000700).
---------------------------------------------------------------------------
    Similarly, a Nationwide Relocation Services customer moving from 
Colorado to Florida spent nearly five months negotiating with the 
carrier to deliver. The customer was given an original binding estimate 
for $3,332.85. She paid an initial deposit of $1,585.73, leaving a 
balance of $1,747.12.\111\ After pick-up, the carrier advised that the 
``final weight of her goods was an additional 2,035 pounds above the 
original estimate.'' \112\ The customer was also charged for $1,220 
worth of additional packing services, increasing the amount due at 
delivery by $1,877.52.\113\ The customer objected to this increase and 
alleged that the carrier made her sign blank documents. The customer 
was unable to pay the increased fees, and the carrier placed her goods 
in storage.
---------------------------------------------------------------------------
    \111\ Nationwide Relocation Services Estimate for Service for Job 
No. 6376147-01-R1 (Jan. 14, 2011) (DiSorbo Doc. DBC 002370-002374).
    \112\ Nationwide Relocation Services response to Florida Department 
of Agriculture and Consumer Services (Mar. 8, 2011) (DiSorbo Doc. DBC 
002376).
    \113\ Nationwide Relocation Services Customer Logs (Jan. 17, 2011) 
(DiSorbo Doc. DBC 002394).
---------------------------------------------------------------------------
    After several months of unsuccessful negotiations, on March 9, 
2011, the carrier sent the customer an auction notice.\114\ After many 
more months of haggling with the carrier and Nationwide Relocation 
Services, the carrier agreed to deliver her goods for $2,500. The 
customer's goods were finally delivered on June 4, 2011.\115\ However, 
the customer alleged that the carrier demanded an additional $500 at 
the time of delivery.\116\
---------------------------------------------------------------------------
    \114\ Nationwide Relocation Services Customer Logs (Mar. 9, 2011) 
(DiSorbo Doc. DBC 002388).
    \115\ Nationwide Relocation Services Customer Logs (June 4, 2011) 
(DiSorbo Doc. DBC 002381).
    \116\ Nationwide Relocation Services Customer Logs (June 6, 2011) 
(DiSorbo Doc. DBC 002381).
---------------------------------------------------------------------------
    More often than not, based upon the information reviewed by the 
Committee and the interviews Committee staff conducted, consumers will 
pay the price increases, rather than face a hostage situation. As one 
customer explained, ``[t]he carrier refused to unload belongings unless 
I paid, but did not hold the belongings for more than one day, as I 
paid the balance.'' \117\ The customer reported paying ``roughly $825 
more than the original estimate.'' \118\
---------------------------------------------------------------------------
    \117\ Customer Complaint to Federal Motor Carrier Safety 
Administration (June 1, 2009) (Budget Doc. Exhibit 5 000135).
    \118\ Customer Complaint to Federal Motor Carrier Safety 
Administration (June 1, 2009) (Budget Doc. Exhibit 5 000136).
---------------------------------------------------------------------------
IV. Examples of Moves Booked By Internet Moving Brokers
    Through the investigation, Committee staff accumulated hundreds of 
examples from consumers that demonstrated the flaws and dangers in the 
business practices used by Internet moving brokers. The following are a 
few of those examples. Each example illustrates the experiences of 
shippers who had relied upon Internet moving brokers and their 
interstate moving partners for their interstate moves. For each of 
these consumer stories, there are very likely thousands that are 
similar to them. Committee staff made dozens of calls at random to the 
companies' former customers and heard similar stories frequently.
    Joyce Gonzalez--Miami, Florida.\119\ To plan for her move from 
Detroit, Michigan, to Florida, Ms. Gonzalez selected Budget Van Lines 
after searching online for a good deal. She was quoted a price of $900 
plus a $250 booking fee. She paid $475 as a deposit. She was unaware 
that Budget Van Lines was a broker. A few days past her original 
scheduled moving date, a single mover arrived and loaded her belongings 
into a Uhaul truck; he told her that there was an issue with the truck 
and that her belongings would be reloaded into a larger truck later.
---------------------------------------------------------------------------
    \119\ Committee staff interview with Joyce Gonzales (Sept. 4, 
2012); Joyce Gonzales Complaint to Federal Motor Carrier Safety 
Administration (Mar. 8, 2011) (Budget Doc. Exhibit 5--000903-000904).
---------------------------------------------------------------------------
    On the day of delivery, Ms. Gonzalez received a phone call from the 
movers stating that they were around the corner and would need almost 
$1,700 in cash. When she questioned the price increase, the movers 
stated that it was due to the increased weight of her move. It was only 
at this point that Ms. Gonzalez learned that Able Moving, Inc. was her 
carrier, not Budget Van Lines. When she indicated that she did not have 
the cash, they left with all of her property.
    She was told that her belongings would be placed in storage and 
that until she wired the $1,691 balance, she could neither learn the 
location of her property nor retrieve it; once she paid this amount, 
she would receive the key in the mail and learn the location of her 
belongings. When Ms. Gonzalez asked Able Movers to meet her at a weigh 
station to understand the price increase, she was told that she must 
first wire the remaining balance. At one point, Ms. Gonzalez said the 
movers threatened to take her belongings to Chicago and charge her 
$4,000 to have it shipped back to Florida.
    Ms. Gonzalez repeatedly attempted to contact Budget Van Lines and 
Able Moving and locate her belongings. At each point, she was told that 
she must first wire $1,691 to Able Moving before she could learn where 
her property was being held. Months after her items were taken, Ms. 
Gonzalez received a call from a local storage company near Lake Wales, 
Florida. She was told that her belongings had been sold at auction, but 
the company would hold her personal papers--such as financial 
documents--until she could retrieve them. Unfortunately, she was unable 
to ever get what remained of her belongings.
    According to Ms. Gonzalez, she lost everything--including family 
photos and all of her children's belongings. She also learned that Able 
Moving had continued to seek a wire transfer for $1,691 even after her 
property had been sold at auction. Ms. Gonzalez said, ``They are just 
trying to rip people off that don't have it.''
    Katie Blick White--San Diego, California.\120\ Mrs. White attempted 
to find a local moving company to handle her family's move from 
Wichita, Kansas, but none could handle a move to California. She then 
began searching for a national company online, and ultimately selected 
United States Van Lines because it provided the lowest quote and the 
estimator made her feel comfortable. The estimator repeatedly told her 
that ``he was a professional'' and that ``he always over-estimates the 
price so in the end you'll pay less.'' Mrs. White signed a contract 
with the company dated December 24, 2010, which gave a $2,578.41 
estimate for moving an estimated weight of 4,032 pounds; she requested 
a move date of January 15 or 16 and paid $810.59 as a deposit.
---------------------------------------------------------------------------
    \120\ Committee staff interview with Katie Blick White (Feb. 24, 
2012); E-mail from Katie Blick White to Committee Staff (Feb. 24, 
2012); United States Van Lines Relocation Division Estimate (Dec. 24, 
2010) (DiSorbo Doc. DBC 001398-001406).
---------------------------------------------------------------------------
    On the afternoon of January 11, 2011, Mrs. White returned a call to 
the Quality Assurance department to review the inventory list again. 
She was told at this point that United States Van Lines had 
``drastically underestimated'' her box count; the new estimated charges 
were increased to approximately $4,900 to cover 6,692 pounds. Mrs. 
White allowed them to charge an additional $1,486.14 for her deposit. 
After discussing it further with her husband, later that evening Mrs. 
White emailed the company and indicated that she would not be signing 
the new paperwork, that she would like to cancel the move, and that she 
was within the five-day window to do so and expected a full refund.
    On January 12, 2011, United States Van Lines contacted her and, 
after several discussions, provided a new estimate of $3,539.32. Mrs. 
White said, ``I called QA [Quality Assurance] supervisor [at United 
States Van Lines] back and told her that we would move with the $3,539 
seeing as it was our last resort since we were scheduled to move 3 days 
later. She sent me to another dept to give yet another deposit, and 
told me that the previous 2 deposits would be credited back to my 
card.'' Mrs. White received a $1,155.50 refund to account for her 
adjusted revised estimate.
    On January 15, 2011, movers from Sirena Moving arrived and 
determined that the weight of the household goods was 3,048 pounds more 
than the revised estimated weight. Ultimately, Mrs. White's move cost 
$5,039.68--approximately $1,500 more than her revised estimate from 
three days earlier.
    Holly Root--Middleburg, Florida.\121\ In October 2011, Holly Root 
contacted Budget Van Lines to move her possessions from two storage 
lockers in Minnesota to her home in Florida. At the time of the call, 
Ms. Root was given a quote of $3,500 for 7,000 pounds, with a rate of 
39 cents per pound for any amount over the initial weight. In order to 
secure the move date, she paid a deposit of $1,108.25 to Budget. On the 
day of her move, Ms. Root met the movers at her storage lockers in 
Minnesota and they loaded all of her possessions onto the moving 
trucks. Once they had finished, she said:
---------------------------------------------------------------------------
    \121\ Committee staff telephone interview with Holly Root (Jan. 31, 
2012); E-mail from Holly Root to Committee staff (Feb. 8, 2012); Budget 
Van Lines Estimate and Customer Call Log (Budget Doc. Exhibit 3-B 
326670-326713); Holly Root Complaint to Better Business Bureau (Dec. 
30, 2011) (Budget Doc. Exhibit 2-h 000426-432).

        The storage business was now closed and the storage units I had 
        were now locked up with the storage units [sic] locks. Then one 
        of the movers said ``this is way more than 7000 pounds.'' Then 
        he approached me with a contract he just wrote up for his 
        company, including Budgets [sic] prices. I could hardly read 
        it. It was dark by this time, I told him it was hard to see in 
---------------------------------------------------------------------------
        the dark!

At this point, she was presented with a new contract from Moving 
Central--a company she had previously never heard of--for $8,649, more 
than double the original quote. When Ms. Root asked what would happen 
if she did not sign the new contract, the movers said ``we will unload 
everything right here.'' Ms. Root called Budget multiple times but 
received no assistance. At that point, Ms. Root signed the contract 
with Moving Central and used her credit card to pay an additional 
$4,000 deposit with $3032.63 due upon delivery.
    Ms. Root continued to call Budget to complain about the additional 
charges and her experience. She said:

        I would continue to call and call Budget and they said we'll 
        have to call the carrier, they would put me on hold, sometimes 
        for long periods of time or even disconnect me or give me the 
        run around the [sic] with the same responses, I would ask to 
        speak to a Manager and they would tell me they are in a 
        meeting, then either put me on hold again, hang up and I never 
        got any calls returned. They acted like nothing [was] wrong, it 
        was me. They acted as if they were not even hearing me.

    Despite numerous calls to both Budget and Moving Central, weeks and 
months went by without delivery of Ms. Root's possessions. ``Neither 
company would take responsibility as they held my property hostage.'' 
Moving Central began to threaten to sell Ms. Root's possession at 
auction if she did not pay the additional amount. Ultimately, Ms. Root 
was able to negotiate with Moving Central and have her items delivered, 
although some items are still missing.
    Mark and Julie Malenda--Erie, Pennsylvania.\122\ In November 2011, 
after searching online for a moving company, Mrs. Malenda worked with 
United States Van Lines Relocation Division to arrange the family's 
move from Nevada to Pennsylvania. She spent a considerable amount of 
time on the phone with the company providing a detailed inventory of 
items to be moved. Ultimately, Mr. Malenda signed a contract to move 
approximately 230 items with an estimated weight of 11,182 pounds on 
November 17 or 18; he was told this was a binding estimate not to 
exceed the price.
---------------------------------------------------------------------------
    \122\ Committee staff telephone interview with Mark Malenda (Aug. 
10, 2012); Better Business Bureau, Complaint Activity Report, Case No. 
90127175 (Nov. 28, 2011) (DiSorbo Doc. DBC 002716-002718).
---------------------------------------------------------------------------
    On November 19, American Van Lines arrived and told Mrs. Malenda 
that the weight would likely be over the estimated weight. According to 
Mrs. Malenda, the movers ``had me sign an invoice which I did because 
he refused to load our belongings so we would lose our deposit and have 
to find a new mover one day later than we were supposed to be moved in 
the first place.'' Over the course of several days and through multiple 
phone calls, Mrs. Malenda was informed that the weight was more than 
2,400 pounds over the original estimate and that she owed approximately 
$4,800. Mrs. Malenda informed United States Van Lines Relocation 
Division that she only had $3,600. The company said it would reduce her 
bill by $400 if it received the remaining balance by the following day, 
otherwise ``they would put our belongings in storage and give us the 
address and keys when we could pay the full amount plus the storage 
fees.'' After numerous unsuccessful calls with the company, Mrs. 
Malenda ultimately paid $4,000 to receive her family's belongings--
which included the remains of her youngest son. According to Mrs. 
Malenda:

        This company is not interested in providing any of the customer 
        service they promised when we chose them. We were led to 
        believe they were their own company only to find out through 
        this fiasco that they are a brokerage firm. The actual company 
        that has our things on it's [sic] van is American Van Lines.

    United States Van Lines Relocation Division's response to the BBB 
provided that ``Mrs. Malenda was informed in writing of [their] role 
pertaining to her move.'' But it is not clear whether she was ever made 
aware that the company who was holding her belongings was owned by the 
brother of Aldo DiSorbo, the owner of United States Van Lines 
Relocation Division.
    Alan Vangen--Rio, Wisconsin.\123\ In preparation for his family's 
move, Mr. Vangen obtained bids from four companies, and United States 
Van Lines was the lowest bid. On February 16, 2011, he was given a 
$5,482.39 binding estimate, not to exceed the price, to move 233 items 
weighing 13,289 pounds. Mr. Vangen paid a $2,335.94 deposit on his 
credit card. On March 11, 2011, a representative of United States Van 
Lines contacted Mr. Vangen to review his inventory; Mr. Vangen added 
two items to the move--a stroller and a plastic highchair--and counted 
the total number of boxes to be moved, which was still significantly 
less than the total on the original estimate. Yet these changes 
resulted in an increased estimate amount of $6,095.89 to move 257 items 
weighing 13,892 pounds, resulting in $406.78 in additional charges on 
his credit card. He owed $3,353.17 when his items arrived. According to 
Mr. Vangen:
---------------------------------------------------------------------------
    \123\ Committee staff telephone interview with Alan Vangen (Aug. 
10, 2012); Better Business Bureau, Complaint Activity Report, Case No. 
90092866 (Mar. 25, 2011) (DiSorbo Doc. DBC 002757); United States Van 
Lines Response to Better Business Bureau Complaint and Accompanying 
Customer Call Log Notes (Feb. 28, 2012) (DiSorbo Doc. DBC 002758--
002761).

        This didn't make a lot of sense with adding two small items, 
        and still being under their initial estimate in total boxes--
        they raised the price. From what I understand now, but they 
        never told me. Once you change any part of the initial order 
        the ``binding estimate not to exceed price'' vanishes and you 
        will now have to pay full tariff rates. Not one word was said 
---------------------------------------------------------------------------
        about this.

    When Mr. Vangen arrived in Wisconsin with his family on March 17, 
United States Van Lines informed him that he would have to pay the 
movers, Roma Movers, $4,424.75 in cash instead of the original 
$3,353.17. He was told that if he did not pay this amount, all of his 
belongings would be placed in storage. However, Mr. Vangen had only 
arranged to have $3,400 available based on his estimate. ``The drivers 
were steadfast and refused to due [sic] anything until I gave them the 
additional $1024.75 in cash. I had no choice, so the bank after hearing 
my situation agreed to cash a personal check for cash so I could give 
it to the drivers.'' Ultimately, Mr. Vangen paid $7,166.97 for the move 
instead of the original $5,482.39 estimate. According to Mr. Vangen, 
``What is the point of a contract or estimate if they are going to miss 
it by so much or not abide by it at all?''
    Adam Martin--Phoenix, Arizona.\124\ On June 1, 2012, Mr. Martin 
obtained a $2,856 binding estimate from Budget Van Lines to move his 
belongings from Fort Wayne, Indiana to Phoenix, Arizona, and paid a 
$714 deposit to schedule the move. In addition, he was charged a $278 
booking fee by Budget Van Lines. Mr. Martin requested a pickup date of 
June 8 or 9. Mr. Martin paid $1,070 at the time of pickup, and per the 
agreement the remaining $1,072 balance was due in full at the time of 
the delivery.
---------------------------------------------------------------------------
    \124\ Committee staff telephone interview with Gary Martin (June 
12, 2012); E-mail from Gary Martin to Committee staff and accompanying 
documents (June 12, 2012).
---------------------------------------------------------------------------
    On June 11, Mr. Martin's carrier, Moving Central, Inc., arrived and 
determined that the estimated cost of the move would be $6,159.10. Once 
the carrier had loaded all of his belongings onto the truck he was told 
that he had more items than were listed on the inventory and would need 
to sign a new agreement. Under the new agreement, Mr. Martin owed 
$4,375.10 at the time of delivery--almost four times the cost of the 
original estimate. Since Mr. Martin did not have the amount demanded at 
the time of delivery, he is making payments until he pays off the total 
balance.
    Matthew and Danielle Buhler--Las Cruces, New Mexico.\125\ Ms. 
Buhler's husband was offered a job that required the family to move 
from North Carolina to New Mexico in three weeks. United States Van 
Lines gave her a binding estimate of $3,411.74 to move an estimated 
5,441 pounds; Ms. Buhler originally planned to use a different company, 
but United States Van Lines matched that estimate. Ms. Buhler paid 
$956.32 as a ``binding estimate fee'' to schedule the move for 
September 26. ``They did not advise us until after we gave the deposit 
that it could take 3 weeks to deliver our stuff.'' United States Van 
Lines never explained that they were a broker.
---------------------------------------------------------------------------
    \125\ Committee staff telephone interview with Danielle Buhler 
(Aug. 9, 2012); Better Business Bureau, Complaint Activity Report, Case 
No. 90122099 (Oct. 17, 2011) (DiSorbo Doc. DMC 000410-000411); United 
States Van Lines Response to Better Business Bureau Complaint and 
Accompanying Documents (Nov. 17, 2011) (DiSorbo Doc. DMC 000412-
000422).
---------------------------------------------------------------------------
    On September 27--one day after the move was scheduled to occur--MBM 
Moving Systems, LLC, arrived and determined that the items weighed 
approximately 9,200 pounds, which increased the estimate to $5,285.26. 
Throughout the move, Ms. Buhler attempted to contact United States Van 
Lines, but her phone calls were not returned. Ms. Buhler's items 
arrived on October 17 and were significantly damaged. According to Ms. 
Buhler:

    I see now that it doesn't matter what they promise you because they 
know the contract is not really binding and they can charge you 
whatever they want. After everything happened I researched this company 
and have found that I am not the only person that they did this to. My 
only fault is not researching them more in the beginning, but we were 
in a hurry and the rep I spoke with seemed very knowledgeable and 
friendly. Lo and behold I could not get in touch with her at all once 
we were on the hook. It just goes straight to the manager's voice mail 
and NO one calls you back.

    Richard Selinfreund--Terre Haute, Indiana.\126\ On July 16, 2012, 
Mr. Selinfreund signed a contract with Colonial Van Lines estimating 
his family's move at $4,896.24; he paid an initial deposit of $2,023 
with a pick-up date of July 30, 2012 and an estimated delivery date 
between August 3 and August 11. On July 27, only a few days before the 
scheduled move, a Colonial employee demanded an additional $2,024 
payment or the movers would not come. Mr. Selinfreund paid the 
additional amount.
---------------------------------------------------------------------------
    \126\ Committee staff telephone interview with Richard Selinfreund 
(Aug. 20, 2012); E-mail from Richard Selinfreund to Committee staff 
(Aug. 20, 2012).
---------------------------------------------------------------------------
    On July 30, the day of the scheduled move, Mr. Selinfreund was 
contacted by Colonial, informed that the truck would not be arriving on 
time, and offered $350 if he could wait until August 4. However, Mr. 
Selinfreund explained that he could not wait because he had to be out 
of the home before August 1 pursuant to the contract for sale and to 
avoid paying an extra month on his mortgage.
    On August 1, Colonial Van Lines promised him that a van would 
arrive that afternoon or, at the latest, the next day. Mr. Selinfreund 
was told that he would need approximately $1,900 for the movers. On 
August 2, the carrier--United Distribution Van Lines--arrived and 
demanded over $3,000 to complete the move; when Mr. Selinfreund 
disagreed, the movers drove away. Mr. Selinfreund spoke with Colonial 
Van Lines, and a Colonial employee informed him that United 
Distribution would return the next day for the previously agreed upon 
$1,900. On August 3, United Distribution returned and loaded some of 
the items, taking $1,900 but still demanding over $3,000 to load the 
remaining belongings. Ultimately, Mr. Selinfreund was forced to 
personally rent a truck and hire local labor to load his remaining 
belongings.
    At this point, Mr. Selinfreund was left with no choice but to make 
his $2,700 mortgage payment for the month of August. Furthermore, 
because he was unable to move out by the originally agreed upon date 
and the final walk through could not occur, the contract to purchase 
his home expired on July 31 and was no longer in effect.
    On August 13, he called Colonial Van Lines to determine when his 
shipment would arrive. On August 18, United Distribution informed him 
that the delivery would arrive the next day, but Mr. Selinfreund would 
need to pay an additional $6,526.45 for extra weight and additional 
services. On August 20, United Distribution called again and indicated 
that the total move had in fact cost $10,678.80--more than twice the 
original estimate--and that, based on his previous deposits, Mr. 
Selinfreund owed $4,705.25. Ultimately, Mr. Selinfreund was able to 
negotiate with United Distribution and have his items delivered.
    Edgar Ibarra--St. Augustine, Florida.\127\ Mr. Ibarra began 
searching online to find movers to handle his relocation from Volo, 
Illinois, to St. Augustine, Florida. He spoke with a few companies and, 
on July 15, 2011, ultimately chose Budget Van Lines because it gave the 
cheapest estimate--$1,955--and seemed like a larger company that would 
be concerned about reputation. Mr. Ibarra paid $683.75, which included 
a $195 booking fee, to reserve the move.
---------------------------------------------------------------------------
    \127\ Committee staff telephone interview (Sept. 4, 2012); Edgar 
Ibarra complaint to the Federal Motor Carrier Safety Administration 
(Aug. 26, 2011) (Budget Doc. Exhibit 5--001441-001442); Budget Van 
Lines Estimate and Customer Call Logs and accompanying documents 
(Budget Doc. Exhibit 5--001443-001468).
---------------------------------------------------------------------------
    He was not aware that Budget Van Lines was a broker until after he 
paid the initial fee. A few days before his August 2011 move, he 
learned that Able Moving Inc. would be his carrier. On August 14, 2011, 
Able Moving packed Mr. Ibarra's belongings, and Mr. Ibarra paid 
$733.13, with the remainder of approximately $700 due at the time of 
delivery. Approximately one week later, the driver for Able Moving 
called Mr. Ibarra to arrange for delivery of the items and indicated 
that Mr. Ibarra owed approximately $1,650. This included approximately 
$600 in additional packing expenses that had not previously been 
disclosed to Mr. Ibarra. When Mr. Ibarra requested paperwork from Able 
Moving, he received documents that he believes Able Moving altered 
after he signed them in order to increase the price.
    When Mr. Ibarra stated that he only owed $700 more and would not 
pay the additional money, Able Moving put his belongings in storage and 
refused to release them until he wired funds. Mr. Ibarra was not told 
where his items were, and despite numerous calls to both Able Moving 
and Budget Van Lines, he received no assistance. Mr. Ibarra contacted 
FMCSA on August 26, 2011 to complain and, with the agency's assistance, 
ultimately paid $928.12 on September 4, 2011 and received his items.
V. Conclusion
    Despite continuous legislative and enforcement efforts, thousands 
of consumers continue to complain every year that moving companies give 
them low estimates, but then increase the cost dramatically once the 
move is underway. In recent years, the rise of the use of the Internet 
by consumers to locate a mover has increased the presence of Internet 
moving brokers. Many of the business practices used by Internet moving 
brokers appear to be problematic for consumers and lead to a 
significant number of consumer complaints. As the household goods 
moving industry continues to evolve, policymakers, regulators, and law 
enforcement officials will need to put more effort into understanding 
the role of Internet moving brokers and the impact that these practices 
are having on consumers.













    The Chairman. It is very nice. It will make you a little 
angry when you read it. It is not that long. Ms. Kovalcik, you 
can do it on the train ride back. You are taking the train back 
to Brooklyn?
    Ms. Kovalcik. Yes.
    The Chairman. You are? OK. Well, I will give you my copy.
    The fact of the matter is that, in spite of the fact that 
we have new rules and regulations, that the number of 
defrauding cases has increased in the last several years, and 
the overcharges have increased, hostage situations, that is 
when you are held hostage and the truck just says, ``All right, 
well, that so called bill of lading,'' which I will get into in 
a minute, ``which you did over the Internet or over the 
telephone does not mean a thing to me, and so we are going to 
have a new bill of lading, and you got to sign it, and if you 
do not sign it, well, by golly, I am just going to hold your 
furniture and all of your moving goods hostage, and there is 
not anything you can do about it.''
    One of the reasons that moving scams are not going away is 
that dishonest companies are getting better at using the 
Internet. Some moving brokers--brokers, remember that--have 
figured out how to use the Internet to lure customers into a 
bait and switch game. Here is how it works.
    Internet moving brokers sign up consumers by offering them 
low, so-called binding statements for their moves. Now, these 
brokers do not own any trucks. They are not moving companies. 
They are brokers. But, they do not tell you that. They do not 
say, ``Oh, we do not have any trucks. We are just a broker, and 
then somebody will turn up at your place, but we do not know 
who it is going to be.''
    They are not upfront with their customers at all. On the 
day of their moves, many customers learn for the first time 
that an entirely differently named company will be moving their 
possessions, and that will always be a company that they have 
never heard of, and the sketchy companies that show up on 
consumers' moving day routinely jack up the price of the moves 
after they have loaded all the consumers' worldly possessions 
in the back of their trucks.
    Now, to their credit, which I am loathed to give them any 
of, they do, presumably, look out to see what is going to be 
moved, and how heavy it is, and how much there is, and how 
valuable it is, and all the rest of it, because they have to 
put a price on it. But, to this point, they have not done that, 
but then they quickly do after they pack it up.
    The bill of lading, which Ms. Kovalcik has been worrying 
about, just disappears from the face of the Earth. It is a 
nothing. It is an absolute nothing. And, she is handed a new 
bill and a new piece of paper to sign. If she does not sign 
that piece of paper, which probably doubles or triples the 
amount of money that she will be required to pay, they may 
drive the truck for a couple of blocks, and just park it in 
some parking lot, and they hold all the moving goods hostage.
    Now, this is not going to cure our problems with Iran, or 
with the Soviet Union, or with China, or anything else, but 
that is not what we are here for. We are here to try and help 
out people like Ms. Kovalcik who have been through these 
horrible experiences.
    So, again, the consumers have received so-called binding 
estimates from somebody who comes to them through the Internet 
or over a telephone, and hereby, who by definition, has 
absolutely no idea what is in the consumer's house, whether 
there is a lot, whether it is valuable, whether they are all 
antiques, whether they all come from the Baroque period, 
whether they are modern, whether there were a lot of them, 
whether there were a little of them. They have no idea. But, 
they quote a price, and it is always a low price, always a low 
price, because low prices are nice things to have, if, in fact, 
it turns out that way.
    But, they do not see Ms. Kovalcik. They do not have any 
experience with her. They do not see her house. They do not see 
her goods. They do not see what they are saying they are going 
to do. And then, they give themselves names, and we will get 
into that. And, they give themselves names which are 
suspiciously like moving companies. In other words, the broker 
who has no trucks, probably has a car to get to work, but no 
trucks, no moving capacity, but they give themselves a moving 
van-like name. So, what is Ms. Kovalcik meant to do?
    She believes, in fact, that they are going to move her 
stuff, and she has no reason, she signs a bill of lading, it is 
a low price, and she is happy about that. And then, this 
totally different company, who she has never heard of, comes 
in, has not been told about that company, and then she gets 
scalded.
    That makes this Committee very angry, and it makes us very 
ambitious to make sure, Mr. Barry, that more people go to jail. 
I mean, it is nice to have the Better Business Bureau sort of 
downgrade your rating, but frankly, that really does not help 
Ms. Kovalcik very much, does it? It is when people go to jail 
that the signal is given in the industry that they better be 
careful because people are watching.
    So, today, we are going to--and this is nothing more than 
extortion, and then these nice moving companies that come in, 
after they take Ms. Kovalcik's--all of her worldly goods, they 
threaten the consumer and say, ``You are never going to see 
your things again, unless you agree to pay us thousands of 
dollars in additional charges.'' That is extortion.
    They have the goods. They have made her sign something. She 
suddenly is getting very nervous, and then they threaten her. 
And, what is she going to do? Tell them to unload it? No, they 
are not going to do that, because they have got a scam going.
    So, today we are going to learn more about how Internet 
moving brokers and their moving carrier partners are causing 
substantial harm to consumers all across America.
    Now, these companies are not only hurting consumers, they 
are also damaging the reputation of the moving industry, which 
we do not want, because the vast majority of moving companies 
follow the law and give customers good service at a fair price. 
But, not Ms. Kovalcik, and she is representative of so many 
people.
    So, we need to redouble our efforts to end these abuses, 
whether that means improving consumer protection, consumer 
education--it is sort of like these ads that you are seeing on 
television now, ``Wait a little bit.'' In other words, do not 
text when you are driving. You can wait. You can wait. You can 
die, or you can wait. And, if you have an accident, you kind of 
remember that, and you do not do it again. Well, these moving 
companies and these brokers need to have an accident so that 
they do not do these kinds of things in the future.
    We need to give our regulators and law enforcement agencies 
more authority, and we have to give them more resources which 
is easy to say and hard to do these days, when we are facing a 
fiscal cliff. But, we are going to fight mightily on this 
Committee to get adequate resources to some of those who are 
before us. We need to put these companies out of business.
    And, we are going to keep doing our part in this Committee. 
We will continue working to improve Federal policy, and when we 
find information indicating potential criminal activities by 
these companies, we will share it with the Department of 
Justice, the Dot Inspector General, any other appropriate 
authority. These abuses have to end.
    Now, let me read our witnesses. Great, I got my coffee.
    One is the Honorable Anne Ferro, and you are there, and you 
are the Administrator of the Federal Motor Carrier Safety 
Administration, the acronym of which is very hard to pronounce. 
So, you have to know all five words, or four words, or whatever 
it is.
    Mr. Timothy Barry, who is the Principal Assistant Inspector 
General for Investigations for the Department of Transportation 
Office of the Inspector General. That makes him a powerful guy, 
a powerful guy.
    Ms. Reana Kovalcik, she is from New York, she has traveled 
to D.C. to, as it says here, ``share her moving experience with 
this Committee.'' Now, I take that as a literal statement, 
``moving,'' but it can be taken in both ways. I mean, she has 
been through--you will have to tell us when you give your 
testimony what you went through and how you felt about all 
this.
    Ms. Linda Darr, who is President and CEO of the American 
Moving and Storage Association. And, we want to protect your 
reputation.
    And, Mr. Jason Romrell. Mr. Romrell is President and Chief 
Legal Officer of Budget Van Lines, which turns out to be one of 
the van lines that turned up.
    OK, I would like to call on Anne Ferro first for your 
testimony. And, I apologize for the lack of colleagues, but 
this is the last day we are going to be in session, and so, all 
kinds of things are going on, but I want at least three or four 
people that are going to be here.

        STATEMENT OF HON. ANNE S. FERRO, ADMINISTRATOR, 
FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION, U.S. DEPARTMENT OF 
                         TRANSPORTATION

    Ms. Ferro. Well, Mr. Chairman, thank you very much for the 
opportunity to join this panel today and discuss with the 
Committee the business practices of the household goods 
industry, and the role of the Federal Motor Carrier Safety 
Administration in that process of weeding out, detecting and 
prosecuting the deceitful practices that you described in your 
opening remarks.
    The FMCSA's primary mission is to reduce truck-and bus-
related crashes and fatalities. Our primary mission is safety. 
But, we also are absolutely committed and dedicated to improve 
consumer protections in the moving industry as part of our 
mandate and part of something we totally embrace. We know how 
vulnerable----
    The Chairman. It is part of your law.
    Ms. Ferro. Part of our law, yes sir. Thank you. We know how 
vulnerable some consumers feel and how vulnerable they actually 
are when their personal property is held hostage by a household 
goods carrier. And, we can constantly work to enforce the 
commercial rules, educate consumers, leverage partnerships, and 
take action against unsafe and unscrupulous moving companies 
and brokers.
    The FMCSA's commercial oversight structure is based on a 
peer relationship between shipper and moving company. In which 
case, in this case the shipper is a consumer. The relationship 
works best both when the shipper and the moving company are 
commercial entities, because both are accustomed to commercial 
operating requirements and civil dispute procedures.
    Homeowners and renters are at a disadvantage in this 
relationship because they may not be aware of the rights, the 
responsibilities, the obligations of that moving company.
    A great example of this is the very fact that rogue movers 
rarely prey upon office relocation activities. An office move 
negotiation generally takes place between business peers.
    Currently, of the 525,000 motor carriers that we oversee, 
that we regulate, just over 4,000 are registered moving 
companies. Out of the 21,000 brokers we regulate, just about 
500 are household goods brokers. And, of the approximately 
18,000 safety compliance reviews that we carry out on the 
industries we regulate each year, about 600 are conducted on 
household goods moving companies and expanding now to brokers.
    Our household goods oversight strategy is driven by four 
actions, much of which you actually identified in your 
testimony--detect, investigate, prosecute, and educate.
    Those strategies start with the detection piece. From the 
outset, we scrutinize applicants for household goods operating 
authority, a process that we call vetting, a process we use on 
household good and passenger carrier applicant side to attempt 
to identify and prevent reincarnated carriers, or those that 
create a new identity to avoid our enforcement actions, and 
come back into a business, avoid being shut down by 
reincarnating, to weed those out.
    Since we began this vetting process in 2009, we have 
reviewed and received almost 3,700 applications for household 
goods authority, and we have vetted out about 30 percent of 
those, that either were rejected by virtual of the content and 
nature of the applicant, or were actually withdrawn because of 
the additional information we requested and they never followed 
through.
    We also operate a national consumer complaint data base, 
where consumers can file complaints against unsafe and 
unscrupulous companies, including moving companies and brokers. 
This year, in 2012, we received about 2,300 complaints. Roughly 
20 to 25 percent are the hostage load complaints that you 
described.
    We will use this data, we do use this data, combined with 
our safety analysis, to go after the worst offenders. We create 
a top 100 list, and when we prosecute and find a very tough 
case, we work with the Inspector General's office to carry it 
through to that criminal prosecution and jail time every chance 
the Inspector General can achieve that.
    We work very hard to get the bad operators out of business, 
and we do that in large part through partnerships, with Federal 
agencies like the Inspector General, with help and guidance 
from the Federal Trade Commission, and in developing stronger 
partnerships with our state law enforcement and public utility 
commissions. It is an effort that has evolved over time since 
SAFETEA-LU. We now have three states that have specifically 
signed MOU's, with trained officers to begin household goods 
compliance reviews early next year, and we have five other 
states in the wings. These states become our force multiplier 
in attacking this problem of deceitful practices.
    MAP-21 has provided some outstanding new authority for us. 
It authorizes us specifically to require testing of a household 
goods applicant before they get their authority, a follow up 
commercial review within their first 18 months of authority. It 
provides and allows for us to assign as restitution to the 
consumer a portion of the penalty, a portion or all of the 
penalty, that we levy against the carrier or that shipper, or I 
should say mover, that has committed violations. These 
additional authorities absolutely will help us crack down on 
hostage good situations and on the deceitful practices.
    We also want to be sure that all consumers have the 
resources they need to get a professional move. We have 
protectyourmove.gov. This is a website that we have absolutely 
improved over time to be a tremendous resource for consumers to 
look at, and educate a consumer as a protected consumer, and we 
are working very hard with other partners in the industry, 
private and public, to get the word out on protectyourmove.gov.
    The Chairman. So protectyourmove.gov?
    Ms. Ferro. Precisely.
    The Chairman. I would much rather be reading that then a 
lot of these political, you know, Internet things you can dial 
into so they can get money from you.
    Ms. Ferro. Thank you for that endorsement.
    The Chairman. To try and help people.
    Ms. Ferro. Thank you for that, and it is very helpful. Two 
very simple tools right there in addition to lots of 
information, a simple checklist of things to do before you 
select a mover and a very clear checklist of things you want to 
do to prevent being caught by a fraudulent mover.
    So, we are absolutely committed, our team at FMCSA, and our 
investigators across the country that are specific to household 
goods investigations, and their partners. We are committed to 
pursuing through investigation, committed for pursuing through 
enforcement action and partnering with other agencies to 
prosecute those entities that are committing fraudulent 
practices against consumers, and ensuring the consumers have 
the tools they need to protect their moves. So, Mr. Chairman, 
thank you again for that time, and I look forward to the 
questions.
    [The prepared statement of Ms. Ferro follows:]

Prepared Statement of Hon. Anne S. Ferro, Administrator, Federal Motor 
    Carrier Safety Administration, U.S. Department of Transportation
    Mr. Chairman, Senator DeMint, and members of the Committee, thank 
you for the opportunity to appear before you today to discuss the 
business practices in the household goods moving industry. The Federal 
Motor Carrier Safety Administration (FMCSA) takes very seriously its 
responsibilities to help protect consumers that utilize the services of 
the moving industry through its Household Goods Program, which is why 
we continue to educate consumers, build partnerships with States and 
other Federal agencies, and take necessary enforcement action on unsafe 
and non-compliant moving companies.
    The primary mission of the FMCSA is to reduce crashes, injuries and 
fatalities involving large trucks and buses. FMCSA's 1,100 employees 
are responsible for monitoring the safety performance of over 525,000 
active motor carriers, of which approximately 4,000 transport household 
goods. Additionally, the Agency is responsible for ensuring the 
compliance of over 21,000 brokers to the Agency's safety and consumer 
protection rules. Of these brokers, approximately 500 are household 
goods brokers. Each year, the Agency performs compliance reviews on 
about two percent of the motor carrier industry, which is about 16,000 
compliance reviews per year. About 400 of these compliance reviews are 
performed on household good carriers, which is about ten percent of the 
household good carrier population each year.
    Over the last ten years, the Agency has expanded its household 
goods program by establishing strategic partnerships with States and 
other Federal agencies, implementing a vetting program to catch 
unscrupulous carriers, and conducting enforcement actions on egregious 
offenders. Over time, FMCSA became aware that there were an increasing 
number of moving-related websites hosted by household goods brokers 
engaging in unfair business practices.
    The Safe, Accountable, Flexible, Efficient Transportation Equity 
Act: A Legacy for Users (SAFETEA-LU) directed the Agency to require a 
broker to provide shippers with specific information whenever it has 
contact with a shipper or potential shipper. The Agency included these 
requirements as part of the ``Brokers of Household Goods Transportation 
by Motor Vehicle'' final rule that became effective on January 28, 
2011. This rule helps ensure that individual shippers who arrange for 
transportation of household goods through brokers receive necessary 
information regarding their rights and responsibilities in connection 
with interstate household goods moves. The rule requires all household 
goods brokers to: (1) provide customers with full disclosure that they 
are not motor carriers; (2) provide customers with the same ``rights 
and responsibilities'' documents that household goods motor carriers 
are required to provide; (3) display a U.S. Department of 
Transportation (USDOT) number on their advertisements and Internet 
websites; and (4) obtain a surety bond or trust fund of $25,000.
Core Priorities
    The FMCSA has a number of initiatives and programs underway aimed 
at achieving our core safety and compliance mission. We have three 
goals that are the strategic framework and focus of our efforts and 
resources:

  1.  Raise the safety bar to enter the industry;

  2.  Require operators to maintain high safety standards to remain in 
        the industry; and

  3.  Remove high-risk operators from our roads and highways.
Raise the Safety Bar
    In April 2009, FMCSA implemented a vetting program to thoroughly 
review applications from household goods motor carriers, brokers, and 
freight forwarders before granting operating authority. The vetting 
process is an in-depth investigation of the applicant to determine if 
it is a reincarnated carrier, broker, or freight forwarder, or has 
affiliations with unsafe or non-compliant entities. The Agency compares 
information about the applicant to data in our Motor Carrier Management 
Information System, which contains an overall company profile, in 
addition to information on the safety fitness of commercial motor 
carriers and hazardous material shippers subject to the Federal Motor 
Carrier Safety and Commercial Regulations (FMCSRs & FMCCRs) and the 
Hazardous Materials Regulations (HMRs). It then investigates any red 
flags in new applications that may indicate an unscrupulous or unsafe 
carrier is attempting to reincarnate, or begin operations under another 
name. Since the inception of the program, the Agency has vetted and 
approved more than 2,400 applications of the more than 3,700 
applications it has received. Of the remaining applications, 
approximately 700 were rejected and 500 were withdrawn.
    The new surface transportation reauthorization law, Moving Ahead 
for Progress in the 21st Century (MAP-21), sets forth requirements that 
greatly improve the standard for entry into the industry. MAP-21 
directs the Secretary of Transportation to issue distinctive 
registration numbers to a person for each authority they request to 
provide transportation or services such as brokering or freight 
forwarding. MAP-21 also increases the level of financial responsibility 
necessary to be registered as a broker, from $10,000 in surety bonds or 
other financial instruments to $75,000 in order to help address claims 
from failure to pay freight charges under a contract or agreement. 
Household goods motor carriers will also be required to successfully 
pass an examination to demonstrate knowledge of safety and consumer 
protection regulations before entering the industry.
Maintain High Standards
    At FMCSA, we have implemented a multi-layered approach to improving 
the safety of commercial motor vehicles involved in transporting 
household goods across State lines, while also ensuring protection 
against moving fraud and abuses. The main components of our efforts to 
maintain high standards in the household goods industry are the 
National Consumer Complaint Database (NCCDB), the Top 100 Household 
Goods Prioritization list, and our hostage goods resolution program.
    The NCCDB maintains complaint information regarding movers and 
passenger carriers. Complaints can be filed in one of two ways: (1) by 
calling our toll free hotline, and (2) by filing the complaint 
electronically on our Protect Your Move website.\1\ The NCCDB database 
is an important tool to assist our enforcement partners combating rogue 
household goods motor carriers.
---------------------------------------------------------------------------
    \1\ https://www.protectyourmove.gov/.
---------------------------------------------------------------------------
    The FMCSA began capturing complaint data in Fiscal Year (FY) 2002 
and received 1,973 complaints in that year. The complaints peaked in FY 
2005 with 3,583 and they numbered 2,851 in calendar year 2011. While we 
track our progress in reducing complaints, we recognize that it is 
probable that complaints will increase as we increase our efforts to 
educate and outreach to consumers.
    The Agency's household goods working group, which includes Federal 
and State enforcement officials, has established an informal 
``Contributing Partner'' effort to assist our State enforcement 
partners in accessing the NCCDB to view or enter complaint data on 
motor carriers and brokers.
Remove Unsafe Operators
    FMCSA has developed a number of enforcement tools to crack down on 
those carriers that violate the FMCSRs and the FMCCRs. We have 
implemented authority to remove from service motor carriers deemed to 
be unfit or declared an imminent hazard as part of our core safety 
program. Most recently, we expanded our efforts and established 
guidance and procedures to revoke the operating authority of motor 
carriers and brokers that continually violate the safety and/or 
consumer protection regulations. To combat the problem of hostage 
loads, we have put into place procedures to revoke the operating 
authority of those found to have committed violations. Finally, FMCSA 
is providing public notice this week alerting the household goods 
industry of our enforcement efforts to suspend or revoke operating 
authority when carriers either demonstrate a pattern of violating the 
commercial regulations or hold consumers' goods hostage.
Investigations of Motor Carriers and Brokers
    FMCSA is well aware of the four motor carriers and brokers that are 
at the heart of your Committee's investigation. The Agency conducted a 
compliance review on Budget Van Lines in January 2011. While this 
investigation did not result in an enforcement action against Budget 
Van Lines, it did lead to an investigation of a series of household 
goods carriers working in concert with Budget Van Lines that were 
noncompliant with the household goods regulations. This investigation 
led the Agency to carriers in California, Florida, Georgia, Maryland, 
New Jersey, and New York and resulted in enforcement actions for 
violations of the household goods regulations on eleven motor carriers.
    Based on complaints that we received, the Agency has also 
investigated Able Moving, Inc., and Best Price Moving and Storage, Inc. 
Able Moving's investigation resulted in an enforcement action for non-
compliance with safety regulations while the investigation for Best 
Price Moving and Storage resulted in no enforcement actions. While Able 
and Best Price have been on the Agency's Top 100 Prioritization list in 
the past, currently, there is not enough data to place them on the list 
as a priority investigation. A preliminary review of Nationwide 
Relocation shows that the company started as a broker and then acquired 
motor carriers, many with records of non-compliance. The Agency is 
currently determining next steps, as a major investigation such as this 
requires FMCSA to balance this task with its core safety mission for a 
significant period of time.
Top 100 Carrier List
    As discussed above, the Top 100 Household Goods Carrier list 
utilizes data from both our Safety Measurement System (SMS) and the 
NCCDB to rank household goods carriers according to their risk of 
commercial regulatory non-compliance.
    The SMS utilizes violation data from roadside inspections and 
investigations, as well as crash data, to identify those carriers with 
the highest risk of crashes and compliance problems. This tool is the 
primary mechanism for FMCSA to prioritize carriers for safety 
interventions. The data in SMS, when linked with the complaints in the 
NCCDB, allow us to identify the 100 household goods carriers with the 
most significant safety and compliance problems to most effectively 
utilize our limited resources. These carriers are then targeted for 
reviews and enforcement, as appropriate.
    In FY 2011, FMCSA conducted over 500 investigations of household 
goods carriers, resulting in approximately 200 enforcement cases. The 
Top 100 list in itself yielded an enforcement rate of nearly 50 percent 
clearly showing its effectiveness as a tool to help the Agency focus 
its limited resources on the most egregious of household goods motor 
carriers.
Hostage Loads
    The FMCSA is also working hard to combat the problem of household 
goods carriers holding consumers goods and demanding additional 
payment. These situations, known as ``hostage loads,'' are particularly 
egregious offenses on the consumer. Many consumers unwittingly fall 
prey to unscrupulous motor carriers who take advantage and exploit the 
consumer. Consumers also often hire moving companies with the lowest 
estimate, instead of confirming that the company is safe and has a good 
customer service record.
    Consumers are often unaware of the regulatory requirements that are 
in place to protect them. Despite an increased focus in outreach, too 
many times consumers fall victim to rogue operators who are willing to 
disregard regulations. FMCSA attempts to address each and every hostage 
load complaint with some level of investigation which could include a 
full onsite investigation when necessary.
    MAP-21 provided the Agency with important new tools to combat 
problems of hostage goods situations. Beginning October 1, 2012, FMCSA 
will have the authority to require the return of hostage goods loads to 
consumers and may also direct a portion of a civil penalty to reimburse 
consumers for their financial losses. FMCSA is beginning to implement 
these new authorities and believes they will provide further strength 
to our household goods program.
Reincarnated or Chameleon Carriers
    It is a common practice in the motor carrier industry for some 
motor carriers to establish a new identity once FMCSA shuts the company 
down because it is not fit, willing, or able to comply with applicable 
safety regulations. The practice of reincarnating to avoid negative 
safety performance history or enforcement action causes an unacceptable 
risk of harm to the public because it hinders the Agency's ability to 
enforce Federal safety regulations and carry out its safety mission. A 
recent amendment to the Agency's Rules of Practice, effective May 29, 
2012, provided procedures for the Agency to issue out-of-service orders 
and/or record consolidation orders when carriers are deemed to be 
reincarnated or affiliated companies that have been created to evade 
complying with an FMCSA order or a regulatory requirement, paying a 
civil penalty, or responding to an enforcement action to avoid being 
linked with a negative enforcement history.
    The issue of reincarnated carriers among the household goods 
industry has become an increasing challenge. A recent investigation 
revealed a household goods motor carrier that was affiliated with 
several other entities that were all controlled by the same corporate 
officials. For each of these affiliated businesses, the NCCDB revealed 
numerous complaints. In an effort to address these types of issues, 
FMCSA is pursuing the affiliated motor carriers and it is considering 
the feasibility of suspending their operating authority.
Broker Activities
    On January 28, 2011, FMCSA's new requirements pertaining to brokers 
who arrange for the transportation of household goods in interstate or 
foreign commerce went into effect. The rule requires, among other 
things, that when the Unified Registration System final rule becomes 
effective, all household goods brokers display a USDOT number on their 
advertisements and Internet websites. In an effort to facilitate this 
requirement in advance of the full compliance date, the Agency has 
already issued USDOT numbers internally to all brokers in the database.
    The rule also provided regulatory authority to address many of the 
concerns that we commonly face with problematic or unethical brokers. 
For example, brokers are required to clearly state that they are not a 
motor carrier in their advertisements. This has been a consistent 
problem because unscrupulous brokers are aware that consumers prefer to 
deal with the motor carrier directly.
    MAP-21 sets forth requirements for higher standards for compliance 
and gives the Agency additional tools for enforcement. It increases the 
registration requirements and directs the Secretary of Transportation 
to issue distinctive registration numbers to motor carriers, brokers, 
or freight forwarders. It prohibits a motor carrier from brokering 
transportation services from other motor carriers unless the motor 
carrier is also a registered broker. MAP-21 also provides effective 
periods for registration and requires a broker or freight forwarder to 
provide a minimum financial security of $75,000 dollars and to evaluate 
if that amount is sufficient every 5 years.
Outreach
    Another layer in our multifaceted approach to increasing safety and 
consumer protection is the implementation of an aggressive outreach 
program. The cornerstone of this effort is the ``Protect Your Move'' 
website, which serves as a first line defense to protect the consumer. 
The site contains a wealth of information for consumers to use while 
planning a move as well as a variety of consumer protection bulletins, 
``The Moving Fraud Protection Checklist,'' and a public service 
announcement. FMCSA recognizes that those hiring moving companies are a 
diverse group--college graduates venturing into new careers, employees 
changing jobs, or individuals who are moving during retirement. The 
website targets materials for all these groups. Public awareness of the 
Protect Your Move website is building. During the first 9 months of FY 
2012 (October 1 through June 30, 2012), there were over 6,300,000 
website hits compared to approximately 3,600,000 during the same period 
in FY 2011. This represents a 74 percent increase. We understand that 
moving is a stressful time, and our goal at FMCSA is to ensure that the 
consumer is protected to the fullest extent.
    The website also includes links to the NCCDB so that consumers can 
research registration status and complaint history of household goods 
motor carriers and brokers before hiring them. This database allows the 
consumer to review and examine the motor carrier's safety and complaint 
data. Other features on the website include: (1) a regulatory webpage 
for our enforcement partners and industry with appropriate Federal 
regulations and statutes; (2) a State and local government resource 
webpage offering information to the consumer whose problems are beyond 
FMCSA's jurisdiction; and (3) a summary of the new broker requirements.
Partnerships
    To combat the problem of unsafe and rogue moving companies, FMCSA 
is constantly reaching out to Federal, State, and local law enforcement 
agencies to develop partnerships to enhance enforcement and combat 
consumer fraud.
    As a result of discussions with the Government Accountability 
Office, FMCSA reviewed the Federal Trade Commission's (FTC) approach to 
consumer protection and is making changes in the interstate household 
goods consumer protection efforts to clearly articulate the 
Department's goal of ensuring consumer protection within its mission. 
These discussions led to the proposed sharing of FTC's investigative 
database, the ``Consumer Sentinel Complaints Database.'' FMCSA also 
reviewed FTC's enforcement strategies and implemented collaborative 
efforts to provide outreach to inform consumers who contact FTC on 
household goods moving fraud.
    A second relationship was forged with the Federal Maritime 
Commission (FMC) and a formal memorandum of understanding to formalize 
collaboration efforts on enforcement activities combating household 
goods fraud and unscrupulous motor carrier operations. This partnership 
allows FMCSA to be involved in enforcement on international movements 
of household goods. While this partnership is new, the Agency is 
eagerly pursuing opportunities to fight rogue motor carriers with the 
support of FMC.
    Another Federal collaboration to combat fraudulent motor carrier 
operations is with the Office of the Inspector General (OIG). The OIG 
has been given access to FMCSA's complaint databases, and they are 
using the data to target motor carriers with numerous complaints of 
fraud. To date, the OIG has completed several investigations on motor 
carriers with fraudulent activities. The OIG recently used data from 
the NCCDB to conduct an investigation and indict a large motor carrier 
operation. Through our collaborative efforts, FMCSA assisted in the 
criminal case by providing expert testimony during the trial.
    FMCSA also has an aggressive campaign to solicit full State law 
enforcement partners to work directly with FMCSA to enforce Federal 
commercial regulations within their jurisdictions. To facilitate this 
effort, FMCSA has provided numerous training opportunities to States 
that are interested in receiving household goods enforcement training. 
To date, Louisiana, Ohio, Indiana, California, New Jersey, Michigan, 
South Carolina, and Texas have received training on household goods 
enforcement. Of those States trained, Louisiana, Ohio, and Texas have 
signed memorandums of agreements--becoming full enforcement partners 
with FMCSA. As a result, each of these States may conduct household 
goods compliance reviews on interstate motor carriers. In accordance 
with the provisions of SAFETEA-LU, they will have the ability to retain 
the financial penalties from any pending enforcement action.
Household Goods Working Group
    As outlined in SAFETEA-LU, the Agency established a working group 
of State attorneys general, State consumer protection administrators, 
and Federal and local law enforcement officials to enhance the Federal-
State partnership on issues involving the interstate transportation of 
household goods. The statute further required that the working group 
make legislative and regulatory recommendations to the Secretary 
concerning enforcement efforts. The workgroup identified three priority 
areas for enhanced outreach coordination:

  1.  General Communication and Information Sharing;

  2.  Information Sharing Related to Federal Laws and Regulations; and

  3.  Enforcement-Specific Communication and Information Sharing.

    To fully implement these goals, the Agency is continually engaging 
the enforcement community and providing updated regulatory, legal, and 
investigative information. As mentioned earlier, FMCSA has provided 
State Partners and Contributing Partners access to the NCCDB through 
the ``Protect Your Move'' website. The database allows partners to view 
household goods enforcement information that can benefit their 
investigations.
    The FMCSA has issued a call for all States to become contributing 
household goods enforcement partners, which allows them access to the 
NCCDB to directly input complaints from consumers related to interstate 
moves.
Conclusion
    Thank you for the opportunity to appear before you today. Over the 
last few years, FMCSA has made significant progress in executing its 
commercial enforcement program. We have a good program with limited 
resources. The goal of our dedicated staff and partners is to protect 
consumers and protect the highways. We are continuing to build on these 
successes and enhancing the program through data-driven decision 
making. We look forward to executing the provisions in MAP-21 that 
increase FMCSA's ability to raise the safety bar to enter the industry, 
require operators to maintain high safety and ethical standards to 
remain in the industry, and to allow FMCSA to remove high-risk 
operators from our roads and highways.

    The Chairman. So do I, and thank you very, very much.
    Ms. Ferro. Thank you.
    The Chairman. Mr. Timothy Barry. We are very formal around 
here, we cannot call you by your first name or anything, okay.

       STATEMENT OF TIMOTHY M. BARRY, PRINCIPAL ASSISTANT

             INSPECTOR GENERAL FOR INVESTIGATIONS,

               U.S. DEPARTMENT OF TRANSPORTATION

    Mr. Barry. Thank you. Good morning, Chairman Rockefeller, 
and good morning, Senator Lautenberg.
    Thank you for the opportunity to testify on our efforts to 
combat household goods fraud. While we have found that the vast 
majority of the Nation's household goods carriers are honest 
hardworking professionals, there are dishonest companies who 
operate with the sole purpose of illegally making as much money 
as they can from unsuspecting consumers. These companies not 
only afflict financial and emotional pain on their victims, but 
they also give the moving industry a black eye.
    My testimony today will focus on our experiences in 
investigating household goods fraud. In conducting these 
criminal investigations we have partnered with Federal and 
state law enforcement agencies, as well as FMCSA, with the hope 
of prosecuting as many of these rogue movers and brokers as 
possible.
    OIG criminal investigations send a strong deterrent message 
to violators who consider civil penalties simply a cost of 
doing business. We currently have 1,400 open investigations 
involving companies operating under 108 different names, with 
more than 3,800 potential victims, and losses amounting to 
approximately $1.9 million in fraud.
    The Chairman. I am interrupting, but the 108 different 
names, does that refer to the moving company that shows up, or 
is that the broker that does not show up?
    Mr. Barry. The moving companies.
    The Chairman. Moving company, OK.
    Mr. Barry. Through our investigations, we have seen that 
these rogue companies do not discriminate in who they prey 
upon. Victims come from all walks of life and from most states 
throughout the country.
    Their stories are fairly consistent. They search the 
Internet to find the least expensive moving company, they 
receive an estimate without anyone coming to their residence to 
inventory their goods, then on moving day, they are asked to 
sign a number of blank documents before any packing or moving 
begins. After their belongings have been loaded and driven 
away, they receive a call, telling them the price of the move 
is significantly more than originally quoted. We have seen 
inflated prices that exceed 500 percent of the original 
estimate.
    Whether consumers deal directly with a mover or broker, the 
outcome is the same. Customers are told they can either pay the 
increased charges or their possessions will be sold at auction. 
The financial loss to our victims can be devastating. However, 
there is no dollar amount for the duress they feel in knowing 
that their worldly possessions may never be returned.
    In our continuous efforts to fight household goods fraud, 
in March 2011, we launched Operation Boxed Up, a proactive 
initiative aimed at identifying unscrupulous movers.
    By analyzing information provided by FMCSA, we identified 
the most egregious allegations of fraud and initiated a number 
of investigations. To date, our efforts have led to nine 
indictments, seven arrests, and eight search warrants.
    These cases always have a very personal element to them. In 
one investigation, an elderly couple relocating from Colorado 
to Nevada contacted a moving company they found on the 
Internet, and received a quote of $1,340. On the moving day, 
while the movers removed the contents of their home, the 
husband was asked to sign blank documents that according to the 
mover gave them permission to move his household goods. When he 
tried to ask questions about the forms, he was told they would 
go over the paperwork later. After the contents of their home 
were on the truck and driven away, he was told the cost of the 
move would now be $7,400.
    Included in their property, now being held hostage was his 
wife's wheelchair. When he asked about retrieving the 
wheelchair the owner of the rogue moving company stated, ``You 
are not getting it, period.'' We later found out that the owner 
tried to sell the victims wheelchair, and he was also using 
some of the victim's personal items in his business.
    To raise public awareness of these schemes we operate an 
OIG hotline to receive allegations of fraud. In addition to 
filing a complaint with the OIG, consumers may also file 
complaints with FMCSA, the Better Business Bureau, and their 
State Attorney General's office.
    In closing, I want to assure you that protecting the 
American consumer from these greed-based schemes remains an OIG 
investigative priority, and that we will continue to work with 
Congress, the department, and other law enforcement partners, 
to identify and prosecute to the full extent of the law these 
rogue household goods movers.
    Mr. Chairman, this concludes my prepared statement, I will 
be happy to address any questions you or other members of the 
Committee may have.
    [The prepared statement of Mr. Barry follows:]
 Prepared Statement of Timothy M. Barry, Principal Assistant Inspector 
     General for Investigations, U.S. Department of Transportation
    Mr. Chairman and Members of the Committee:

    Thank you for the opportunity to testify on criminal fraud in the 
residential moving industry. We have investigated allegations of fraud 
in this area for over a decade and have found that while the vast 
majority of interstate household goods carriers are honest, there are 
dishonest companies and individuals who operate at the fringe of the 
industry and victimize the public. They do so with the sole purpose of 
illegally making as much money as they can from unsuspecting consumers 
by breaking the law and Federal regulations. We last testified before 
this Committee in May 2006 \1\ and highlighted the problem of fraud 
perpetrated by rogue household goods moving companies. We appreciate 
this opportunity to update the Committee on our investigative work.
---------------------------------------------------------------------------
    \1\ OIG Testimony Number CC-2006-044, ``Household Goods Moving 
Fraud,'' May 4, 2006. OIG investigative summaries and testimonies are 
available on our website: www.oig.dot.gov.
---------------------------------------------------------------------------
    My testimony today will focus on our (1) household goods (HHG) 
fraud investigations, (2) proactive initiative ``Operation Boxed Up,'' 
and (3) efforts to educate the public about HHG fraud. My statement is 
based on our completed and ongoing investigative work.
In Summary
    Since 2006, we have opened 36 HHG fraud investigations. We 
currently have 14 investigations open involving companies operating 
under 108 different names, with more than 3,800 potential victims, 
amounting to around $1.9 million in fraud. The criminal conduct we have 
targeted through our investigations consists of holding a customer's 
household goods hostage while demanding significantly larger sums of 
money than originally quoted. In March 2011, we launched a national 
fraud project to proactively identify the most egregious consumer 
complaints involving hostage loads against HHG carriers and brokers. We 
focus, in particular, on groups of carriers and brokers that illicitly 
engage in hostage fraud schemes. In addition to filing a complaint 
through our agency Hotline,\2\ available on our website, consumers can 
file complaints about improper HHG activities with the Federal Motor 
Carrier Safety Administration (FMCSA), the Better Business Bureau, and 
their State Attorney General's office.
---------------------------------------------------------------------------
    \2\ The OIG's 24-7 Hotline number is 1-800-424-9071. Complaint 
forms and HHG fraud information for consumers are also available on our 
website under the Household Goods Movers portal.
---------------------------------------------------------------------------
Background
    The Office of Inspector General (OIG) Office of Investigations (OI) 
conducts criminal, civil, and administrative investigations of 
allegations of fraud, waste, and abuse within the Department, its 
programs, and grantees. OI's investigative work is accomplished by 
criminal investigators assigned to regional offices around the country. 
Investigations are opened based on OIG priorities and procedures and in 
consideration of prosecutorial guidelines that the local United States 
Attorneys have established.
    OI has four investigative priority areas:

        Transportation safety investigations typically involve parties 
        that violate criminal laws relating to the Department's 
        statutes and regulations. These investigations include matters 
        involving aviation safety, motor carrier safety, and hazardous 
        materials.

        Grant and procurement fraud investigations involve allegations 
        of bribery and corruption, bid rigging, false claims, labor and 
        materials over-charging, disadvantaged business enterprise 
        fraud, and product substitution in connection with the 
        Department's annual expenditure of nearly $64 billion on direct 
        procurements and projects funded through grants.

        Employee integrity investigations address a wide range of 
        violations involving Department employees. These include time 
        and attendance/travel voucher fraud, misuse of government 
        property or funds, conflict of interest, ethics violations, and 
        prohibited personnel violations.

        Consumer and workforce fraud protection investigations help to 
        protect American consumers and workers from fraud in connection 
        with FMCSA regulatory programs, including household goods 
        movers as well as shippers and cargo freight forwarders. Though 
        FMCSA is responsible for the civil enforcement of the consumer 
        protection and economic regulations governing the interstate 
        transportation of household goods, OIG investigations--and 
        resultant prosecutions--are separate from, but complement, 
        FMCSA's regulatory enforcement programs. The availability of 
        criminal sanctions sends a strong deterrent message to 
        violators who consider regulatory/civil penalties simply a cost 
        of doing business.
OIG Is Investigating Household Goods Hostage Fraud Complaints
    Combating HHG fraud is an OIG investigative priority. Our 
investigations have targeted suspect HHG brokers and HHG carriers that 
hold customers' household goods hostage while demanding significantly 
larger sums of money than are legally permissible and much greater than 
the original quotes made to their customers. To carry out these crimes, 
perpetrators engage in illegal activity that includes extortion, 
conspiracy, wire fraud, mail fraud, money laundering, and falsification 
of bills of lading and shipment weight documents.
    Our HHG criminal investigations are often conducted with Federal, 
State, and local law enforcement partners and with the assistance of 
FMCSA. The vast majority of the allegations against rogue HHG companies 
we investigate have come from FMCSA and our own proactive efforts to 
uncover these illegal and deceptive business practices. Several of our 
investigations have included the use of concealed recording equipment 
to monitor communications between victims and the owners and employees 
of unscrupulous carriers. We have also used undercover law enforcement 
personnel to pose as consumers. These investigative techniques have 
enabled us to identify and prosecute numerous violators. Despite these 
efforts, we continue to receive hundreds of complaints each year of 
allegations of HHG fraud.
The Fraud Scheme
    Like most Americans, the victims are interested in getting the most 
for their money and frequently search the Internet to help them find 
the least expensive moving company. Though many of our cases involve 
the customer directly interfacing with the HHG carrier, some involve 
the use of unscrupulous brokers.
    After finding a company on the Internet, the initial contact with 
the company--either an HHG broker or HHG carrier--is typically by 
telephone or e-mail. Almost universally, the rogue company provides a 
quote without conducting a physical survey to get the best estimate of 
what it will cost to move the customer's belongings. Instead, the types 
of quotes customers receive can vary; they may be given a verbal quote 
or a written, binding quote that most often contains significant 
details, in small print, about the quotes and services provided. The 
impact of HHG fraud can be felt across the United States, as shown in 
figure 1 on the next page.
    Broker: Our investigations have shown that the dishonest broker, 
with full knowledge, provides customers a low-ball estimate knowing the 
carrier will grossly inflate it once the goods are loaded on the truck. 
The broker will frequently keep a fee for booking the move usually 
obtained in the form of a deposit, taken from the customer up front. 
Because these brokers have companies that they frequently book loads 
for, they are familiar with their schemes and often receive phone calls 
from angry customers from whom the carrier is trying to extort 
additional money in exchange for releasing the HHGs.
    Carrier: Once a carrier has received the brokered load and the 
hectic moving day arrives, the illicit moving company driver or foreman 
will aggressively attempt to compel the customer to sign a number of 
blank documents before any actual packing or moving begins. Our 
investigative work has shown that these blank forms are most typically 
revocations of prior agreements or estimates and contain revised 
estimates. Instead of deceptively compelling customers to sign blank 
forms, the driver or foreman should advise the customer before the move 
starts that the estimate is wrong and renegotiate a new estimate, as 
required by regulation.
Figure 1. States Impacted by HHG Fraud


    Source: OIG Investigative Data

    After the rogue moving company has the customer's belongings, 
someone from the moving company will tell the customer that there were 
more household goods than the customer had told the company estimator 
about. They may also tell customers that the weight of their belongings 
was far greater than estimated and/or that large quantities of packing 
materials were necessary. All of which caused the price of the move to 
be significantly more than the originally quoted price. This 
information is always provided before the customers' belongings are 
unloaded at their new residence. In most cases, victims are told about 
the price increase immediately after the goods are loaded on the truck 
or within a day or two after the goods have been driven away. Sometimes 
the customer is not informed until the driver arrives at the new 
residence. The victim is presented with the blank documents they signed 
before the goods were loaded onto the moving trucks, which are now 
filled out with the inflated price on them. The documents will also 
have the customer's signature, which indicates agreement to the price 
increases on the day the belongings were loaded on the moving truck. In 
nearly every situation, victims are told they can either pay the price 
or incur additional costs for storage, and if they fail to pay, their 
possessions, including the family's mementos, will be sold at auction. 
This form of extortion is one of the most heinous frauds we see.
    Let me share with you several particularly egregious cases.
Egregious Case Examples
    Santa Clara Investigation: Working with the Santa Clara District 
Attorney's Office, Monterey County District Attorney's Office, the 
Alameda County District Attorney's Office, and the Federal Bureau of 
Investigation (FBI) we participated in three interstate undercover 
operations to ferret out HHG moving companies with numerous complaints 
against them for holding customers' goods hostage until illegally 
inflated charges were paid. In one case, an undercover agent arranged 
for a move from Nevada to California and received a telephone quote of 
$1,461. After the goods were loaded, the undercover agent was informed 
that the move would cost $3,138, more than twice the original quote. Of 
the $1,677 in overages, $900 was for packing materials. In this case, 
felony complaints were filed in Santa Clara County, California, against 
the 10 individuals associated with the 4 targeted HHG carriers. Four of 
the defendants are fugitives, five are awaiting adjudication, and one 
pleaded guilty and was sentenced to 4 years of probation.
    Kasprowicz Investigation: Our investigations of HHG fraud also led 
to the prosecution of Lester C. Kasprowicz of Oregon, who was notorious 
for giving misleading or false estimates and holding customers' goods 
hostage until the customer paid the inflated amount.\3\ For example, a 
U.S. Navy officer contacted one of Kasprowicz's companies, which she 
found on the Internet, to arrange for a move from Oregon to Hawaii, 
where she was transferred after a tour of duty in Iraq. Once she was in 
Hawaii, after her belongings were loaded on the moving truck and taken 
away, she contacted the moving company about delivery and was told that 
she should send a money order for the full balance of her move after 
which her goods would be delivered. Shortly after mailing the money 
order for $2,131--the quote she received over the telephone--the moving 
company told her that due to the weight of her goods, the price of her 
move had increased an additional $3,246, and she needed to send that 
amount before her goods would be delivered. She subsequently mailed 
them the additional money.
---------------------------------------------------------------------------
    \3\ Kasprowicz was previously prosecuted for operating over a dozen 
rogue HHG moving companies and violated Federal and State Permanent 
Injunction Orders prohibiting him from doing business in the household 
goods arena.
---------------------------------------------------------------------------
    Three months after her initial move, she received one of the two 
pallets of household goods from DHX, a company Kasprowicz had 
contracted with to actually ship her goods. However, Kasprowicz had 
never paid DHX for the shipment so she was unable to get the rest of 
her belongings until she settled the balance of the unpaid bill. Our 
investigation identified a total of seven victims who were collectively 
defrauded out of $9,691. Kasprowicz was convicted on mail fraud charges 
in connection with his HHG fraud scheme and sentenced to 33 months in 
prison, 5 years of supervised release, and payment of $9,691 in 
restitution.
    AY Transport (Carrier) and National Moving Network (Broker) 
Investigation: Our HHG investigations also led to the indictment of 14 
individuals associated with AY Transport, Inc.\4\ and National Moving 
Network (NMN) \5\ in U.S. District Court, San Jose, California, on 
charges of extortion and fraud upon consumers in residential moves.
---------------------------------------------------------------------------
    \4\ Also known as Progressive Van Lines and Midwest Relocation 
Services.
    \5\ AY Transport was a moving company based in San Jose, 
California; NMN was a moving broker in Miami, Florida.
---------------------------------------------------------------------------
    In this case, NMN brokered moves for other moving carriers and 
customarily provided fraudulently low quotes over the telephone to 
customers. NMN management often held meetings with sales 
representatives to discuss ways to manipulate the bidding process to 
ensure customers received these low quotes and agreed to do business 
with the company. Because sales representatives received commission 
based on the number of quotes accepted by customers, they actively 
participated in providing the fraudulently low quotes. In addition to 
providing customers with artificial and fraudulently low quotes, it was 
common knowledge among the sales representatives that the majority of 
the business was directed to AY Transport. The sales reps were aware 
that once AY Transport took possession of the customers' household 
goods, they habitually and systemically demanded amounts up to four 
times over NMN's original quote.
    In one such move, a family found NMN on the Internet and contacted 
them to arrange a move from California to Alabama, a relocation made 
necessary due to a new job. After describing the contents of his home, 
the customer received a telephone quote of $1,400 and gave NMN a $500 
deposit. On moving day, AY Transport showed up and took possession of 
the family's household goods, and the customer paid the driver around 
$900. After arriving in Alabama, he called NMN numerous times to 
arrange delivery of his possessions. Eventually, he spoke to an AY 
Transport employee who told him that if he wanted his goods delivered 
he needed to pay an additional $1,600 to cover costs associated with 
extra boxes, fuel, delivery fee, and storage, which, ironically, the 
employee said was necessary because the company could not get in touch 
with him to arrange delivery. Because AY Transport was holding the 
family's possessions hostage, the victim's children and pregnant wife 
had to sleep on the floor. The victim was forced to pay the additional 
fees and had to drive 4 hours to retrieve the family's goods himself.
    To date, our investigation of AY Transport and NMN has uncovered 
over 1,000 victims with a loss of just over $1 million. Thus far, 9 of 
the 14 defendants have pleaded guilty, 1 has accepted a pre-trial 
diversion, and 3 are fugitives. One defendant recently went to trial, 
but the jury was unable to reach a verdict. Of those defendants who 
have pleaded guilty, five have been sentenced and ordered to pay 
restitution of over $32,000.
    OIG's ``Operation Boxed Up'' Aggressively Targets Complicit HHG 
Carriers and Brokers
    In recognizing the significant, negative impact that rogue HHG 
motor carriers and brokers can have on our Nation's consumers and 
workforce, our office developed a strategy to focus our investigative 
resources in this area of fraud. In March 2011, we launched ``Operation 
Boxed Up,'' a proactive, cooperative initiative aimed at removing 
unscrupulous HHG movers before they further victimize American 
consumers. By analyzing databases from FMCSA's HHG regulatory program, 
we identified the most egregious hostage load complaints consumers 
filed against HHG carriers and brokers. We focused, in particular, on 
groups of interrelated carriers and brokers engaged in hostage fraud 
schemes.
    When we formally kicked off Operation Boxed Up, we held a joint 
training session with FMCSA, emphasizing the importance of OIG-FMSCA 
cooperation to target those who prey on the trust of unsuspecting 
consumers. The training was a venue for information sharing, with FMCSA 
speaking in detail about how a moving company typically perpetrates 
household goods fraud and the information available to the OIG through 
FMCSA's databases. OIG agents talked about recent successful 
investigations of fraudulent movers. Staff from both agencies learned a 
lot about their mutual capabilities and expertise relating to HHG 
fraud.
    Approximately half of our open HHG investigations are from our 
Operation Boxed Up data analysis project. Through this initiative we 
have executed eight search warrants and made seven arrests. Further, 
nine individuals have been indicted in connection with these fraud 
schemes. Our investigations continue to identify unscrupulous 
fraudsters who prey on individuals unfamiliar with the moving industry 
rules and regulations.
    Cases identified through Operation Boxed Up include the following:
Operation Boxed Up Case Examples
    New York Search and Arrest Warrants: We executed a Federal search 
warrant and arrested three officials of companies that had a pattern of 
providing customers at or below market value estimates and then 
substantially increasing them after the contents of the customers' 
homes were loaded on the companies' trucks. Specifically, the company 
officials provided customers a verbal quote of $2,000 to $3,000, then 
raised the costs several thousand dollars, demanding full payment prior 
to delivery; if payment was not received, they threatened to auction 
off the property.
    In one such case, a customer was quoted a price of $1,056 for a 
move from North Carolina to Texas based on an itemized list that she 
prepared and e-mailed per the company's instructions and an approximate 
weight of 2,000 pounds. The customer was also told that she would 
receive 25 large packing boxes for free if she hired the company. She 
subsequently agreed to the terms of the quotation and provided a small 
credit card deposit to the company.
    However, on the day of the move, after her household goods were 
loaded on the truck, she was told that the cost of the move would 
increase to over $5,700 based on cubic feet. In response, the victim 
demanded the company representatives unload and put the items back in 
her house. The representatives then told her that the price would 
likely decrease once her household goods were weighed. Feeling backed 
into a corner, she allowed the company to drive away with her 
possessions. Ultimately, the price did not decrease and the victim's 
credit card was charged over $5,700.
    During our investigation into this company and its many victims, 
OIG agents used electronic monitoring equipment, which captured company 
representatives telling victims that if they failed to pay additional 
charges, their goods would be auctioned.
    FMCSA has received over 100 complaints against the subjects of this 
investigation. The potential fraud amount is as high as $250,000.
    Colorado Indictments: Another Operation Boxed Up investigation led 
to the indictment of the owners and two employees of two related moving 
companies on charges associated with hostage HHG schemes designed to 
unjustly enrich the owners of the companies. This scheme involved HHG 
brokers (or companies representing themselves as HHG brokers) luring 
customers by offering extremely low moving estimates, transferring the 
brokered loads to the unscrupulous carrier or one of its affiliates, 
and taking possession of customers' household goods. The mover would 
then significantly increase the price and withhold delivery of the 
household goods until the customers paid the fraudulently inflated 
price. In addition, customers were threatened that if they refused to 
pay, their household goods would be auctioned.
    In one such case, an elderly couple relocating from Colorado to 
Nevada because of the wife's poor health contacted a trucking company, 
found on the Internet, which acted as an HHG broker but was not 
registered with FMCSA as either an HHG broker or carrier. The customer 
was provided a $1,340 estimate and paid a $260 deposit. On moving day, 
while the movers started moving the contents of his home, an employee 
of the moving company had the customer sign documents that ``gave them 
permission to move his household goods.'' When the customer tried to 
ask questions about the forms, the mover told him they would go over 
the paperwork later. After his property was loaded on the truck, the 
mover provided copies of some of the signed documents but many, 
including a Revised Written Estimate, were blank.
    Later that day, after the contents of the his home had been loaded 
on the truck and driven away, he was told that the cost of the move 
would now be around $7,400--more than a 500-percent increase. Included 
in the goods being held hostage was the customer's wife's wheelchair, 
which the owners of the HHG carrier flat out refused to release, saying 
``you are not getting it, period'' or any of the other property until 
the extortionate revised cost of the move was paid. We later found out 
that the owner of the moving company was using this victim's computer 
and his flat screen television in the business.
    OIG's investigation of these complicit companies has identified 36 
victims to date, with an approximate loss of around $126,000.
    Texas Indictments: Another Operation Boxed Up investigation led to 
the indictment of three individuals posing as legitimate moving 
companies on State of Texas deceptive practices charges. Between May 
2009 and January 2012, the three engaged in a number of typical hostage 
HHG fraud schemes designed to unjustly enrich themselves.
    In one case, a single mother of two young children, was quoted a 
price of $39 per hour for an intrastate moving job that ended up taking 
just less than the agreed to minimum of 3 hours. When the movers 
arrived at the customer's new home, she was told she owed $3,908 in 
cash; $3,000 of the charge was for bubble wrap. Because she did not 
have the cash, everything the mover loaded in the truck has yet to be 
returned.
    In another case, a customer was told an intrastate moving job would 
cost approximately $400. After the contents of his home were loaded on 
the truck, the customer was told he would have to pay $5,000 to get his 
possessions back. The victim still has not received his goods.
    The investigation has revealed a total of 46 individuals that have 
been defrauded by this group, with a total fraud amount of $244,206.
OIG Has Raised Public Awareness
    Based on our experience working HHG fraud investigations, we have 
identified the following red flag indicators for consumers.

   The company's website has no local address and no 
        information about its FMCSA registration or insurance.

   When you call the mover, the telephone is answered with a 
        generic ``Movers'' or ``Moving Company,'' rather than the 
        company's name.

   The mover does not offer or agree to an onsite inspection of 
        your household goods, gives an estimate over the telephone or 
        Internet--sight unseen--and does not provide you with either a 
        ``binding'' or ``non-binding'' written estimate. These 
        estimates will often sound too good to be true, and they 
        usually are.

   The mover does not provide you with a copy of ``Your Rights 
        and Responsibilities When You Move,'' \6\ a booklet movers are 
        required by Federal regulations to supply to their customers in 
        the planning stages of interstate moves.
---------------------------------------------------------------------------
    \6\ https://www.protectyourmove.gov/consumer/awareness/rights/
rights.htm.

   The moving company demands cash or a large deposit before 
        the move.
   On moving day, a rental truck arrives rather than a company 
        owned or marked fleet truck.
   On moving day, the moving truck driver or foreman will try 
        to get you to sign blank documents before beginning to load 
        your goods. Never sign blank forms, and read what you sign.
Conclusion
    In closing, I want to assure you that we remain committed to 
protecting the American consumer from these greed-based schemes by 
continuing to work with Congress, the Department, and other law 
enforcement partners to identify, investigate, and prosecute rogue HHG 
movers to the fullest extent of the law.
    In the very near future, OIG will unveil a `most wanted' Web page 
that will identify defendants charged with transportation-related 
crimes (including hostage goods fraud) and who have fled the court's 
jurisdiction and/or the United States, rather than face prosecution or 
serve a sentence. Similar to FBI's list of most wanted, we encourage 
the public not to attempt to apprehend any of these individuals, rather 
they should notify us with information they have which might help bring 
these fugitives to justice.
    Mr. Chairman, this concludes my prepared statement. I will be happy 
to address any questions you or other Members of the Committee may 
have.

    The Chairman. Thank you very, very much.
    And, we now go to Reana Kovalcik.

             STATEMENT OF REANA KOVALCIK, CONSUMER

    Ms. Kovalcik. Thank you, Chairman Rockefeller and Senator 
Lautenberg, for inviting me to speak today about movers and 
brokers who engage in these fraudulent practices.
    My name is Reana Kovalcik, and I am originally from 
Chicago, and now living in New York. I am 28 years old and I 
work for a non-profit organization in New York City.
    In March 2010, my boyfriend, Ross Heron, and I began a 
process of arranging a move from Chicago to New York. At the 
time, I was already living in New York, having moved in 
September 2009, to attend graduate school. In March 2010, Ross 
was able to join me, and begin moving the remainder of our 
apartment, mostly our large goods.
    When we began the search for a mover, price was the most 
important factor. Ross was still completing his graduate degree 
and I was only working part-time in New York City. In our 
previous moving experiences, which we had many, we had always 
rented our own truck, and hired movers to load and unload us. 
It was a simple process which we felt pretty comfortable.
    This is our first time moving between states however, and 
we were not familiar with the process of interstate moving or 
the companies who undertook interstate moves.
    Using online search engines and a moving company search 
site called vanline.com, we looked for companies that are based 
in Chicago that could do an out of state move for us, and 
compared the prices. All of the companies, whether it be an 
online form or over the phone, asked how many rooms we had, and 
roughly the size and the weight of our belongings.
    We received quotes from four companies, ranging from $950 
to $2,000. The most expensive was an in-person quote, given 
after a site visit, the only one who gave a site visit. We also 
priced out the cost of moving ourselves, via U-Haul, which was 
roughly $876 for the truck alone.
    After assessing all of the quotes, we decided that $950 was 
still more than we wanted to pay and that we would move 
ourselves with the U-Haul rental truck. We gave our response to 
all four companies. Only World Wide Van Lines responded with a 
new offer, offering $898, approximately $100 less than their 
original quote of $999.
    Since we would have to deal with finding people to help us 
in both Chicago and New York and making a cross-country move in 
the truck ourselves, if we did the U-Haul option, we decided to 
go with World Wide Van Lines. We paid World Wide an original 
deposit of $198.95 online with our credit card, and scheduled 
the move for April 10, 2010. The remainder of the payment was 
to be paid when our items were delivered to our new apartment 
in New York City.
    At no point in our correspondence with World Wide did they 
indicate that they were a broker. It was also not outlined in 
any of the materials or e-mails we exchanged with them. It was 
not until the movers on moving day were over five hours late 
for the original loading time that we finally reached World 
Wide over the phone, who then told us that they would not be 
moving us, but a company called Able Moving was supposed to 
arrive.
    Had Able Moving been part of our original search, we would 
never have selected them. A cursory Internet search of their 
name brings up terrible reviews across several rating agencies. 
However, since we had virtually no say in who was moving us, 
having thought we were contracting with World Wide, we accepted 
that this company was going to be doing our physical moving.
    Once the Able Movers arrived, our belongings were loaded 
into their truck, having them pre-packed by us. Ross was given 
and signed a bill of lading, which confirmed the original 
estimate given to us by World Wide, and left a space for any 
moving materials needed, of which we used none, because we 
packed everything in advance. The guaranteed delivery date 
given to us by Able was Wednesday, April 14, 2010.
    After our move date had come and gone with no contact from 
or ability to contact Able Moving, we finally received a call 
from an Able representative on Thursday, April 15, telling us 
that our belongings would not be delivered until Saturday, 
April 17, and that we now owed $2,000. Able claimed that we 
were being charged for packing materials, of which we had not 
used any, and for the additional weight of the truck. Although 
we asked for a re-weigh, which we had determined we were 
legally entitled too, we were never provided with the actual 
weight of our items.
    We attempted to reason with Able and negotiate the delivery 
of our belongings, but were met only the verbal abuse and 
demands for the money. We finally consented to pay the $2,000 
upon delivery, the Able movers showed up in an unmarked truck, 
supposedly containing our belongings, on April 18, 2010. The 
movers demanded cash on delivery, but were unable to provide us 
with contracts or any new documents that justified this new 
amount.
    When we first were notified by Able of the new charges, we 
had contacted the police for advice. They suggested we call 
them when the movers arrive in case there were any problems. 
Because the movers had brought no new documentation and were 
being extremely hostile, we called the police. Before they 
arrived however, the movers took off in the truck with our 
belongings.
    The story takes many twists and turns from there, which I 
have included in my longer, full-length statement for the 
Committee. In the end we had to pay $2,434 in ransom payments 
to Able Moving to negotiate the release of our belongings, a 
majority of which we eventually found to be lost or stolen, 
totaling roughly $10,000 in loss and damages.
    Factoring in the cost of our original deposit with World 
Wide, and the cost for us to rent another truck, and then hire 
new movers to help us unload, what was supposed to be an $898 
dollar move, cost us roughly $3,000 in fees and over $10,000 in 
loss and damages.
    While it took over 3 months from our belonging to be moved 
from Chicago to New York, this ordeal has stretched out over 3 
years, since I am here today. We filed paperwork with every 
agency we could think of, including the Federal Department of 
Transportation, the Illinois Attorney General, the Chicago 
Department of Business Affairs and Consumer Protection and the 
U.S. Department of Justice. I did do my homework.
    To date, only the Chicago Department of Business Affairs 
has pursued our case. After an October 13, 2010 hearing at 
which I testified, they ruled that Able Moving was responsible 
for $34,040 in fraudulent business practice fines, and $3,332 
in restitution to Ross and myself. However, the Chicago 
Department of Business Affairs was never able to collect from 
Able Moving, and we have yet to receive any compensation from 
the case. We were finally able to recover $3,770 through our 
renters insurance, but this cannot replace many of the 
sentimental items we lost, and does not come close to the 
$10,000 in total damages.
    Throughout this process, I have been continually surprised 
and disappointed at the lack of legal recourse we have had. The 
police did not want to help us, and mostly the other agencies 
or offices we contacted were not willing or not able to assist 
us.
    If it had not been for my experience working in local 
government, we might never have had traction with the Chicago 
Department of Business Affairs. Because I had the necessary 
knowledge to realize the importance of filing complaints with 
all of the aforementioned agencies, I stand before you today to 
relay this story. However, it is my personal opinion, as I have 
sought out and spoken to other victims of this type of fraud, 
there are countless other people who did not have this 
knowledge and whose stories likely remain unreported.
    Thank you. [The prepared statement of Ms. Kovalcik 
follows:]

             Prepared Statement of Reana Kovalcik, Consumer
    Thank you, Chairman Rockefeller, Ranking Member Hutchison, and 
Senator DeMint for inviting me to speak with you today about my 
experience with moving carriers and brokers who engage in fraudulent 
business practices, changing agreed upon rates and in some cases, like 
mine, holding goods hostage and extorting exorbitant fees for their 
return. My name is Reana Kovalcik and I am originally from Chicago, now 
living in New York City. I am 28 years old and work for a non-profit 
organization focusing on curbing childhood obesity.
    In March of 2010 my boyfriend, Ross Heran, and I began the process 
of arranging a move from Chicago to New York City. At the time, I was 
already living in New York, having moved in September of 2009 to begin 
graduate school. In March 2010, Ross was able to join me and move the 
remainder of our apartment. When we began the search for movers, price 
was the most important factor. Ross was still completing his graduate 
degree in Digital Cinema, and I was only working part time in New York. 
In our previous moving experiences we had always rented our own truck 
and hired movers only to load and unload; it was a relatively simple 
process and one with which we felt comfortable. This was our first time 
moving between states, and we were not familiar with the companies who 
undertook interstate moves or the process of an interstate move. Using 
online search engines and a moving company search site called 
Vanline.com, we looked for companies that were based in Chicago that 
could do an out of state move and compared their prices. All of the 
companies, whether via online form or phone conversation, asked how 
many rooms we had and roughly the size and weight of our belongings. We 
received quotes from four companies. The quotes ranged from $950 to 
$2,000. The most expensive was an in-person quote given after a site 
visit. We had also priced out the cost of moving ourselves via U-Haul, 
which was roughly $876 for the truck alone.
    After assessing all of the quotes, we decided that $950 was still 
more than we wanted to pay, and that we would move ourselves with a U-
Haul rental truck. We gave our response to all four companies. Only 
World Wide Van Lines responded with a new offer, offering $898, 
approximately $100 less than their original estimate of $999. Since we 
would have to deal with finding people to help us both in Chicago and 
NYC as well as making the cross-country drive in the truck if we went 
with the U-Haul option, we decided to go with World Wide Van Lines. We 
paid World Wide an original deposit of $198.95 online with our credit 
card and scheduled the move for April 10, 2010. The remainder of the 
payment was to be paid when our items were delivered to our new 
apartment in NYC. At no point in our correspondence with World Wide did 
they indicate to us that they were a broker. It was also not outlined 
in any of the materials or e-mails we exchanged with them. It wasn't 
until the movers were over 5 hours late for the original loading time 
that we reached World Wide over the phone, who then told us that they 
would not be moving us, but that a company called Able Moving would be.
    Had Able Moving been part of our original search for companies, we 
would never have selected them. A cursory Internet search of their name 
brings up terrible reviews on several rating agencies. However, since 
we had virtually no say in who was moving us, having thought we were 
contracting with World Wide for the move, we accepted that this was the 
company who would be doing the physical moving. After the Able movers 
finally arrived at our apartment, World Wide was no longer in the 
picture and things began to fall apart.
    Once the Able movers finally arrived, our belongings were loaded 
into their truck, having been pre-packed by us. Ross was given and 
signed a Bill of Lading, which confirmed the original estimate amount 
given to us by World Wide and left space for any additional moving 
supplies needed--of which we used none. The ``guaranteed delivery 
date'' given to us by Able Moving was Wednesday April 14, 2010. After 
our move date had come and gone and with no contact from or ability to 
contact Able Moving, we finally received a call from a Ms. Tracie 
Terman (Able Representative), on Thursday, April 15 telling us that our 
belongings wouldn't be delivered until Saturday, April 17 and that we 
now owed $2,000. Able claimed that we were being charged for packing 
materials, of which we used none, and for the additional weight of the 
truck. Although we asked for a reweigh of the truck, to which we had 
determined we were legally entitled, we were never provided with the 
actual weight of our items. We attempted to reason with Able and 
negotiate the delivery of our belongings, but were met only with verbal 
abuse and demands for the money.
    When we finally consented to pay the $2,000 upon delivery, the Able 
movers arrived in an unmarked truck, supposedly containing our 
belongings, on April 18, 2010. The movers demanded cash on delivery, 
but were unable to provide us with contracts that justified the new 
amounts. When we were first notified by Able of the new charges we had 
contacted the police for advice, who suggested that we call them when 
the movers arrived in case there were any problems. Because the movers 
had brought no new documentation and were being extremely hostile, we 
called the police. Before they arrived, however, the movers took off in 
the truck with our belongings. Worried that we would never find our 
belongings again, Ross attempted to follow the vehicle to ascertain the 
location to which our items would be taken. Although the Brooklyn 
police called the drivers, were able to speak with them and instructed 
them to return to the house, they never did so. The drivers drove 
around New York City for several hours and then into New Jersey.
    The drivers were pulled over in Little Falls, New Jersey after Ross 
called 911 and reported the license plates. The officer on the scene 
spoke with the truck drivers and instructed them to give Ross the 
location of the storage unit where we could pick up our things. They 
told police they would do so, and told us they would be taking our 
things to a facility in Pennsylvania and that Able would contact us 
with the storage location. We then arranged with Ross' family to meet 
us in Pennsylvania so that they could help us load the storage unit. 
However, after we had already arrived in Pennsylvania, we were informed 
by the Able representative that the location had been a false one and 
that our things would be in storage in an undisclosed location until we 
wired money into their bank account.
    Not willing to wire the money to a company we had by then realized 
was running a scam, we requested that our family lawyer (Matt Kovalcik) 
deliver the demanded amount to Able so that we could obtain our things. 
We acquiesced to paying this amount, seeing no other recourse, so that 
we could receive our belongings and pursue legal action against Able 
afterward. When Mr. Kovalcik attempted to deliver the check in person, 
we discovered that Able has no physical presence in Chicago, although 
they claim to be a Chicago-based business. Their advertised address, 
730 W Lake Street, is only a mailbox. Several other addresses we found 
for the business proved to be residential units. During this time we 
had also been working with the local Chicago Alderman, Scott 
Waguespack, in whose district one of the Able addresses was located. 
Alderman Waguespack was able to confirm that the secondary address we 
had found for Able was a condo building.
    Since Able had again ceased taking our calls, I attempted to reach 
them by calling from a new number so we could ascertain just where the 
company Able Moving LLC was located. The Able representative answered 
the call from the unrecognized number and disclosed to me (without at 
the time knowing my name or relationship to Mr. Heran) that there was 
in fact no actual company in existence in Chicago. She told me that all 
Able employees work from home and that she operates the company from 
her home in Naperville, IL. At this point in time we began working with 
Alderman Waguespack to file a case against Able with the Chicago 
Department of Business and Consumer Affairs for fraudulent business 
practices. Eventually our lawyer, Matt Kovalcik, was able to convince 
the Able representative to meet in person on April 21, 2010 so that we 
could deliver the demanded amount and receive the location where our 
belongings were being held. Mr. Kovalcik, and my mother, Juliana 
Kovalcik, met the Able representative in Aurora, Illinois and gave her 
a money order for $2,434.34 in exchange for the address and storage key 
where our belongings where being held, which turned out to be a Public 
Storage facility in New Jersey.
    Upon receiving the storage key a few days later in the mail from my 
mother, Ross and I had to rent another moving truck and drive to New 
Jersey to load our things. After opening the storage unit we found that 
our things had been smashed and thrown together; almost all of our 
furniture had been destroyed beyond repair. Several other items were 
also damaged or destroyed including framed artwork. We found that Able 
had removed the protective packaging in which we had wrapped our 
furniture and that many of our boxes had been opened and the contents 
thrown into boxes labeled Able Moving, LLC. We also found several empty 
boxes, which were full of our protective packing material that they had 
stripped off. We believe the items were repackaged to justify the 
fraudulent copy of our Bill of Lading, which our lawyer was given 
during the money exchange.
    The contracts, copies of which are included in my supplemental 
materials, were filled in with additional charges after Mr. Heran had 
signed them. Since we never received an original, a carbon copy, or 
even a scanned copy (until much later) we were unable to effectively 
fight the charges. What you may note, even from the scanned copy, is 
that Mr. Heran's signature is clearly in a pen type that does not match 
the rest of the document, while the date was filled in by another 
party. None of the materials charged on the scanned contract were on 
the original contract signed by Mr. Heran.
    After unpacking our things and assessing our damages from the New 
Jersey facility we realized that many of our things are missing still 
missing. After several calls and e-mails again to the Able 
representative, we finally reached her and were told that ``12 or 13'' 
of our boxes never left Chicago. The Able representative claimed on the 
phone that these items would be returned to us without charge. On April 
29 we were told via e-mail that the items would arrive within a week, 
on May 5 we received another e-mail saying the items were still five 
days out. Later that week we finally received our second shipment of 
goods, in another unmarked truck. These boxes were also damaged and as 
we unpacked them we confirmed that a large quantity were still missing, 
with many of our most expensive goods stolen.
    In our final assessment we estimate that approximately $10,000 of 
goods were missing/stolen, or damaged beyond use, in addition to the 
many sentimental items that were damaged or missing. Although it took 
over three months for our belongings to be delivered, this ordeal has 
stretched out over almost three years. We filed paperwork with every 
agency we could think of, the Federal Department of Transportation, the 
Illinois Attorney General, the Chicago Department of Business Affairs 
and Consumer Protection, and the Department of Justice. To date only 
the Chicago Department of Business Affairs has pursued our case, and 
after an October 13, 2010 hearing, at which I testified, they ruled 
that Able was responsible for $34,040 in fines and $3,332.00 in 
restitution to Ross and me. However, the Chicago Department of Business 
Affairs was never able to collect from Able Moving and we have yet to 
receive any compensation from the case. We were finally able to recover 
$3,770.63 through our renter's insurance, but this can't replace many 
of the sentimental items that were lost.
    Throughout this process I have been continually surprised and 
disappointed at the lack of legal recourse we have had. The police did 
not want to help us and most of the other offices or agencies that we 
contacted were not willing or able to assist us. If it hadn't been for 
my experience working in local government we might never have had any 
traction with the Chicago Department of Business Affairs. Because I had 
the necessary knowledge to realize the importance of filing complaints 
with all the aforementioned agencies, I stand before you today to relay 
this story. However, it is my personal opinion, as I have sought out 
and spoken to other victims of this type of fraud, that there are 
countless other victims who did not have this knowledge and whose 
stories likely remain unreported.

    The Chairman. Well that was both a moving experience, and a 
moving experience.
    Before I go to you Ms. Darr, Senator Lautenberg has really, 
really been good on this subject, and he was detained. Would 
you object if he had an opening statement to make?
    Ms. Darr. No sir.
    The Chairman. Thank you.
    Senator Lautenberg.

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. That is putting a vice on me. Thank you 
very much, Mr. Chairman, and thank you Ms. Darr.
    I listened with interest of course, but amazement as well, 
because at a moving moment in a family's life, there is always 
some confusion, there is often all kinds of emotional things, 
and for these companies to take advantage of people at that 
time is just something that ought not to be ignored.
    I do not know whether, Ms. Ferro, whether these complaints 
are frequent. Have we identified the movers who are most 
frequently cited? Because, there are things we can do out of 
your department that maybe should have a form that gets filled 
out and certified before--and not certified, that gets to be 
cumbersome, but at least there in writing.
    And, also it would be a good idea for the perspective 
victims to be a little cagey and say, ``I want you to know, Mr. 
So and So, that I am recording our discussion, or I will insist 
on a duplicate being sent over that I can send on to the 
appropriate people,'' to at least start letting these guys know 
that you are not just going to sit there and take it.
    Every year, 35 million Americans move to a new home. Many 
of these families need help moving their household goods, and 
so they hire a moving company. The companies are often 
entrusted with the families' most treasured possessions. So, we 
expect them to be professional, do their jobs, honestly.
    Most movers are honest, but this Committee's investigation 
has revealed that enough are not, that it warrants our 
attention. Unscrupulous movers devise ways to cheat 
unsuspecting customers. The most common obviously is for 
companies to give a lowball estimate for the cost of the move, 
and then after they have got the families' property, as we have 
heard from you, Ms. Kovalcik, you were chasing your property 
around town, or around states. It could not have been very 
pleasant.
    So, once they have your property in their possession, then 
the demands I guess get more rigid and more defiant, and the 
fact they hold a families property hostage, everything from 
valuables, to priceless keepsakes.
    The Committee investigation found that some Internet moving 
brokers, the middle men that connect consumers and moving 
companies, make a bad problem even worse. These Internet 
brokers are misleading customers by giving impossibly low 
estimates, tacking on, and you have confirmed it, all three of 
you, tacking on hidden fees and leaving customers with no 
options when the moving company demands more money. They are 
serious problems.
    There have been more than 10,000 complaints from consumers, 
since 2005. These complaints tell the story of families left 
without access to their possessions, with goods that are lost 
or damaged, or with thousands of dollars extra in fees, and who 
knows what items might be missing at a moment of delivery that 
you cannot find a place where suddenly they were no longer 
available.
    So, to better protect consumers, I was proud to author 
provisions in the recently passed Surface Transportation Bill, 
with the help of the Chairman, to require the return of the 
consumers goods, permit penalties collected from the companies 
to be given to consumers, and add new requirements for brokers.
    Unfortunately, bad actors will always seek a way to exploit 
the system. So, we have got to continue to adapt, stay one step 
ahead of them, and let them know we are interested. There ought 
to be some kind of a telltale place that people can go, and 
just get a little bit of information about beware or be 
careful, if moving this is what you have got to be aware of. 
So, thank you all, and I look forward to hearing the rest of 
our witnesses.
    Mr. Chairman, I thank you very much for that.
    The Chairman. Thank you, Senator Lautenberg.
    And, Ms. Kovalcik you should know that he represents the 
state of New Jersey, which is not far off. I do not think he is 
going to give you his telephone number, but you got a friend in 
the neighborhood.
    Senator Lautenberg. I did not like the fact that this one 
outfit took the goods to New Jersey, and that is not a very 
good reputation to have going to New Jersey, the most crowded 
state in the country, you may see your goods there. Thanks, Mr. 
Chairman.
    The Chairman. I want to thank Ms. Darr for being patient, 
and I appreciate it, and we appreciate your testimony.

  STATEMENT OF LINDA BAUER DARR, PRESIDENT AND CEO, AMERICAN 
             MOVING AND STORAGE ASSOCIATION (AMSA)

    Ms. Darr. Thank you, Chairman Rockefeller, and thank you, 
Senator Lautenberg. I am pleased to be here today to testify on 
behalf of the American Moving and Storage Association 
concerning consumer abuses by criminals posing as legitimate 
movers. We do not call them movers; we call them rogues.
    Although the vast majority of interstate household goods 
moves are performed without major incident rogues can, and do, 
take advantage of their unique position of trust to rob 
consumers. When this occurs, the harm to consumers can be 
substantial.
    I would like to focus on what AMSA is doing to combat this 
problem and what we think should be done by Congress and the 
FMCSA. AMSA is the National Trade Association for the moving 
and storage industry representing more than 4,200 interstate 
moving and storage companies, local movers, international 
movers, industry suppliers, and state associations.
    AMSA is taking proactive and effective action to help 
protect the public by ensuring that its members adhere to a 
strong code of conduct. Under AMSA's ProMover Program, we 
annually review performance of our members and terminate the 
membership of companies that engage in repeated violations of 
our code of ethics, or the FMCSA/STB regulations, or that have 
a pattern of unresolved consumer complaints. We are so serious 
about this that we expelled over 200 members in the first year 
of our ProMover Program.
    Another valuable consumer protection program, MoveRescue, 
was initiated by an AMSA member, Unigroup, in 2003. MoveRescue 
provides free advice and assistance to consumers having 
problems with household goods moves. Many of these callers have 
been victimized and need immediate assistance to recover their 
wrongfully held possessions. The program features an 
educational website, toll-free nationwide hotline staffed by 
knowledgeable representatives, and access to a nationwide 
network of pro bono transportation attorneys familiar with 
household goods moving laws.
    AMSA and its members will continue efforts to promote 
legitimate movers and to weed out rogues, but a strong Federal 
regulatory effort is essential to deal effectively with the 
problem. AMSA's household goods consumer protection proposal 
for the recently enacted MAP-21 was intended to give FMCSA 
adequate authority and needed resources.
    That proposal consisted of: (1) stricter entry standards to 
screen out applicants who are not qualified or unwilling to 
provide satisfactory customer service; (2) enhanced enforcement 
through hiring additional household goods compliance 
inspectors; (3) creation of a joint industry/federal consumer 
assistance program, possibly patterned after MoveRescue, to 
provide real-time consumer relief; and (4) improved and 
simplified consumer education materials and practices as 
recommended by an expert advisory panel, including educators.
    The Committee's ``Commercial Motor Vehicle Safety 
Enforcement Act'' and the Senate-passed version of MAP-21 
included most of the elements of AMSA's consumer protection 
proposal. Unfortunately, the final version of MAP-21 
essentially only contained the entry provisions.
    Much of AMSA's proposal was based on GAO reviews and 
recommendations concerning FMCSA's household goods efforts. GAO 
specifically cited a lack of household goods inspectors, noting 
that the agency only increased the number of inspectors from 
two to eight, between 2001 and 2007. There are approximately 
7,000 registered interstate movers and 800,000 interstate 
household goods moves annually. Yet today, there are only ten 
full time FMCSA household goods inspectors. The old ICC had 
regulatory responsibility over household goods movers, and 
before its termination in the mid-1990s, I believe ICC had a 
household goods team that included well over 100 inspectors.
    Effective enforcement of household goods consumer 
protections will require additional ``cops on the beat.'' 
AMSA's proposal calling for additional FMCSA household goods 
inspectors is still needed, we believe. More needs to be done 
on enforcement by hiring household goods inspectors, and by 
creating a joint consumer assistance program, and we must do a 
better job of consumer education. AMSA will continue to press 
for these missing pieces of the puzzle.
    Thank you for the opportunity to comment, and I would be 
happy to answer any questions you might have.
    [The prepared statement of Ms. Darr follows:]

 Prepared Statement of Linda Bauer Darr, President and Chief Executive 
        Officer, American Moving and Storage Association (AMSA)
    The American Moving and Storage Association (``AMSA'') is pleased 
to make this statement on consumer abuses by unscrupulous rogue groups 
posing as legitimate household goods movers and brokers. AMSA 
congratulates the Committee for focusing on this important consumer 
protection issue, and we are pleased to join you in the fight against 
rogue operators that harm consumers and our industry.
    AMSA is the national trade association for the moving and storage 
industry. AMSA represents more than 4,200 members, including interstate 
moving and storage companies, local movers, international movers, 
industry suppliers and state moving associations.
    The household goods moving and storage industry has a unique and 
profound impact on consumers. The industry consists of 7,000 companies 
operating at 13,900 locations, and executing approximately 800,000 
interstate household goods moves annually. Beyond the numbers, though, 
is the fact that these moves involve consumers entrusting most or all 
of their possessions, to professional movers for safe transportation 
and delivery over hundreds or thousands of miles.
    Although the vast majority of these moves are performed without 
significant problems, there is a rogue element inserting itself into 
the marketplace that takes advantage of their unique position of trust 
to rob consumers. According to the GAO, the Department of 
Transportation receives approximately 3,000 consumer complaints related 
to household goods movers annually, some involving egregious offenses. 
There are also additional complaints reported elsewhere, such as with 
AMSA, BBB and various other consumer complaint websites. While the 
number of complaints is statistically small when compared to the total 
number of moves performed without incident, when problems arise they 
can be substantial for consumers.
    The Committee's investigation leading up to this hearing 
underscores the seriousness of the problem. That investigation focused 
on four companies that had a combined total of 109 complaints 
documented by MoveRescue, a program discussed in more detail later in 
my testimony. The most serious of the complaints involved holding 
shipments hostage, while other complaints primarily involve disputed 
charges, delivery delays and damaged shipments.
    AMSA believes that ensuring a strong, compliant household goods 
moving industry is available to household goods consumers is one way to 
continue to combat the ongoing problem of criminals preying on those 
consumers. AMSA has taken effective action to help protect the public 
by drawing sharp distinctions between the legitimate moving industry 
and the criminals merely posing as movers. One way that AMSA does this 
is to ensure that its members adhere to a strong code of conduct. Under 
AMSA's recently launched ProMoversm program, AMSA moving 
company members must agree to comply with AMSA's stringent Code of 
Ethics, FMCSA/STB regulations, and other relevant business standards. 
Upon compliance with these standards, the moving companies are then 
certified as ProMovers by AMSA. AMSA annually monitors performance of 
its members and terminates the membership of operators who engage in 
repeated or egregious violations of the Code of Ethics, the FMCSA/STB 
regulations, or has a pattern of unresolved consumer complaints. As an 
example of the seriousness of our intent, we kicked out over 200 
members in the first year of the ProMover program.
    In fact, AMSA terminated the membership of Budget Van Lines, one of 
the companies identified for investigation by the Commerce Committee. 
That termination, which occurred prior to the Committee's 
investigation, was made because of consumer complaints and the 
company's low Better Business Bureau rating.
    AMSA will continue to take action on its own to promote ethical 
conduct by household goods movers in order to distinguish its members 
from the criminal element imposing itself on our industry. However, 
AMSA believes that a strong Federal regulatory effort is also essential 
to deal effectively with the problem of criminals posing as household 
goods movers.
    Responding to a request from this Committee, the GAO undertook an 
examination of regulation of the household goods industry and how the 
changes in rules enacted in SAFETEA-LU, enacted in 2005, impacted the 
effectiveness of that regulation. In its report to the Committee 
entitled, Household Goods Moving Industry: Progress Has Been Made in 
Enforcement, But Increased Focus on Consumer Protection Is Needed 
(October, 2009) GAO found generally that the FMCSA had made limited 
progress in dealing with household goods consumer abuses, and that the 
SAFETEA-LU changes had little impact on that progress. GAO made 
recommendations for improvements in four categories of consumer 
protection--enforcement; establishing and maintaining partnerships; 
consumer education; and enhanced data collection regarding consumer 
complaints.
    The GAO report, along with the experience of AMSA and its members, 
were the building blocks for AMSA's consumer protection legislative 
proposal for the Federal transportation program reauthorization bill. 
Unfortunately, only a portion of AMSA's household goods consumer 
protection proposal was included in the recently enacted MAP-21. We 
still believe that our proposal provides the best possible path to 
meaningful reduction in household goods consumer abuses. AMSA's 
proposal has three components:
Entry
    All applicants for new household goods authority would be required 
to pass a written proficiency examination demonstrating their 
understanding of, and ability to comply with, FMCSA's household goods 
consumer protection regulations, would be required to show compliance 
with tariff filing requirements, and also impose increased levels of 
financial responsibility and filing fees. After meeting these 
requirements, applicants would be granted provisional registration, 
which would only become final after the registrant passes an FMCSA 
consumer protection audit demonstrating that it is conducting its 
business in compliance with the FMCSA household goods regulations and 
has not had a pattern of substantiated customer service complaints 
filed against it based on regulatory violations.
Enforcement
    FMCSA would be directed to strengthen its enforcement approach in 
three areas and would be given the resources needed to do so. These 
three areas are: 1) carrying out consumer protection audits required 
for new operators and, where warranted, existing operators; 2) the 
hiring of additional Federal household goods compliance inspectors with 
more focus on civil penalty and authority revocation cases where there 
are repeated and/or serious consumer protection violations; and 3) 
establishment of a new joint federal/private sector program based on 
the existing industry Move Rescue program, through which consumers can 
get advice and assistance, particularly in household goods hostage 
situations.
    MoveRescue has performed a uniquely beneficial role in protecting 
consumers. Started in 2003 by UniGroup, Inc., parent company of 
licensed movers United Van Lines and Mayflower Transit, MoveRescue 
provides free advice and assistance to consumers needing help or 
information concerning household goods moves. Many of these callers 
have been victimized by criminals posing as movers and need immediate 
assistance to recover their wrongfully withheld household goods. The 
program features an educational website, toll-free hotline staffed with 
knowledgeable representatives, and access to a network of 
transportation attorneys, who make their services available on a pro 
bono basis. In extreme cases of hostage goods or abandonment, 
MoveRescue works with agents for United and Mayflower to ``rescue'' 
shipments and return the goods to their rightful owners. MoveRescue 
also coordinates informally with FMCSA to support the agency's 
enforcement efforts. AMSA's proposal would enhance that partnership by 
establishing a clear, formal role for FMCSA, devoting more resources to 
the effort and making the program truly nationwide in coverage, 
involving more licensed, legitimate movers, providing expanded 
marketing and greater awareness by consumers, and giving consumers 
real-time, immediate help and advice from customer assistance 
specialists during a difficult and stressful time.
Education
    Movers are required to provide consumers with specific guidance on 
their rights and responsibilities according to Federal law. We support 
the concept, but the process and primary document are complex, lengthy 
(60 pages), and often outdated. Consumers just don't read the 
educational material. Therefore, we propose that FMCSA be directed to 
convene a panel of education experts, industry personnel, and consumer 
advocates to develop recommendations on how to make the consumer 
educational effort more understandable and user-friendly.
    The Senate Commerce Committee's transportation reauthorization bill 
incorporated many of these proposals, and they were included in the 
Senate passed version of MAP-21:

   Applicants for new household goods operating authority are 
        required to demonstrate, through passage of a proficiency exam, 
        the ability to comply with household goods consumer protection 
        regulations, estimating, consumers' rights, and options for 
        limitations of liability for loss and damage.

   If applicant successfully completes the application and 
        testing, it gets operating authority, but must undergo an FMCSA 
        consumer protection review within 18 months and is subject to 
        authority revocation if the results are unsatisfactory.

   FMCSA is required to implement a Joint Assistance Program to 
        educate HHG consumers, assist consumers with timely resolution 
        of hostage situations, and improve implementation, monitoring, 
        coordination of Federal/State enforcement activities; FMCSA may 
        partner with one or more HHG motor carrier industry groups to 
        carry out the program.

   Civil penalties assessed by the Secretary may be paid to 
        aggrieved shipper in hostage situations. Secretary may order, 
        after notice and opportunity for hearing, that hostage goods be 
        returned to shipper. Secretary may withhold or reduce civil 
        penalties as part of a settlement agreement.

   FMCSA is directed to convene a task force of education 
        experts, industry personnel, and consumer experts to make 
        recommendations regarding condensing and simplifying existing 
        consumer protection information into a format that can be 
        easily used by a consumer and the use of state-of-the-art 
        education techniques/technologies, including the Internet.

    The entry provisions and part of the enforcement provisions of the 
Senate bill were the only parts to make it into the enacted version of 
MAP-21. Applicants for household goods authority are required to pass a 
household goods consumer protection proficiency examination, in 
addition to the safety examination required of all applicants. 
Successful household goods applicants are required to undergo a 
consumer protection standards review within 18 months of beginning 
operations.
    MAP-21 also gave FMCSA the authority, after an opportunity for 
notice and proceeding, to order a person holding a household goods 
shipment hostage to return the shipment to an aggrieved shipper. 
Finally, MAP-21 gives FMCSA the authority to assign all or a portion of 
a civil penalty to an aggrieved household goods shipper and to withhold 
all or part of imposition of a civil penalty, presumably as a 
bargaining tool to resolve ongoing hostage shipment cases.
    We strongly support the tougher entry requirements, and while the 
enforcement provisions can be useful tools for FMCSA, we continue to 
believe that the implementation of a comprehensive joint assistance 
program, and adding additional household goods compliance inspectors 
would be a better approach, and provide more timely assistance and 
potential relief to victimized consumers. We also think that the 
enhancement of consumer education contemplated by the Senate bill is 
important. Hopefully, these provisions can be added in the next 
authorization bill. AMSA will certainly continue to press for them.
    It is important to emphasize that the provisions contained in 
AMSA's proposal and in MAP-21 are of limited benefit if FMCSA does not 
have the resources to implement them effectively, and to enforce 
compliance with household goods consumer protections. FMCSA does its 
best with available resources and, as GAO noted, has made enforcement 
improvements, but FMCSA simply does not have what it needs to do the 
job right. Effective enforcement of household goods consumer 
protections will require additional ``cops on the beat'' . . . 
household goods compliance inspectors. Despite increased efforts and 
commitment, FMCSA still only has a handful of household goods 
inspectors, yet there are thousands of registered movers and who knows 
how many rogues operating in the household goods moving marketplace 
without the appropriate authority. AMSA's proposal called for $3 
million annually to hire additional FMCSA household goods inspectors. 
We continue to believe that this is needed, at a minimum. We recognize 
that the FMCSA budget is limited and the trucking industry is large, 
but we also believe that the consumer protection and personal safety 
aspects of the moving industry warrant special attention. We are not 
moving widgets or working with experienced shippers, so the margin for 
``mischief'' is large and must be addressed.
    There are two other related household goods enforcement issues that 
need to be addressed. The first concerns enforcement of FMCSA's new 
household goods broker rules. Legitimate brokers can perform an 
important function as intermediaries between consumers and reputable 
movers, if consumers are adequately educated about brokers' role in the 
moving process. But in the Internet age, unscrupulous brokers can 
easily engage in deceptive practices such as not making it clear to 
consumers that they are not movers, inaccurate estimates and the use of 
unauthorized household goods carriers. In 2011, FMCSA addressed these 
practices by adopting regulations containing a number of important, 
common sense protections advocated by AMSA.
    These rules essentially require that brokers provide the same 
consumer protection information as required of household goods movers 
and they focus on transparency, ending bogus estimates and unauthorized 
carrier abuses. Among the most important protections are requirements 
that a broker arrange for household goods moves to be performed by 
licensed household goods carriers, with whom the broker has a written 
agreement; that estimates be based on the carrier's published tariff; 
that such estimates be based on physical surveys if the shipments are 
within 50 miles of the carrier's place of business, or the physical 
survey must be waived by the consumer in writing; and that broker 
Internet sites include prominent disclosures about the brokers' role 
and the names of FMCSA authorized household goods carriers with whom 
the broker has a written agreement.
    These are important new protections, but they are only beneficial 
to the public if they are effectively enforced. AMSA believes that it 
is important that FMCSA have a focused household goods enforcement 
program for monitoring and enforcing these rules, and that Congress 
provide sufficient resources to support the enforcement program.
    Container companies that act as household goods movers are a good 
example of the widespread non-compliance with household goods broker 
regulations. It is reported that some container companies may be 
operating as household goods brokers, but are marketing themselves as 
household goods movers and contracting with freight carriers to haul 
the containers. These companies do not have household goods broker 
authority and often do not comply with the relevant household goods 
broker rules.
    A second area of concern is that some freight carriers are moving 
household goods shipments for consumers across state lines while 
attempting to evade regulation as household goods movers. These freight 
carriers are relying on the so-called ``Limited Service Exclusion'' 
that excludes carriers from the definition of ``Household Goods Motor 
Carrier'' if such carriers do not provide certain services, such as 
packing and loading, to their customers. However, there are reports 
that these carriers do, in fact, offer or supply packing and loading 
services through providers believed to be operating as their apparent 
or actual agents, while not registering with FMCSA as household goods 
motor carriers, or complying with that agency's household goods 
consumer protection regulations.
    The consequence of these reported practices is that interstate 
household goods shippers using these services are being denied 
important consumer protections. They do not have protections ensuring 
accurate estimates based on published tariffs of licensed household 
goods movers, relevant consumer protection information, timely and full 
performance by licensed household goods movers, and adequate remedies 
for non-compliance that are otherwise available to household goods 
shippers using authorized household goods carriers or brokers. AMSA has 
brought this issue to FMCSA's attention and urged FMCSA to investigate 
these suspected violations and enforce the regulations appropriately.
    In conclusion, AMSA and its members will continue to do everything 
we can to eliminate the consumer abuses caused by criminals posing as 
household goods movers, to distinguish those bad actors from 
legitimate, licensed movers, and to hold hard-working, legitimate 
companies accountable for compliance with the law. AMSA knows that 
FMCSA is committed to enforcing its household goods broker and consumer 
protection regulations, but it needs adequate resources to be 
effective. AMSA appreciates what the Committee has done to give AMSA 
the tools that it needs and to shine a light on the abuses that must be 
stopped. AMSA looks forward to working with the Committee and FMCSA to 
give all shippers of household goods the protection they deserve.
    I am happy to answer any questions members of the Committee might 
have.

    The Chairman. That you very much, Ms. Darr.
    And, Mr. Romrell, I am glad that you are here and I want to 
praise you for being here, because you are the only broker so 
to speak who agreed to come, and you deserve credit for that. I 
may not agree with everything you have done, but you are here, 
and you did not have to be, you could have just turned us down 
flat, and you did not, and you subject yourself to questions, 
and so I respect you for that.

   STATEMENT OF JASON M. ROMRELL, PRESIDENT AND CHIEF LEGAL 
                 OFFICER, BUDGET VAN LINES INC.

    Mr. Romrell. Thank you, Mr. Chairman. Thank you.
    Mr. Chairman, members of the Committee, I am Jason Romrell. 
I serve as President and Chief Legal Officer of Budget Van 
Lines. We are a federally licensed household goods 
transportation broker located in Los Angeles, California. We 
are one of the Nation's largest household goods transportation 
brokers, having arranged tens of thousands of moves and 
currently employing about 100 people.
    We appreciate the Committee's interest in household goods 
transportation. We have been open and cooperating with the 
Committee over the last 9 months and have provided over 500,000 
pages of documents.
    We have been operating with FMCSA authority as a broker 
since 2005 under the same business entity and the same name. 
Brokering is a common business model in many industries. It 
helps consumers save time and money. We provide consumers easy 
access to more transportation options, lower costs, and time 
savings. We help carriers operate more efficiently, helping 
them connect with customers and giving them a way to fill 
returned trips on partial loads.
    Without legitimate brokers, consumers in more rural areas 
and small towns may not be able to find a carrier when they 
need one, consumers everywhere might have fewer choices, prices 
would likely increase, and many independent carriers would 
probably be out of business.
    It is important to note that we are not the motor carrier. 
Mr. Chairman, as you mentioned we do not provide the actual 
transportation, we do not own trucks, but we do have required 
contractual relationships with carriers who are adequately 
licensed and insured.
    Our home page on our website references our role as a 
broker, what I believe, very clearly, and we also have an 
introduction video that explains on our home page how our 
business model operates. In addition, our estimates reference 
our position as a broker over ten times in very clear, plain 
language. It is not something we hide, because we know we 
provide a value to consumers.
    I would like to explain how we provide consumers with 
estimates, since this has been part of the Committee's focus. 
Our trained and knowledgeable sales representatives explain to 
the customer our role as a broker and how the estimate process 
works. We then conduct a telephone survey to obtain an 
inventory of the customer's household goods and other services 
they require. This discussion can last up to two hours, 
depending on the size of the inventory, questions that are 
asked, and the explanation of the entire process.
    Our sales representatives then provide consumers with a 
written binding or non-binding estimate, depending on their 
preference, and 60 percent of our consumers choose a non-
binding estimate.
    Budget's policy is to be open and transparent with 
consumers. In our documents and our conversations with 
prospects, we strive to explain the moving process thoroughly 
and in layman's terms to help customers avoid or minimize 
additional charges, and we encourage them to be as accurate as 
possible when they are creating an inventory of items to be 
moved.
    For example, we recently revised our inventory software to 
ensure that inventories that we prepare are more comprehensive 
and easier for the customer to accurately complete. We do not 
earn, and our sales representatives do not receive a 
commission, for additional or adjusted charges assessed by the 
carrier at pickup or delivery, even when the carrier and the 
customer agree to a revised estimate.
    We care about doing business with integrity. We have 
implemented numerous internal procedures beyond what is 
required by law to provide accurate estimates and to improve 
the customer experience. We conduct extensive training for our 
sales representatives, we have a quality assurance department 
that reviews each estimate for obvious errors, we prohibit 
estimates based on volume to avoid potential abuse in the 
packing and loading process, and we do not incentivize under 
estimating. More importantly, we have a robust carrier 
selection process.
    A software system that we created checks, each day, the 
Federal licensing status and the safety record of every motor 
carrier in our network, to make sure they have not been placed 
out of service with the FMCSA. Before signing a carrier to our 
network, we look at the history of prior ownership and 
affiliations, service credit and complaint histories, claims 
resolution process and other important business information.
    We also provide carriers with our own quality control 
guidelines, a checklist to help them conduct business in 
compliance with the Federal regulations, and to help them avoid 
or reduce consumer complaints. The only thing the law requires 
us to do is make sure the carrier is licensed.
    We do not tolerate hostage situations, and we believe 
carriers who engage in these situations should have their 
licenses revoked and should be subject to civil and criminal 
penalties. True hostage situations are not good for the 
industry, they are not good for our business, and they are 
terrible situations for consumers.
    The nature of the industry is a difficult one, and 
consumers want, and the law requires, written estimates, and 
these contribute to some of the pricing concerns that are 
raised by the Committee. But we continue to do our part to 
improve our processes.
    My heart goes out to Ms. Kovalcik. She had a traumatizing 
experience. And, I am a consumer just like I am a broker. I am 
sympathetic to that, and no one should have to go through that 
situation.
    I appreciate the opportunity, Mr. Chairman, to be here to 
testify because we want to be part of the solution. We do not 
want to be contributing to the problems. So, I welcome any 
questions the Committee may have.
    [The prepared statement of Mr. Romrell follows:]

   Prepared Statement of Jason M. Romrell, President and Chief Legal 
                     Officer, Budget Van Lines Inc.
    Thank you Chairman Rockefeller, Ranking Member Hutchison, Senator 
DeMint and other members of the Committee for the invitation to testify 
today. My name is Jason Romrell and I serve as President and Chief 
Legal Officer for Budget Van Lines, a federally licensed, independent 
household goods transportation broker headquartered in Los Angeles, 
California. We have been operating as a federally licensed broker under 
the name Budget Van Lines continuously since 2005. We are one of the 
Nation's largest household goods transportation brokers. We broker 
approximately 10,000 moves annually and employ approximately 100 
people. We take care of our people, providing decent wages, medical 
insurance coverage and other benefits. As stated in our mission 
statement, we strive to be the country's best moving broker by working 
with quality carriers that take care of our customers and their 
property, by delivering exceptional customer service throughout the 
entire moving process. We treat our customers and our employees the way 
we treat our family and friends.
    We appreciate the Committee's interest in household goods 
transportation, ensuring such moves occur safely, efficiently and 
fairly and exploring ways to improve the experience for consumers. We 
have been open and cooperatively working with the Committee over the 
last nine months and have provided the Committee over 500,000 pages of 
documents to assist in its investigation of the household goods 
transportation industry.
    Let me take a moment to explain what household goods transportation 
brokers do, as it is often misunderstood. As you know, brokering is a 
common business model in many industries, from travel to insurance 
sales to the groceries on the supermarket shelves. Brokering is an 
effective and common business model because it increases options and 
saves businesses and consumers time and money. In the interstate moving 
industry, brokers like us arrange transportation services between 
customers and qualified household goods motor carriers. We help 
customers in a variety of ways, by providing easy access to more 
transportation options, lower costs and time savings. We help customers 
navigate a host of complicated and often unfamiliar decisions that must 
be made when arranging an interstate move. At the same time, we help 
federally licensed household goods motor carriers operate more 
efficiently by reducing their marketing costs and helping them connect 
with customers. We save motor carriers money and time by taking 
inventories and working with customers through the initial sales cycle. 
We also help motor carriers operate in a difficult economy by giving 
them a way to fill empty space on return trips and to fill partial 
loads. The services we provide create a win-win situation for both 
consumers and household goods motor carriers.
    It is important to note that we are not a motor carrier; that is, 
we do not provide the actual transportation for a shipper's household 
goods. Acting as a broker, we are not allowed under Federal regulations 
to own, operate or control the motor carriers to whom we broker jobs. 
We have contractual relationships with household goods motor carriers 
that are adequately insured and that the Federal Motor Carrier Safety 
Administration (FMCSA) has granted a license to transport household 
goods, and these are the only motor carriers we use for moving our 
customers' shipments. Our company's website and documents very clearly 
state that we are a federally licensed household goods transportation 
broker and not a motor carrier. Our website's homepage includes a short 
video explaining exactly how we help consumers arrange moves. We comply 
with the many Federal requirements applicable to household goods 
transportation brokers, including registration with the FMCSA, 
obtaining process agents, securing appropriate bonding, and using only 
properly licensed household goods motor carriers to provide 
transportation.
    It is also noteworthy that our volume has seen significant growth 
almost every year since 2005, which we attribute to operating our 
company with a high level of integrity, referrals from past customers 
and our ability to provide consumers with a variety of quality, 
reliable motor carriers offering very competitive prices.
    Let me explain how household goods brokers provide customers with 
estimates for interstate moves, since this has been a major focus of 
the Committee's inquiry. Under Federal regulations, we may provide 
customers with written binding or non-binding estimates showing the 
anticipated cost of a move. Whether it's binding or non-binding is the 
customer's choice. The estimates must be based on either a telephone or 
a physical survey of the customer's household goods. A physical survey 
is required if the goods are located within a 50-mile radius of the 
motor carrier's or agent's location unless the customer has waived the 
physical survey requirement in writing.
    What normally happens when a potential customer contacts us is that 
the potential customer will fill out a request for a moving quote, then 
one of our trained and knowledgeable sales representatives will follow 
up, explaining our role as a broker and how the estimates work 
(including the binding versus non-binding estimate options). We then 
conduct a telephone survey to obtain an inventory of the prospect's 
household goods and other services that are requested or required. This 
process involves a detailed discussion with the prospect that can last 
up to two hours depending on the size of the shipment, including time 
answering questions, explaining the process, reviewing the customer's 
unique situation and creating the inventory.
    We recently revised our sales process to include a more detailed 
inventory process. Our sales representative walks the prospect (over 
the phone) through their home room-by-room. As each room is 
inventoried, the prospective shipper can more easily account for all 
household goods and is more likely not to skip any rooms. For example, 
the sales representative can walk the customer through the ``Living 
Room'', then through ``Billy's Room'', then through ``Amy's Room'' and 
so on. After the inventory is complete, industry standard figures are 
used to assign prescribed weights to the various household goods for 
arriving at an estimated total shipment weight. Our sales 
representative then provides a written binding or nonbinding estimate, 
consistent with applicable Federal regulations, to the prospect based 
on carrier rates for the estimated shipment weight, the distance 
between origin and destination, as well as additional and accessorial 
services to be provided. The written estimate includes all inventory 
items with the same room-by-room headings, making it easier for 
prospects to review the inventory to ensure more accuracy. We do not 
perform physical (on-site) surveys, regardless of the carrier scheduled 
to do the move. Physical survey waivers are included in all our 
estimates and must be executed and returned to us prior to our 
acceptance of the job.
    It might be helpful to explain the differences between nonbinding 
and binding estimates, as this is an aspect of the household goods 
moving industry that is often unknown or misunderstood. A nonbinding 
estimate is an estimate of the total cost of the move based upon the 
estimated weight or estimated volume of the customer's shipment, the 
services requested, and the carrier's tariff-based rates, but it is 
only an estimate. The final cost of a move done pursuant to a 
nonbinding estimate may be higher or lower as determined by the actual 
weight (or if requested by the shipper, the actual volume) of the 
household goods. While the final price of a nonbinding estimate can 
vary dramatically from the estimated price, Federal regulations state 
that the customer does not have to pay more than 110 percent of the 
estimated amount at delivery. This is known as the ``110 percent 
rule.''
    However, the 110 percent rule does not apply to additional charges 
not appearing on the nonbinding estimate where: one, the customer 
requests additional services after the goods are loaded, or two, 
additional services are required that were not reasonably contemplated 
in the estimate (for example, required use of a smaller ``shuttle 
truck'' to reach the final destination where a larger moving truck will 
not fit). Also, if the shipper's actual household goods end up not 
matching the inventory contained in the nonbinding estimate, Federal 
regulations allow the motor carrier to prepare a revised estimate for 
the shipper's consideration, which then must be in writing and signed 
by the shipper before loading the shipper's household goods. The 
shipper is not required to accept a revised estimate and may cancel the 
move. Likewise, the motor carrier may agree to accept and transport the 
shipment under the terms of the original estimate.
    A customer may want a nonbinding estimate for many reasons. They 
may not, for example, want to go through the time-consuming process of 
completing a detailed inventory, or they may be unsure of the actual 
pieces or quantity they will end up moving (as would occur if a 
customer plans to have a garage sale to get rid of many items before a 
move or they have unknown items in storage), or they are unsure of the 
number of boxes they may have once their items are packed. The 
nonbinding estimate provides the customer with a general idea of the 
cost of the move, but the actual cost is determined at or before 
delivery based on the shipment's actual weight or volume.
    A binding estimate is an agreement between the customer and the 
motor carrier that sets the cost of the move based upon a precise 
inventory and listing of services to be provided. Customers may opt for 
a binding estimate if they are certain of the amount of goods and 
number of boxes to be moved. Federal regulations provide that the 
customer does not have to pay more than the binding estimate amount at 
delivery to receive his or her goods at destination. However, Federal 
regulations allow the motor carrier to collect fees for additional 
services requested by the shipper after loading that were not on the 
estimate, or for services that were not reasonably contemplated when 
the estimate was prepared and are needed in order to complete delivery.
    As with the nonbinding estimate, if the shipper's actual household 
goods do not match the binding estimate's inventory, Federal 
regulations allow the motor carrier to prepare a revised estimate for 
the shipper's consideration before loading the shipper's household 
goods. The shipper is not required to accept a revised estimate and may 
cancel the move. Likewise, the motor carrier may agree to accept and 
transport the shipment under the terms of the original estimate.
    Budget's companywide policy is to be open and transparent with 
customers. In our documents and in our conversations with prospects, we 
strive to explain the moving process thoroughly and in layman's terms 
and help customers avoid or minimize additional charges by encouraging 
them to be as accurate as possible when creating an inventory of the 
items to be moved. We do not earn and our sales personnel do not 
receive a commission on additional or adjusted charges assessed by the 
motor carrier at pick-up or delivery, even when the carrier and the 
customer agree to a revised estimate. Therefore, there is no incentive 
whatsoever to underestimate the cost of a particular job.
    Budget cares deeply about doing business with integrity. With that 
in mind, we have implemented numerous internal programs and procedures 
above and beyond what is required by law to provide accurate estimates 
and improve the experience of residential customers booking moves with 
us. We conduct extensive initial and ongoing training with our sales 
representatives to ensure they are knowledgeable and up-to-date on the 
moving industry, the applicable regulations and with our internal 
processes. We strive to train our employees properly and completely so 
they can better describe the moving experience to prospective 
customers, explain different estimate options and respond accurately 
and in plain English to customers' questions.
    We also created a Quality Assurance Department that reviews every 
estimate before it is sent to a carrier, looking for obvious errors and 
flagging estimates that do not meet quality assurance standards. Sales 
calls may be recorded to help us quickly identify sales representatives 
who potentially may cause problems or those who need additional 
training. We do not permit our sales representatives to estimate jobs 
based on volume, but only on weight, to avoid the potential abuse of 
volume-based jobs by motor carriers in the packing and loading process. 
We forbid sales representatives from underestimating jobs. When a job 
goes wrong and we provide financial remedies to our customers, our 
sales representatives do not earn a commission on those jobs.
    We have a well-paid large customer service department that answers 
customers' questions before, during and after a move, and acts as a 
liaison between the customer and the motor carrier. We do everything in 
our power to help customers through the moving process, including 
helping customers deal with the occasional motor carrier the customer 
believes failed to perform professionally or follow applicable 
regulations.
    Our carrier selection and retention process is selective and goes 
above and beyond what is required by law. Since 2005 we have terminated 
relationships with over 580 motor carriers for various reasons, 
including a lack of quality customer service and regulatory 
noncompliance. We created our own software system that checks the 
Federal licensing status of every motor carrier in our network each day 
to ensure they have not been placed out of service by the Federal Motor 
Carrier Safety Administration. If we find a carrier out of service, we 
suspend all jobs to that carrier immediately and will not book jobs for 
that carrier until they are back in good standing with the FMCSA.
    Before signing a carrier to our network, we consider the history of 
prior ownership, prior affiliations with other companies, service 
history, credit history, complaint history, claims-resolution processes 
and other important business information and practices. Because safety 
is also important to us, we also check the carrier's FMCSA Compliance, 
Safety and Accountability (CSA) score and will refuse or subsequently 
drop a motor carrier if the carrier's CSA score suggests serious 
ongoing concerns. In fact, the same software program we designed to 
check every carrier's licensing status on a daily basis also checks 
every carrier's safety ratings so carriers who are deemed 
``unsatisfactory'' by the FMCSA are flagged for immediate review and 
disqualification in our system.
    If we discover a motor carrier that exhibits an ongoing pattern of 
unprofessional performance or that fails to comply with Federal 
regulations, we will suspend or terminate that carrier from our 
network. We also provide motor carriers with our own Quality Control 
Guidelines, a checklist of issues to help them conduct business in 
compliance with the Federal regulations, and to help them avoid or 
reduce customer complaints. As you can see, we go well beyond our legal 
requirements. The only thing the law requires we do is to check that a 
carrier is licensed and insured.
    Our records indicate that approximately 40 percent of the estimates 
we prepare are binding and 60 percent of our estimates are nonbinding. 
Customers are free to select whichever estimate type fits their needs. 
When a motor carrier takes a job based on a nonbinding estimate, it is 
highly likely that the job will result in a final price that is 
different from the estimated price. This is the case whether the 
estimate was supplied by a broker or the carrier itself. The reason for 
this is that the final charges are calculated from the actual weight or 
volume of the shipment. For weight-based moves, the final weight of the 
shipment is obtained using weight tickets from certified commercial 
scales. If the actual scaled weight of the shipment is off by even one 
pound from the original estimated weight (a virtual certainty), then 
under a nonbinding estimate scenario, the motor carrier is obligated 
under its tariff to charge the customer for the extra weight. However, 
under the 110 percent rule, the motor carrier cannot collect more than 
110 percent of the amount from the nonbinding estimate at delivery.
    Motor carriers are not required by Federal regulations to, and as a 
matter of practice generally do not, provide us information on price 
increases (from the original estimate) that occur at the beginning or 
end of a customer's move. However, in an effort to be cooperative with 
the Committee, our evaluation of customer complaints on file gives us 
an indication that approximately 15-25 percent of our nonbinding 
estimates result in a price increase to the customer beyond the 110 
percent rule. Reasons for these price increases vary. Budget Van Lines 
agrees that unfair and unexpected price increases in the household 
goods transportation industry can sometimes create situations where 
consumers are treated unfairly. Changes to the regulatory scheme should 
be considered if such changes could reduce the frequency of customer 
complaints where the price of a move based on a nonbinding estimate 
increases above 110 percent.
    While we have spent considerable time and effort improving our 
internal processes, admittedly we still can and continually strive to 
do better. We routinely evaluate and reevaluate every aspect of our 
operations and continue to make refinements to our operations. Within 
the last two years, we have revised and improved our estimates for more 
clarity, striving for estimates in plain-English and with no confusing 
legal fine print. We have implemented better and more consistent 
training of our sales and customer service teams, which continues to be 
an ongoing activity. Even though our customer service department is a 
demanding, challenging job, we offer competitive wages and full 
medical, dental and vision benefits to customer service employees. Our 
QA department screens each and every estimate for obvious errors and 
omissions and helps us continually evaluate performance of our sales 
representatives and focus ongoing training where it is needed most. We 
are constantly on the lookout for quality carriers to add to our 
network of licensed motor carriers. We are diligent in working with 
carriers, helping them appreciate quality customer service, providing 
them with regulatory updates, and encouraging them to embrace not just 
regulatory compliance but best practices.
    It is no secret the household goods transportation industry is a 
difficult industry. The tasks of assembling, packing, lifting, 
stacking, storing, reloading, unloading, lifting, unpacking and 
reassembling used furniture and other household goods is physically 
demanding both on the laborers as well as on the property being moved. 
In most cases, the movers (the people actually loading the truck) are 
not the same people who prepared the estimate, so whether it comes from 
a broker or a carrier, from a telephone or in-person survey, price 
changes and adjustments are not that unusual. In fact, they are common. 
And it is not just the household goods moving industry where price 
adjustments happen.
    The nature of the moving industry, and customers' desire for 
written estimates, are factors that contribute to the pricing concerns 
raised by this Committee. We continue to do our part to improve our 
processes and our customers' experiences, but there may be industry-
wide solutions worth considering. Our proposals and suggestions include 
the following:

        Requirements for Brokers and Carriers:

        Consider whether to require brokers to provide estimates based 
        only on weight, since shipments moved pursuant to volume-based 
        estimates can be manipulated upward by carriers in the packing 
        and loading process;

        Require brokers and carriers to send the shipper's survey-based 
        inventory to customers separate from all other paperwork, along 
        with a simple explanation that the inventory is the basis for 
        the estimate and any changes to the inventory may result in a 
        revised estimate and additional fees on the day of the move;

        Require motor carriers to price overages based on the price-
        per-pound quoted in the estimate instead of allowing the motor 
        carrier to use a higher price-per-pound, even if that higher 
        rate is allowed under the motor carrier's tariff.

        Require brokers and carriers to notify customers that they may 
        review and revise their estimate's inventory of items up to 48 
        hours before the scheduled pick-up time, giving customers time 
        to see how such changes will affect the estimated cost;

        Prohibit brokers, motor carriers and their employees from 
        profiting from price adjustments before, during or after a move 
        that do not meet regulatory requirements (in such cases, the 
        FMCSA could ``claw-back'' those profits and return them to the 
        consumer, along with other appropriate penalties assessed 
        against the offending entity);

        Require brokers and carriers to publish on their websites, 
        visible to consumers, the percentage of their loads booked 
        during a specified period that resulted in a known price 
        increase, the range of those increases, and average or median 
        increases (similar to airlines reporting their percentage of 
        on-time departures);

        In relation to the above suggestion, also require motor 
        carriers using a broker to book jobs to promptly provide the 
        broker with data regarding price increases;

        Mandate the inclusion of a prominent warning on the Bill of 
        Lading and on any revised written estimate above the shipper's 
        signature lines warning shippers not to sign documents with any 
        blanks (except those blanks that are necessary to be blank and 
        are authorized by Federal regulations);

        Require brokers and carriers to report to the FMCSA and display 
        on their websites the number of household goods shipments they 
        booked/carried each month, so consumers are able to evaluate 
        complaint ratios versus gross complaint numbers posted by the 
        FMCSA (a broker or carrier with 10,000 jobs and 200 complaints 
        may be providing far better service than a broker or carrier 
        with 1,000 jobs and 40 complaints);

        Federal Motor Carrier Safety Administration:

        Require the FMCSA to focus more attention on the enforcement of 
        household goods brokers and carriers;

        Require the FMCSA to create a short, easily readable, summary 
        consumer education document with key information necessary for 
        consumers to make informed decisions when considering 
        interstate moves;

        Require the FMCSA to create a more accessible, user-friendly 
        online resource where shippers can evaluate brokers' and 
        carriers' performance and job histories, including the previous 
        suggestion that brokers and carriers report total jobs booked/
        carried so complaint ratios can be provided to consumers with 
        accuracy and reliability;

        Encourage or require more expeditious, responsive, and 
        aggressive license revocation processes for brokers and 
        carriers who clearly violate Federal regulations, thereby 
        protecting consumers from rogue movers and automatically 
        preventing brokers from using rogue movers;

        Encourage the FMCSA to create standard volume measurements for 
        common household items, thereby bringing some uniformity to the 
        inventory process;

        Require the FMCSA to deny licensing to individuals or 
        businesses who have been implicated in regulatory violations 
        previously, including the transfer or sale of existing 
        businesses already licensed, if the new owners have an adverse 
        or negative history in the moving industry;

        Related to the preceding point, because we believe that many 
        rouge movers giving the moving industry a bad name are run by 
        individuals who pay others to take record-ownership of the 
        company to circumvent close FMCSA scrutiny and to obtain or 
        retain carrier authority (straw-man strategies), require the 
        FMCSA to conduct interviews of new applicants or restrict the 
        free transfer of motor carrier authority already assigned to an 
        existing company, thereby reducing or eliminating straw-man 
        strategies.

    If the FMCSA cannot or will not engage in faster and more 
aggressive license revocations, require the FMCSA to share with brokers 
its data on motor carriers so brokers can ensure they are not working 
with known problem-carriers.
    We are aware that the Committee has been looking not only at post-
estimate price increases but also at alleged ``hostage'' situations, 
where a carrier holds a consumer's goods until the consumer pays fees 
in excess of the agreed-upon estimate. Budget does not tolerate true 
hostage situations and believes that motor carriers engaging in true 
hostage situations should have their licenses revoked and be subjected 
to civil and criminal penalties. True hostage situations are not good 
for consumers or the household goods transportation industry.
    If we become aware of an alleged hostage situation involving one of 
our customers, we endeavor to engage directly with the motor carrier 
and use our influence to encourage the carrier to make things right 
with the customer by delivering the customer's goods as promised in the 
applicable estimate and to comply with Federal regulations. Motor 
carriers that show a clear disregard for Federal regulations by 
willingly and knowingly creating true hostage situations are terminated 
from our network and will be reported to the FMCSA.
    Nevertheless, we have encountered instances where alleged hostage 
situations were determined, after careful investigation, to be cases of 
honest misunderstandings between the parties. For example, when the 
goods to be moved or the services necessary to carry out the move are 
more than originally estimated, customers often sign a revised estimate 
before the carrier loads their property, agreeing to the additional 
charges. This scenario is permitted by Federal regulation allowing 
motor carriers to make necessary adjustments when a shipper's situation 
has changed.
    In cases where a customer refuses to pay additional charges 
pursuant to a signed revised written estimate, and subsequently lodges 
a complaint with us, we step in and endeavor to help the customer 
understand the estimate, the regulations and the circumstances 
warranting the additional charges. No matter what we do or say, we do 
not control the motor carrier, which is why more aggressive and prompt 
enforcement by the FMCSA would benefit brokers and consumers alike. 
Regardless of the circumstances, we strive to have motor carriers in 
our network deliver our customers' goods without further delay and have 
those carriers paid the appropriate, lawful amount due them. From our 
analysis of complaints filed against us, only a few hostage allegations 
turned out to be true hostage situations.
    Thank you for the opportunity to testify today and we look forward 
to working with the Committee on ways to improve the household goods 
customer experience. I welcome any questions you may have.

    The Chairman. I thank you, very much for that. And, we will 
go to questions now.
    The Ranking Member, Senator DeMint, from the state of South 
Carolina, said that he might have a few comments to make when 
he question time came up which should be right after mine, and 
so we will eagerly await that.
    Let me start with Ms. Kovalcik, and this is about the whole 
binding estimates, and non-binding, and all of that. Congress 
has been fighting household moving fraud for a very, very long 
time.
    Back in 1980, we decided that moving companies should be 
able to give consumers binding estimates. That means that the 
moving company and the customer have to agree on a price before 
goods get loaded onto a truck. Once the goods are on the truck 
the price is again final, but that is not the way it is working 
in the cases that we have been reviewing, and certainly in 
yours. Moving companies are loading the goods in the trucks and 
then jacking up the price on consumers.
    So, let me ask you these questions. You reached a written 
agreement with a company called World Wide Van Lines to pay 
$900 for your move, from Chicago to New York, right?
    Ms. Kovalcik. Yes.
    The Chairman. Yes, OK. But then, the company that moved 
your goods, Able Moving, charged you $2,434 for your move, is 
that correct?
    Ms. Kovalcik. Yes.
    The Chairman. What was Able Moving's answer when you asked, 
if you did, why they were demanding more money?
    Ms. Kovalcik. They originally told us that the weight of 
the truck was heavier than anticipated, and they also----
    The Chairman. The weight of the truck?
    Ms. Kovalcik. The weight of our goods, yes, in the truck.
    The Chairman. In the truck, okay.
    Ms. Kovalcik. And that we were being charged for packing 
materials. But, our original bill of lading, we did sign one, 
but there were nothing filled out because we had not used 
anything. Also, it was not crossed out. So, it was filled out 
later.
    The Chairman. Is there anything I might ask, either Ms. 
Ferro or Mr. Barry, that says that you cannot pack yourself for 
moving?
    Ms. Ferro. No, the consumer is absolutely at liberty to 
pack their own goods and to indicate that to the moving company 
they contract with. There are no prohibitions.
    The Chairman. In both of your experiences, that has not 
provided a problem, like people packing ineptly so that things 
became a shambles on a truck?
    Mr. Barry. No, that has not been an issue.
    The Chairman. OK. So, you packed your own services, and 
your goods, and I guess you should not have done that, but you 
did, and that would be the responsible thing to do, and you 
sound like a pretty organized person to me. So, that does not 
surprise me that you did it.
    So, Able Moving charged you more than three times what you 
were expecting to pay them, and their reason was they packed 
your goods, but you packed them yourself, and the answer to 
that is, yes. Many consumers would not be able to come up with 
that much money on the spot. I would say most consumers would 
not be able to come up with that kind of money on the spot. So, 
what was the deal with you? How were you affected by that?
    Ms. Kovalcik. Well, I have the exact date in my full-length 
statement, but we actually had quite a long time to come up 
with the money because there was quite a long process of chase 
involved. On the Saturday they arrived, which was about 6 days 
late, we had planned to call the police, and see a new 
contract, and sort of see what happened. We did not have the 
money when they arrived. We agreed to pay the money over the 
phone but we did not have the money.
    It turned out that we did not need to pay the money because 
they then engaged in an interstate chase with our things. So, 
we did not turn over the money then. We turned over the money 
weeks later when we had, sort of, a hostage exchange. We 
exchanged a money order for a key to an undisclosed storage 
unit in New Jersey. So, we had several weeks, but we did have 
to borrow money from my family and then we paid.
    The Chairman. Borrow from your parents?
    Ms. Kovalcik. Yes.
    The Chairman. Mr. Romrell, is it in the order of things, 
either rules, regulations, common practice, and I will ask this 
of Ms. Darr also, that when you call them and you said that you 
sometimes spend 2 hours asking them what it is they have to 
pack, but you are still calling them, or maybe it is over the 
Internet. So, it is sort of hard to judge.
    Now my question to you is, it does not seem to be possible 
to figure out what to charge somebody without actually seeing 
what it is that they are packing. Now, that is even harder if 
they have already done the packing, like Ms. Kovalcik did, and 
therefore you cannot see, you can only see boxes, cardboard 
boxes, or whatever. So, I do not understand that.
    Why do you have to call them to offer them a price? And, 
you said you spent 2 hours on the phone with one example that 
you gave. I do not know that that is a common thing. I doubt it 
is. But then, did you go pick out the moving company?
    Mr. Romrell. Mr. Chairman, to give one of our prospects, an 
accurate idea of the cost of their move, an accurate estimate, 
we do have to go through the inventory process. There are 
problems with in-home estimates, just like there are problems 
with telephone estimates. You have to have three things that 
come together at the same time.
    The person who is taking the estimate has to be properly 
trained, and they have to gather the right amount of 
information. Whether it is over the phone or whether it is 
person, the person doing the estimate has to know what they are 
doing.
    The second issue is the consumer has to be cooperative in 
fully disclosing everything that is there. Even on an in-home 
estimate, if they had a storage shed they forgot to mention, or 
they have something in the garage and the estimator did not go 
into the garage, you can have the same sorts of problems.
    The third issue is the carrier. Even with in-home estimates 
as with telephone estimates, when the carrier shows up the 
person loading the truck is not the same person that did the 
estimate. They can look at the property to be moved and say, 
this does not match, and that is often where pricing issues 
come up. The person loading the truck may be incentivized by 
the carrier to say, ``Hey, if you collect extra money, you get 
a commission from that,'' or maybe it is a great carrier and a 
great employee, and they just see things differently than the 
estimator.
    So, our goal is to walk everyone that we talk to through a 
very detailed inventory over the phone, and the system we set 
up is to say, ``OK, let's go to your living room,'' we type it 
into our computer and say, ``What is in your living room?'' and 
we label that for them. But, we go through every piece of 
property they have. And, then we go to Billy's room, and we 
label that.
    So, after we have walked through the entire house, the 
entire inventory with our prospect, we send them a written 
estimate that has this information detailed and labeled the way 
we walked through it with them. So they can look through the 
list and say that, ``Billy's room, I forgot the bunk bed,'' or, 
``Why isn't my desk in the den listed here,'' and then we can 
make additions or corrections if we need to.
    But, when we do our job right, and the customer is helpful 
with us and cooperative, we prepare very good estimates, and we 
strive to do that because we want to prevent these types of 
issues from coming up.
    The Chairman. I thank you. My time is 3 minutes over. 
Senator Lautenberg and Senator Pryor can note that, and duly 
punish me. But, I wanted to get that answer out of you, and I 
also want to pursue that with you, but Ranking Member Senator 
DeMint, I call upon him.

                 STATEMENT OF HON. JIM DeMINT, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator DeMint. Thank you Mr. Chairman and I would ask 
consent that my opening statement be in the record. No 
objection, right?
    The Chairman. No, not at all.
    Senator DeMint. OK, thank you very much. I apologize for 
being late. I appreciate all of you being here.
    We all know that America has a very unique economy, and 
that our citizens are very mobile. The ability to move around 
the country and take better jobs is critical to improving our 
way of life, and our opportunities as families. And so, the 
moving industry is very important to everyone. Even to those of 
us who are not moving, it is very important.
    I have known that as an employer myself, being able to move 
people in from other states. But, even when everything goes 
perfectly moving is a very stressful experience. And when 
things start to break down, it can become a nightmare as 
explained today.
    What we need to know is what we can do about the problems. 
I have gotten a sense from what has been said today that this 
is not a matter of us needing more laws, but more enforcement 
of our laws. Would our Federal agencies folks agree with that? 
Is this a matter of enforcement, or does this Committee need to 
consider new legislation?
    Ms. Ferro. Thank you, Ranking Member DeMint. Anne Ferro 
here.
    I would reinforce that the Committee took some very 
positive steps in the authorizing language you incorporated 
into MAP-21 and, specifically, in providing additional 
authorities to demand hostage loads be released, to allow for a 
sharing of the fines and penalties against a mover with the 
actual consumer, and to require a level of screening at the 
beginning before someone even gets their authority. You 
provided some strong additional authorities.
    I would say some further support for partners, our Federal 
and state partners that are carrying out additional work 
leveraging, kind of that force multiplier, and I would say 
again this Committee played a leadership role, Senator 
Lautenberg in particular, in incorporating into the original 
authorization proposal some additional grant support for state 
prosecution.
    Thank you.
    Senator DeMint. Mr. Barry?
    Mr. Barry. I would agree with what Ms. Ferro stated. For 
us, the ability to prosecute and investigate these rogue movers 
is what we do. So, when we have the ability to work with our 
Federal and state law enforcement partners it does act as a 
force multiplier, it gives us an ability to bring more of our 
cases to the U.S. attorneys' offices, and I think that it does 
act as a strong deterrent within the industry.
    Senator DeMint. So, I just want to make sure that I am 
clear. There is nothing in the law that is holding you back 
from prosecuting the violators of fraud in this industry. It is 
just a matter of needing to multiply the force and effect 
cooperation networks with the states.
    Do you feel that the industry itself, the industry 
association that Ms. Darr represents, is doing enough? I know 
there are a lot of industries who do things with encouraging 
best practices. A lot of them are involved with a lot of 
voluntary enforcement of their members, when things are not 
going right. Is the industry itself, the big players, doing 
enough to root out the ones who are the bad actors?
    Ms. Ferro. Senator, the industry, the reputable movers, 
both at the state and the national level, have been very strong 
advocates for pursuing and prosecuting rogue operations. At the 
same time, it is from a Federal enforcement perspective. Our 
agency, the Federal Motor Carrier Safety Administration, has 
to, and does, demonstrate the commitment to detect, and pursue, 
and prosecute those rogue companies.
    And so, together I think it is a great deal of effort. Is 
it ever enough? I think we all are really driven to continue 
pursuing that.
    Senator DeMint. If a consumer finds herself in the trouble 
that Ms. Kovalcik did, how do they know who to call for help to 
get their goods released? Did you have any idea what to do? Did 
you just call the local police? What happens?
    Ms. Kovalcik. The very first instance, when the moving 
company arrived with the higher estimate, we did call the 
police, in part because the movers were being extremely 
hostile, but I do have experience in local government. So, I 
started pulling up every agency I needed to talk to. I think 
from the statements given there is probably even more had I 
been even more savvy, but I went through the attorney general, 
I went through the department of justice, I went through the 
Federal Bureau of Transportation, I went to everything and 
filled out everything and submitted forms to everything that I 
could think of, so.
    Senator DeMint. I know I am about out of time, but I would 
like to ask the industry a question. It would seem like on 
every contract, whether you are a broker or a mover actually 
with the trucks, that it should have a number to call if there 
is a problem, whether it be a Federal agency or someone in the 
association, so that if this occurs, very quickly the right 
people could get this, that you would not have to go through 
local law enforcement and find out who else to call. Does that 
exist now here, you know, like, how is my driving, call 1-800 
on a truck? I mean, how do we do that for the consumer when 
something goes wrong that they know who to call?
    Ms. Darr. That is an interesting concept, the 1-800, how is 
my driving, in the moving industry is not a bad idea, and we do 
not have that. I mentioned earlier, Senator, the America Moving 
and Storage Association is promoting a program called the 
ProMover Program, and that is why I am taking the opportunity 
now to put my folder in front of you and talk about how we 
certify our movers and try to make sure they are doing the 
right thing.
    Part of that program is working with the Department of 
Transportation to make sure that the companies coming into the 
industry and the companies that we promote are solid and abide 
by the law.
    In terms of who you are able to call, one program that we 
mentioned earlier is MoveRescue, and that is a program that is 
primarily run through Unigroup, one of our member companies, 
and they employ their system of agents, lawyers that are 
familiar with transportation law, they have a partnership with 
FMCSA, and they do have a 1-800 hotline number, but I would say 
that the movers that are displaying that number are likely to 
be within that Unigroup family of agents. That is not an 
industry-wide program it is limited to Mayflower and United 
which are Unigroup companies.
    Senator DeMint. I would just hope the industry could have 
some kind of a good housekeeping seal that was on every 
contract, that if something goes wrong there was someone to 
call, and if that seal is not there you should not move with 
them.
    Just a quick comment from you, Mr. Romrell. Can we improve 
the consumer's ability to get to the right people quickly to 
resolve these hostage situations?
    Mr. Romrell. Thank you, Senator DeMint. One of the benefits 
of working with a credible broker who respects their position 
as a broker is they can help the consumer know how to do those 
things. So, having a phone number to call is great, but I 
personally, I have talked to consumers who have been in 
dramatic situations, and I have contacted the FMCSA for them. 
So, my pitch to our customers and our carriers is always the 
same, if you are following the regulations, great. If you are 
not, we are going to report you. If there is bad conduct and 
bad actors, we do not want them in the industry.
    Senator DeMint. One last comment. I think this is a system 
that has to work quickly. Because if you are in a house with no 
furniture and a new job, you are likely to pay the ransom in 
order to get your furniture. So, I would just encourage whether 
it is on the Federal side, the industry side, that we have to 
have instant response so that someone would feel the heat 
immediately if they are trying to take advantage of a consumer. 
And, if the industry can do that then it is less likely we will 
try to come in with more laws and tell you what to do.
    Thank you for the extra time, Mr. Chairman.
    [The prepared statement of Senator DeMint follows:]

Prepared Statement of Hon. Jim DeMint, U.S. Senator from South Carolina
    Thank you, Mr. Chairman. I know you care deeply about consumer 
protection and I appreciate your perseverance in drawing attention to 
these issues.
    A vital component of our exceptional and unique American experience 
has always been the mobility of our citizens. This mobility has driven 
our tremendous economic growth and contributed to our recoveries in the 
past. In short, the freedom of movement we have in America is a great 
attribute of our nation.
    At the individual level, however, moving is rarely an easy 
experience--especially when the relocation is to a distant place across 
state lines. Even when everything goes well, moving is a particularly 
stressful event, both emotionally and financially.
    When things go poorly, however, these already stressful events can 
quickly become outright nightmares. And when the things that go poorly 
include fraud and theft, the government has a responsibility to protect 
the citizens it serves.
    Technology, specifically the Internet, provides tremendous 
opportunity for entrepreneurs and established businesses to offer more 
choice for consumers, and this is evident in the household goods moving 
industry. This choice, in turn, empowers consumers.
    Unfortunately, but not surprisingly, criminal and unethical 
opportunists also benefit from this same advance of technology. The 
Internet can make it easier for bad actors to enjoy a measure of 
anonymity and the ability to appear respectable or perhaps even as 
something they are not.
    Mr. Chairman, I hope this hearing and your report allow us all to 
learn more about the intersection of our mobile citizenry and the 
challenges and benefits provided to them by the interstate moving 
industry. I look forward to hearing about how our government agencies 
(particularly the FMCSA, DOT, and DOJ) use existing laws and their 
regulatory authority to address illegal behavior that harms consumers.
    The unfortunate truth is that experiences like Ms. Kovalcik's will 
likely continue as long as people move. Opportunists will continue to 
break and ignore laws and regulations, and adequate enforcement is the 
only deterrent. What we can do here today, at least, is highlight the 
need for more consumer education and awareness, and encourage our law 
enforcement to use the tools Congress has given them.
    That seems like a worthwhile use of a Thursday morning, Mr. 
Chairman. Thank you.

    The Chairman. Thank you, Senator. Appreciate it. I am going 
to call on Senator Lautenberg.
    Senator Lautenberg. Thanks, Mr. Chairman.
    The Chairman. But, then I want say that after that, I am 
going to call on Senator Pryor, and all should be aware that he 
is Chairman of our Consumer Subcommittee, a trained lawyer, 
from Arkansas, and knows all the tricks.
    Senator Lautenberg.
    Senator Lautenberg. Before we get to the hard bitten 
Senator from Arkansas, the fellow from New Jersey will take 
over for just a few soft minutes.
    And, one of the questions that looms in my view is the 
brokerage relationship to the industry, and you know, when I 
look at Mr. Romrell's testimony, you said that your company 
makes every effort to adjust for that to provide consumers with 
quality, reliable service, and you say that most complaints are 
mere misunderstanding?
    That is a pretty accusatory thing suggesting that, well, 
more people want to make trouble than be serviced properly, but 
the investigation has shown that your company has had a 
disproportionate share of complaints, as many as 20 times more 
than the average company. Now, how is it possible that 
misunderstandings are responsible for this huge number in 
disparity in complaints?
    Mr. Romrell. Thank you, Senator Lautenberg. I think part of 
the problem with the statistics is they are not ratio-based, 
and that is something that I have talked to everyone in the 
industry that I can about. The FMCSA, the Better Business 
Bureau, AMSA, they never, when this investigation started or 
after, they never asked how much volume we do.
    We have complaints, and my statement in the testimony is 
not to minimize those. Some complaints are misunderstandings. 
Legitimate issues with the customer are serious issues. But 
here is what I look at, is the ratio of complaints to the 
volume of business that we do. Two really important things I 
look at, are the BBB and the FMCSA complaints, and our ratio of 
complaints is very low.
    Now, how can you compare us to other industry actors, if 
you do not know what their ratio is? So we have raw data that 
does not tie to the volume that you do, and that would be a 
very useful piece of information for consumers and for brokers 
to say, ``What is your ratio of complaints so we know how you 
stack up apples to apples?''
    The other issue, Senator Lautenberg, is that we work with 
consumers who are budget conscious consumers on a COD basis. 
So, we do not--we try to, and we do some office moves, but we 
do not do a lot of corporate relocations, and we do not do a 
lot of military moves. So, the COD business in general, I think 
Ms. Darr might agree, is a more problematic industry segment.
    Senator Lautenberg. But the fact you may be handling a 
larger volume would suggest to me that you should be better at 
the supervision of the business, and not readily compared to 
much smaller operations who have less of a number of 
complaints.
    I want to ask you this, Ms. Darr, do you have any idea how 
much of the business is initiated by brokers?
    Ms. Darr. I do not have that exact number, but I do have to 
say that Mr. Romrell has made an excellent point, that brokers 
do step in and help out some of the independent movers. Most of 
the moving industry is represented by agents of van lines, so 
they do not necessarily rely on the brokers as much as the 
smaller independent movers do. So, I would say the bulk of his 
clients, I guess if you will, were smaller independent movers, 
and they are a significant force in the industry. We probably 
have about a 1,000 independent movers that are members of the 
American Moving and Storage Association.
    Senator Lautenberg. It seems odd that an industry where the 
transactions are relatively small, that there is such, and I 
have got to say it, kind of a cloud that hangs over things. 
Because, once they got you, they got you. And Ms. Kovalcik, you 
have become an expert in having been gotten there, that you had 
to chase your goods around the states.
    But, the American Moving and Storage Association, DOT 
Inspector General, said that consumers should avoid moving 
companies and their brokers that require substantial fees or 
deposits, but I am not sure that that makes a lot of sense. I 
mean, if the truck is going to show up, you got a crew assigned 
to it and so forth, I think there is a responsibility, to be 
honest, with the purveyor.
    So, have you seen a lot? And, Ms. Ferro, I do not know 
whether you are into this kind of detail. But, of situations 
where brokers have misused the concept of deposits to defraud 
people, is that something you run into quite a bit?
    Ms. Ferro. We have certainly seen in the arena of broker 
practices a level of, sort of, freedom of operation if you 
will, that is now getting better contained by virtual of a 
broker rule that was put in place early last year. A consumer 
does not have to put a deposit down to achieve a full, strong, 
sound estimate from a reputable mover. That is point number 
one.
    And, under the new rule that is in place, brokers must 
disclose, first and foremost, as Mr. Romrell indicated, that 
they are not a mover themselves, they must disclose the moving 
companies they are working with, they must disclose the DOT 
number that they are operating under as well as the moving 
companies they are working with, and they must provide the 
consumer, the consumer's rights and responsibilities.
    We have seen--you asked earlier whether there is a resource 
where a consumer can file a complaint. We operate a National 
Consumer Complaint data base, and receive on average anywhere 
from 2,500 to 3,000 complaints a year, about 20 percent are 
hostage loads complaints, they may be packing complaints, or 
overcharging complaints. But, we have seen an uptick in broker 
complaints in the past two years, and it could very well be 
because of the increased focus on brokers and the opportunity 
for brokers to utilize that Internet kind of no fixed address 
concept more.
    But, we feel very strongly about taking those, that we use 
that National Consumer Complaint database to formulate our top 
100 list. Again, our strategy is to detect, investigate, 
prosecute and educate consumers, and so we use that complaint 
database combined with our safety database to create a top 100 
list, and pursue enforcement action and reviews of those 
carries.
    We have--the terminology I will use may not be appropriate, 
but we have a higher rate of return on that top 100 list than 
we do through our standard compliance reviews. We pursue 
enforcement action against about 50 percent of the entities, 
and this is our top 100 list for household goods movers. We 
have now adjusted the algorithm to provide a better focus on 
brokers as well, since they do not have those physical assets.
    Senator Lautenberg. Mr. Romrell, once you have entered into 
the transaction, a transaction, you become responsible for the 
whole process, and as such, you have, I assume, investigate 
complaints that you get. Do you try to come down with an 
adjudication on these things? Have you talked to the company 
and say, ``Hey, if you do not cut that out, we are not going to 
be handling your business?'' Do you have a responsibility and 
do you exercise it, to make these companies behave more 
appropriately?
    Mr. Romrell. I appreciate the question, Senator Lautenberg, 
and the short answer is yes. Sorry, I did not have my 
microphone on, but yes, we do what I would call our own 
compliance review every time we get a complaint, and we keep 
track of that information so we know which of the carriers in 
our network are showing up more often than others. If we have a 
system or a pattern of complaints, or bad behavior, that 
carrier is out of our network. And, since we started doing 
business in 2005, we have removed hundreds and hundreds of 
carriers from our network, some because they went out of 
service, which we drop immediately, and we know the day they 
are out of service we drop them, but some just do not provide 
the right level of service. So, we are always looking for 
better carriers, but we do not keep the bad actors.
    Senator Lautenberg. Mr. Chairman, thanks very much for 
having this hearing. I would ask that we keep the record open 
there. Lots of questions that come into mind as we review this.
    The Chairman. I would say so. Yes, we will. Senator Pryor.

                 STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Thank you Mr. Chairman, and thank you for 
doing this hearing it is very important, it is good to have 
everybody here today. Thank you for coming. Administrator 
Ferro, it is always good to see you, and thank you for being 
here.
    I have a question for really both of you and Mr. Barry to 
start with. And, I will stipulate to the fact that your 
employees work hard, that they work as efficiently as possible, 
as smartly as possible, but I also guess that with about 7,000 
movers around the country doing about 800,000 moves a year, 
interstate moves a year, that you probably are not able to get 
to, you know, a very high percentage of the complaints and 
really spend the amount of time you would like to on those, and 
you all mentioned this state prosecution aspect, and really the 
first question I have is, do most states have sufficient laws 
on the books to prosecute some of this wrongdoing, or is it 
really a matter of resources at the state and local level?
    Mr. Barry. Senator, we actually have some ongoing work with 
state prosecutors. We find that their laws are adequate for us 
to move forward with these investigations, and our experiences 
have been this, when we go and talk to the U.S. Attorney's 
office, and we find that we just cannot get the cases 
prosecuted through those offices, and we go to a district 
attorney's office, or a state attorney general's office, we 
have been welcomed, we have been given resources, and we have 
had successful prosecutions. So, from our limited number of 
cases, it has been a good experience.
    Ms. Ferro. Senator Pryor, if I might jump in on the getting 
to the larger group of states across the country, an area of 
strong interest by us, and this Committee has demonstrated it 
in their reauthorization recommendations last year, is to 
provide resources either through our standard grant program, to 
reinforce to states and states attorney general's offices, the 
value of prosecuting these cases.
    They find, if they prosecute, the fines general do not go 
back to their specific efforts to prosecute this kind of 
consumer protection and identifying resources. I think again, 
this Committee identified our mix of grant programs as a 
potential resource that was not adopted in the final MAP-21.
    But, we work through a Federal-state working group to 
expand both the knowledge and expertise among the states and 
their attorney general's offices as well, specifically about 
household goods moving prosecution or enforcement, and we have 
a specific fraud working group that is just the enforcement 
agencies at the state and Federal level, to again identify and 
pursue specific strategies that we found in cases.
    We have three states now with whom we have full MOUs, that 
are going to begin doing compliance reviews enforcing cases on 
interstate household goods movers beginning early next year, 
and we have got another five states in the wings ready to 
pursue that. We have also improved the resources for them from 
an education perspective, and understanding of the regulations, 
and an access to resources. Those are kind of the three 
barriers they have identified that we are all working to 
overcome for that fourth multiplier.
    Senator Pryor. Good. Well, thank you for that.
    Mr. Romrell, let me ask a follow-up on Senator Lautenberg's 
question a few moments ago where he was talking about 
basically, when you have a problem with a carrier, what do you 
do? And, if I understood your answer correctly, you talked 
about if there is a pattern of a problem with this carrier you 
take him out of your system. But, why do you not have zero 
tolerance? Why is it not that if you have one problem, that you 
look at, and you realize it is a problem with the carrier, it 
is not a misunderstanding, but it is a problem and they are not 
doing right, why do you not take them out of your system right 
then?
    Mr. Romrell. Thank you, Senator Pryor. There are some 
things that we have as a zero tolerance policy, but it really 
depends on the situation, and it is one of the challenges in 
the moving industry, and the way the regulations are written. 
Carriers have some leeway, whether it is through a broker or 
their own estimator, to make changes to the estimate when they 
show up, and that is where I mentioned in my written testimony 
there are some misunderstandings between customers and 
carriers.
    So, even if a customer complains, in some cases it is not a 
regulatory violation, and it is not a bad action on the case of 
the carrier. Sometimes it is just a misunderstanding. So, we 
have to look at the situation and assess it.
    If we have a carrier that is a bad actor--and I am not 
sitting here saying we do great every time, all the time. We 
strive too, but we make mistakes. But, when we do see those bad 
actors, then we have to contact the carrier the minute that 
report comes in. The minute the complaint comes in, we are on 
the phone with the carrier saying, ``What is your side of the 
story? Tell us what happened.''
    Right, or wrong, we push them with our influence, which is 
all we have, to make the situation right for the customer. We 
are in an awkward situation because all we really have is for 
leverage is our relationship with the carrier. So, we push 
them, and sometimes we will actually pay the carrier off to 
deliver goods, and then we will deal with the carrier after the 
customer has been taken care of. So, it is really a case-by-
case evaluation that we go through.
    Senator Pryor. I think the better--not telling you how to 
run your business, but I think the better policy is the old 
adage that is the customer is always right and more of a zero 
tolerance standard, unless it is justifiable for some reason, 
clearly justifiable for some reason with your carrier. I think 
you would be a lot better off, and I also think you would play 
a role in reducing a lot of the fraud and the problems around 
the country. To me, that would be you taking responsibility and 
taking the proper steps.
    Mr. Chairman, let me, if I may, just pursue one more very 
short line of questions.
    Mr. Romrell, in your opening statement, you talked about 
how you are a broker, and that you made it clear that you are a 
broker to the consumer. Now, I have a little advantage here. I 
am a lawyer, and I used to be the attorney general. So, we 
spent a lot of time in consumer law. So, the way I look at 
something may not always be the way the general public sees it.
    But, when I look at your website, which I have a copy of 
here, I think your website is misleading, at least in a couple 
of ways, and I just would like to get your comments on it.
    First, I would say that, even though you say you make it 
clear that you are a broker, I do not think the website makes 
it that clear, and also, I think that you never, at least not 
that I could see on the website, you never really explain what 
that means to be a broker. You know, you do not clearly explain 
that, at least not that I can find, that you are really an 
intermediary between--now, it may be somewhere in the fine 
print, but it was not obvious to me when I read through it 
here.
    And, that, I think, is a significant concern because, in 
the world of the Internet, it is always a challenge that people 
understand who they are dealing with. So, I did want to bring 
that to your attention.
    The other thing about this, about your website, and I will 
be glad to let you respond to the first thing as well, but let 
me go ahead and get this second point in. I noticed on here 
that you talk about, and I am seeing, one, two, three, four, 
just in the first two pages of the website, four references to 
reviews that you can get on here and read the reviews from 
others.
    I am guessing that you do not put the negative reviews on 
your website. I did not see any. And, to me, that is misleading 
if you are only telling part of the story, but you are not 
telling the rest of the story. And, I think your customers have 
a right to know if there have been a lot of complaints.
    So, I would like for you to respond to both of those.
    Mr. Romrell. Thank you, Senator. The explanation on the 
website, if you have not seen it yet, I would urge you to click 
on the video that is on the homepage. It is very prominently 
displayed at the very top.
    Senator Pryor. Yes, it is right there, a little video clip.
    Mr. Romrell. Yes, and also I think the image has a link to 
the video. The video explains our business model as a broker. 
It lays it out in a graphic audio visual way, very clearly. 
There is nothing misleading, if you watch that video, about our 
role as a broker. We follow the regs, and list our status as a 
broker, our MC and DOT numbers, and those give consumers 
options to say, ``Can I go to the FMCSA and look at your 
reviews?''
    There are a lot of other rating agencies industry-wide, and 
consumer rating in general, that have reviews for us. So, it is 
an interesting idea to post the good and the bad. We have not 
done a great job collecting a lot of positive reviews. It is 
something we are doing more of now, actually surveying our 
customers after the move, and we are getting a good response 
rate and some very positive feedback.
    But, the last step in the process before we do business, 
before we have a business relationship with a consumer, is to 
send them our binding estimate, and our binding estimate is not 
an obligation for them, it is not a payment document. It is 
their chance to say, ``What are you telling me you are going to 
do?''
    And I have written this in a way, revised the estimate we 
used to use in a way that it is not full of legalese, and there 
is no fine print. And, the very first paragraph where it says 
``General Information,'' the very first line there says, ``As a 
moving broker licensed with the FMCSA, an agency with the DOT, 
Budget Van Lines matches your moving needs with a carrier that 
is insured and licensed by the DOT,'' and we reference our role 
as a broker ten times in our written estimate, clearly 
displaying our role as a broker on the top, and throughout.
    So, this is the consumer's chance, if they read it, which 
is a challenge that is a challenge in any industry, if they 
read it, there is no question before they decide to do business 
with us that we are a broker and we are only an intermediary.
    Senator Pryor. I will look at the video, but one point, and 
I will even look at your form if you want me to, but one more 
point on that is that, I think one thing that causes 
confusion--my guess would be, one thing that causes confusion 
in the consumer's mind, is on your website, at least on two, or 
three, or four occasions, in big, nice, bold letters you talk 
about full-service moves.
    And, I think when people say on I'm on Budget Van Lines 
full-service moves, even though you have said broker at 
different places, they are thinking that you guys do the move. 
Now, you all may not have intended that, but I do think that 
would be confusing to consumers.
    Mr. Romrell. Can I respond to that?
    Senator Pryor. Sure.
    Mr. Romrell. Senator, I think there are two issues 
actually. The full-service move is an industry term that means 
something to people in the industry. Consumers may not 
understand that. I can concede that point. The other issue, and 
I was just talking to Mr. Barry about this earlier this morning 
is, I do not think consumers realize that there is a broker 
industry within the moving industry itself. So, even if they 
see broker, it may not register, and that is an opportunity for 
the industry itself, and for us to educate consumers better.
    Senator Pryor. Right. From my stand point, the fact that 
there is a broker, just by virtually being a broker is not a 
deal killer, it is not a bad thing necessarily. But, what I 
would hope is my broker would be out there picking reputable 
companies for me to deal with, and I think that is part of this 
consumer-broker relationship that you need to safeguard and 
work on. So, that would be my concern.
    Mr. Chairman, thank you.
    The Chairman. Thank you, Senator Pryor. I am somewhat 
amazed that we are spending so much time on Mr. Romrell. I do 
not know what the heck you are in business for, and I want to 
go to Ms. Darr. You booted him out. You terminated him. You 
terminated him. Why did you terminate him?
    Ms. Darr. We terminated Budget Van Lines because of their 
history with the Better Business Bureau and unsatisfactory 
ratings.
    The Chairman. How many people do you terminate?
    Ms. Darr. Well, I mentioned in my testimony the first time 
that we did our review of all of our movers, the several 
thousand movers, we terminated 200 movers in the first year. It 
is pretty significant. But, as time goes on, our movers have 
kind of stepped up to the plate, and they are used to the 
screening and the standards that we apply. We feel like the 
boats have risen, and those that have not, we found maybe 20 to 
25 a year that we have to get rid of during the course of the 
year.
    The Chairman. Maybe somebody, the four of you, can help me 
understand why brokers have to exist at all? I mean, in other 
words, do you not have all of these moving vans? Can people 
call you and get advice? Do you offer advice? Do you have to 
rely on him?
    I mean, do you understand that many of the people who have 
relied on him, when they got in trouble, received absolutely no 
assistance whatsoever? They just walked away from them. I see 
him as nothing but trouble, and I am really trying to figure 
out in my own mind, good grief, what Ms. Kovalcik must be 
thinking.
    I do not know why he is in business. I do not know how he 
makes his money. What does he make it off of? What service does 
he render? He spends 2 hours, he said, I doubt that happens 
very often, you know, scanning a living room which he never 
gets into, to offer a price, and then he produces, or does not 
produce, I do not know if he does produce or does not produce. 
He takes a name, which implies that he is a moving company, 
just like Senator Pryor said. I would believe, based upon what 
Senator Pryor said in that paper, what I had seen before, that 
he is a mover. What is he doing in business? Why is he in 
business? Please answer me. You were not happy when he was 
talking. I was watching your body language.
    Ms. Darr. Thank you, Mr. Chairman. I guess you were 
noticing my body language on a couple occasions. We are 
concerned about consumers hiring brokers rather than going 
directly to the mover. We are concerned about consumers having 
estimates provided over the phone, rather than the mover coming 
into the house and providing a written in-home estimate, which 
we believe is their practice.
    The Chairman. If Ms. Kovalcik wanted to find a mover, how 
would she have done it? Not using him.
    Ms. Darr. She would--I would have recommended her to come 
to the American Moving and Storage Association for us to 
recommend a mover.
    The Chairman. That sounds like a great idea.
    Ms. Darr. We provide recommendations.
    The Chairman. Do you put yourself forward? Does she have 
reason to know about you?
    Ms. Darr. It is very--we do try to put ourselves forward. 
The ProMover Program is what we are trying to make the brand of 
the industry, and we are trying to create a standard high 
enough that movers are gravitating toward it, they know that it 
is necessary to be a part of the ProMover Program in order to 
be successful in this industry, but it is difficult, because as 
you noted earlier, Mr. Chairman, people move very rarely. It is 
not like what kind of cereal you eat every day.
    So, it is hard to get the penetration, the brand 
penetration, that we need for a program like this, but we have 
made a lot of good progress. It has been five and a half years, 
and we are getting a lot of good press. The Federal Motor 
Carrier Safety Administration has been helpful coming out with 
press releases and talking about the importance of the program. 
We work very closely with the Better Business Bureau.
    All of those steps are leading people to come to the 
American Moving and Storage Association to look for a 
recommendation and to hire a legitimate mover. There are 
limitations, and I have to say I think that there is more that 
we could do with the Federal Motor Carrier Safety 
Administration to promote the ProMover Program. I think that 
there is also more that we could do with FMCSA to promote the 
MoveRescue program that we talked about. And finally, I think 
we should take the MoveRescue program to a higher level, and I 
think Senator DeMint had a really interesting concept. You 
know, put on the back of a truck, you know, how is your move? I 
mean, why cannot there be a 1-800 number for people that are 
having problems with their move, and if there were, that number 
could come into a call center, for a program like MoveRescue.
    The problem right now is that MoveRescue is run by a 
private entity. There is not a partnership, a formal 
partnership, with the Federal Motor Carrier Safety 
Administration in place, and we think that is absolutely 
critical. It was proposed in the bill, it did not make it 
through, but the administrator talks about force multipliers.
    The industry is there, to be a force multiplier, it is in 
our own best interest that we get rid of the rogues, and 
honestly, to some extent, a lot of our movers would like to 
eliminate the amount of business that brokers have in the 
industry, because in some cases that is money taken out of 
their pocket. But, we can only do that if we are given the 
opportunity through programs like MoveRescue and working with 
FMCSA to let people know about the concerns, give them a simple 
course of action to address these issues, and then once they 
make that call, there have enforcement people on the ground to 
deal with these issues, and with ten full-time inspectors for 
our entire industry, it seems a little crazy to me. I have to 
be honest. I believe it was 170 under the ICC, but we need to 
check those numbers.
    The Chairman. Yes, welcome to Federal budgeting.
    Ms. Darr. Yes.
    The Chairman. I mean this, it is a horrible thing.
    Ms. Darr. It is a horrible thing.
    The Chairman. I am humiliated and embarrassed that that is 
the case. Then it could get worse. Maybe the economy will come 
back and it will get much better.
    Ms. Darr. Sir, I would add----
    Mr. Chairman. You terminated him.
    Ms. Darr. I did.
    The Chairman. So why are we sitting here discussing him as 
a useful component in this decision process that Ms. Kovalcik 
went through? Why is it necessary that he be involved, or his 
people be involved? I think he false advertises, he gives the 
impression he is a moving company, and he is not full-service, 
and he is not--he does not show up at the house. You know, to 
me it is one-sided, and maybe I am wrong, so I am going to turn 
to Ms. Ferro and Mr. Barry, and you can give me a scolding if 
you want too, but I do not think you will.
    Ms. Ferro. Mr. Chairman, the question of why are brokers in 
business in the household goods moving industry is a tough one 
to answer, because that is a longstanding practice. It is sort 
of a because they can.
    The law, the Federal law, overseeing the movement of 
freight, allows for a broker industry in all aspects, whether 
it is a household goods mover or a standard freight mover. As I 
mentioned, we have 21,000 brokers in our oversight structure 
that have authority through the Federal Administration, FMCSA, 
to operate, and about four or five hundred of those are 
household goods brokers, specifically.
    We are absolutely committed to pursuing the provisions of 
the broker rule that we put in place last year, to ensure that, 
since brokers operate, that they are required to demonstrate 
full disclosure, that we hold them to that, and that we 
continue to identify as we have, and are doing right now as we 
can carry out two pretty significant investigations, the data 
points that are indicators of patterns of potential violations 
so we can prevent the kind of fraud that you have heard about 
today, and that I know you have heard from constituents on, so 
that we can continue to pursue that.
    The Chairman. Now Ms. Darr can terminate him, figuratively 
speaking. You can, too.
    Ms. Darr. We can now. Yes, we will take----
    The Chairman. Because of the new authority?
    Ms. Darr. With the authority we have, and we have issued 
much clearer enforcement policies where we identify evidence of 
hostage loads. Now, this is where it is a little tougher to 
link to a broker, because again the broker does not have the 
assets. But, where we can create those links and pursue other 
areas of violation, we can suspend and revoke a broker's 
membership.
    The Chairman. Now, remember that the person who is the 
center of all of this is Ms. Kovalcik. And, I do not know this, 
but I am going to guess, Mr. Romrell, that you have changed 
your website, since we started investigating, and you knew that 
we were.
    Mr. Romrell. Mr. Chairman, I am not----
    The Chairman. Can you just say yes or no?
    Mr. Romrell. I am not aware of any changes since the 
investigation started, any substantive change.
    The Chairman. I am not aware. All right. Could you follow 
that up? We will follow that up.
    Mr. Romrell. Absolutely, yes.
    The Chairman. OK. It is just crazy. It is just crazy. She 
is the person who is going to pay, Ms. Kovalcik, some money to 
be able to do something which happens in America and frequently 
to individual families, but in an aggregate manner happens a 
lot. And, you say the rules and regulations allow them to 
exist, and then I look at them and I look at Ms. Darr, and she 
has terminated him, she does not want anything to do with him. 
No affect on him, no affect on him at all. Goes right ahead and 
does his business. Terminated by Ms. Darr, well that is too 
bad, but I will go ahead and keep on with what I am doing, 
which is making a misery of Ms. Kovalcik's experience.
    Now, I have to leave in about 5 minutes, but I am really 
stunned by all of this. You know, at this point it is just like 
what happened on Wall Street, you know, Too Big To Fail, and 
then that wonderful question that Hank Paulson asks at the end 
of the movie when they have got what $125 billion or $700 
billion they have given to the big banks, and then somebody 
says, ``Now, they are going to use that for housing aren't 
they?'' And, Mr. Paulson is not sure, and the movie ends while 
he is saying, looking out a blank window, with a blank stare, 
and a sad face, ``I hope they do.'' And they didn't. They spent 
it all on rewarding themselves on salaries.
    And, it just absolutely defies my imagination that some of 
those people have not gone to jail. I think going to jail is a 
big deal. Certainly is for the person who does go to jail. I 
think it is a big deal for all of those who are contemplating 
doing business on an important sector and important people, 
like Ms. Kovalcik who has not had much of a chance to talk 
here, and she cannot defend herself against his company.
    He false advertises what he is doing, then he says it is 
fully explained, but if the word full-service is in there what 
in the heavens name do you expect Ms. Kovalcik to think he is? 
That he is a moving company. That is what he is, but of course 
he is not, and has never been in her place, has no idea, 
although he spends 2 hours on the phone. What he does for those 
2 hours on the phone I have absolutely no idea. How big is the 
chandelier? How big is your living room table? I mean all that 
kind of thing, I have no idea.
    But, it just does not hold water to me, and it strikes me 
as it may be legal, and if it is legal under your definitions, 
and rules, and regulations, and yours, Mr. Barry, then there is 
not a whole lot I can say, except complain mightily, and try 
and get your budgets in place so that you can--and of course, 
the public never understands that, you know, that you do not 
have enough people. They just say, ``Well, I have got a 
problem, and nobody is helping me,'' and you want to and you 
cannot because you do not have enough people. So, that is part 
of our responsibility.
    But, I do not understand why he is business, because he 
misled a lot of people, abandoned a lot of people, they have 
told us, because we have been working on this for many, many 
months, and it is just wrong.
    Ms. Kovalcik, you are going to end this hearing with 
whatever is in your heart.
    Ms. Kovalcik. You know, I was also really attracted to 
Ranking Member DeMint's comment about having a hotline. When 
this happened to us, I knew the police were not the right 
people to call, but they were the most immediate, and I 
recognized that budgets are tight and you cannot have--you 
know, you cannot call someone and have the moving police come 
to your door 10 seconds later. I understand that.
    But, I do consider myself to be a savvy consumer, and I did 
do my homework, and if there had been a number to call, I would 
have called it. Instead, I had to think, OK, interstate 
transit, who is going to regulate that? OK, shipping, who is 
going to regulate that? And find these things throw my own 
knowledge base.
    I would love it if there was a number, even if the truck 
was not reputable and they did not have the number listed, but 
I could search and find the number, and then there be some 
relationship with local law enforcement where they at least 
they could detain the truck, and then, you know, whoever needs 
to sort it out, can sort it out.
    But, the police told me, you know, this is a contract 
dispute, it is not our problem. So, there was no immediate 
solution, and then the truck is gone, and then that is too 
late. And, when we searched for moving companies, I had never 
heard of Ms. Darr's organization. So, when a consumer is 
searching that does not come up for them.
    So, I would love the idea of a hotline, and maybe some way 
at the very least whoever is the local law enforcement could 
stop what is happening, and then the agency that really needs 
to handle it, could come and intervene.
    The Chairman. Yes, because they had a bill of lading, and 
that was very compelling to you. Bill of lading is a bill of 
lading. Something sort of final, and professional, and legal 
about that, except it just does not mean anything, when the 
mover comes in and has a different one, and asks you to sign up 
at a much higher price, and says if you do not do it he is 
going to hold you hostage.
    This Committee's work is to make sure that people like you, 
Ms. Kovalcik, do not get held hostage. You happened to be very 
smart, and you did a whole lot more, you know, sort of smart, 
investigatory work then would be the case for most families. 
So, in fact, you are, untypical, unlikely to have this happen 
too, but it did happen to you, because there is a limit to what 
you can do, and I feel incredibly, badly about that.
    So, I am going to adjourn this hearing, and I am a very 
unhappy Chairman, and when I took over as Chairman I formed an 
investigative committee. I took that idea from Henry Waxman, 
and I have sitting behind me, some highly trained lawyers, who 
look for malevolence wherever they can find it. They do not 
look at airline schedules, or slots at Washington Reagan 
National Airport, whatever. They just look for consumers 
getting the bad end of the deal, and I think that is an 
honorable and sacred work, and so do you, and so do you, and it 
is what you do.
    So, let us just agree that we have to pursue this, let us 
understand that Mr. Romrell has been terminated, kicked out, by 
the trade association, and that Ms. Kovalcik has had a horrible 
experience and came all the way down here to tell us about it, 
which is very brave. Although you are not shy, you did 
extremely well. So, having said all of that, we have work to 
do, do we not?
    This hearing is adjourned.
    [Whereupon, at 11:52 a.m., the hearing was adjourned.]
                            A P P E N D I X

 Budget Van Lines Response to September 12, 2012 Committee Staff Report
                                           Budget Van Lines
                                  Los Angeles, CA, October 26, 2012
Hon. John D. Rockefeller IV,
United States Senate,
Chairman,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Chairman Rockefeller:

    On behalf of Budget Van Lines, Inc., we offer this response to the 
September 19, 2012 Committee Staff Report ``Internet Moving Brokers--A 
New Consumer Protection Problem In The Household Goods Moving 
Industry''. We respectfully request that our comments be made part of 
the official hearing record for the hearing held on this subject on 
September 20, 2012.
    We appreciate the work of the Committee to investigate issues in 
the household goods industry. Budget Van Lines has been cooperative 
throughout the Committee's investigation by providing over 500,000 
pages of documents to assist its investigation and was the only 
corporate entity investigated that agreed to testify at the September 
20th hearing. We agree that the household goods brokers and carriers 
and the enforcement community can do a better job to ensure consumers 
have good moving experiences. Budget Van Lines has been working hard 
over the last several years to continually enhance its policies and 
procedures with this goal in mind. We acknowledge that there are still 
areas of improvement within our company where we can further reduce the 
complications consumers sometimes face with a household goods move. In 
addition, we will continue to work with the Committee, industry leaders 
and the Federal Motor Carrier Safety Administration to identify and 
implement industry-wide solutions. We support strong enforcement of 
existing Federal regulations, enhancements included in the recently 
passed MAP-21 legislation, and future legislative and regulatory 
changes that will ensure the industry operates optimally.
    Budget Van Lines agrees with the report's concerns with unethical 
and unscrupulous brokers and carriers that do not comply with 
regulations and create difficult situations for consumers. Budget Van 
Lines agrees with the report's concern with brokers and carriers that 
do not follow regulations and supports the strongest levels of 
enforcement to get these entities out of the business. The entire 
household goods industry suffers from the actions of a few bad actors. 
Household goods brokers that misrepresent themselves to consumers, 
evade regulations or operate under multiple names are problematic and 
should not be permitted to operate. Rogue carriers and unethical 
brokers should be investigated and put out of business.
    However, household goods brokering by ethical brokers is a 
legitimate business with many benefits for consumers and carriers. 
Brokering is a common business model in many industries helping 
consumers save time and money. In the household goods industry, brokers 
help customers by providing easy access to more transportation options, 
lower costs and time savings. We help carriers, many of them small 
businesses, operate more efficiently by helping them connect with 
customers and giving them a way to fill return trips and partial loads. 
Honest and ethical brokers ensure consumers have access to reasonably 
priced moves and ensure that independent carriers will continue to 
survive and thrive. Without brokers, moving costs for all consumers 
would be much more expensive and harder to obtain and many smaller 
carriers would not be in business.
    Budget Van Lines agrees with the report that brokers that engage in 
the practice of intentional low-balling of estimates to get business 
mislead and confuse consumers. If brokers are engaging in this 
practice, they should be investigated and put out of business. Budget 
Van Lines does NOT engage in this practice. Our sales representatives 
are trained to complete as thorough an inventory as possible and to 
prepare estimates that are complete and fair. We do not earn and our 
sales personnel to not receive a commission on additional or adjusted 
charge assessed by the motor carrier at pickup or delivery, even when 
the carrier and the customer agree to a revised estimate. Therefore, 
there is no incentive whatsoever to underestimate the cost of a 
particular job. In addition, Budget Van Lines closing rate on estimates 
is between 3 percent and 6 percent. What this means is that of the 
estimates we provide, only a small portion of them actually turn into 
moving jobs. If we were intentionally low-balling estimates, our 
closing rate would be much higher.
    Budget Van Lines agrees with the report's concerns about 
unscrupulous brokers that collect booking fees and deposits and do not 
perform legitimate services or credit them to carriers. Budget Van 
Lines collects a booking fee and a deposit for its services at the time 
the move is booked. Budget Van Lines credits the deposit to the 
customer against the total cost of the move and reflects the motor 
carrier's fee for the services Budget Van Lines provides. Motor 
carriers who work with Budget Van Lines do not have to incur the same 
expenses for marketing to prospective customers, taking routine calls 
with questions about the moving process, creating inventories, 
preparing estimates or addressing customer service concerns before 
goods are shipped. The provision of these services by Budget Van Lines 
offers considerable savings in overhead for the motor carriers. The 
booking fee and deposits are separately itemized on the estimate. In 
addition, the booking fee and deposit ensures the customer that Budget 
Van Lines will provide as accurate an estimate as possible, arrange the 
move with a reputable and licensed carrier, and be available to help 
resolve disputes or issues should they arise. If unscrupulous brokers 
are collecting fees and deposits and not performing legitimate 
services, they should be investigated and put out of business.
    Budget Van Lines agrees with the report's concern that many 
consumers do not understand what a household goods broker does, leading 
to confusion for consumers and that some unscrupulous brokers are 
intentionally misleading consumers. Budget Van Lines has operated as a 
federally-licensed household goods broker since 2005, operating 
continuously under the same name. We have always intentionally 
represented ourselves as a broker and not a carrier. We do this in 
prominent ways on our website, documents and estimates and through our 
sales personnel. Sales representatives are trained diligently to 
disclose our role as a broker and are terminated if they would attempt 
by action or omission to mislead a potential customer into thinking 
otherwise. This is a zero tolerance policy for our company. In 
addition, these disclosures and policies were all in place before the 
Committee's investigation began. That being said, we acknowledge that 
many consumers may not understand what a broker is and this can lead to 
confusion. Budget Van Lines believes more can be done to further 
improve our corporate communications regarding explanations of the role 
of a household goods broker, how we interact with qualified carriers, 
the broker's role in the moving process and procedures to follow for 
when a problem arises during a move.
    Budget Van Lines believes the report's analyses based on volume of 
complaints against our company based solely on raw numbers could be 
improved by evaluating a company's complaint ratio instead. The 
complaint ratio is the relationship between the numbers of complaints 
to the numbers of jobs handled. We believe this is the only meaningful 
and relevant data point. Without using the complaint ratio as a 
measuring stick, it is impossible to assess whether the number of 
complaints is high or low or whether they are increasing or decreasing 
over time as a percentage of jobs performed. The use of raw volume data 
alone is misleading and does not aid in identifying problems, bad 
actors or overall industry trends. The staff report shows that over a 
five year period, Budget Van Lines had 200 total complaints. However, 
over that period, Budget arranged over 30,000 moves, resulting in a 
relatively low complaint ratio of .006, which is not reflected in the 
report. Budget is one of the Nation's largest household goods brokers 
and has grown significantly each year over that time period, which we 
attribute to operating our company with a high level of integrity, 
referrals from past customers and our ability to provide consumers with 
quality and cost-effective moves. While we strive for a positive moving 
experience for every customer, occasionally problems do occur and we 
endeavor to intervene and resolve them on behalf of our customers when 
they do.
    Budget Van Lines agrees with the report's concern with unexpected 
price increases from original estimates to price of actual moves. Motor 
carriers are not required by Federal regulations to, and as a matter of 
practice do not provide us information on price increase from original 
estimates. However, in an analysis of customer complaints on file, 
Budget Van Lines estimates that approximately 15-25 percent of our 
nonbinding estimates result in a price increase to the customer beyond 
the 110 percent rule. While no estimate will ever be perfectly accurate 
due to the need to weigh the shipment at actual loading, Budget Van 
Lines agrees that more can be done to reduce the number of jobs 
resulting in price increases. Budget Van Lines agrees that unexpected 
price increases in the industry can sometimes create situations where 
consumers are treated unfairly. There are many reasons for price 
increases. Inventories are not accurate, estimates are not understood, 
customers have high demand for written estimates or carriers are 
unscrupulous. Budget Van Lines has spent considerable time and effort 
improving our internal processes, and we still can and continually 
strive to do better. We routinely evaluate and reevaluate every aspect 
of our operations and continue to make refinements. Just over the last 
two years, we have revised and improved our estimates for more clarity 
and eliminated legalese and fine print. We have implemented better and 
more consistent training of our sales and customer service teams. We 
have a quality assurance department that screens every estimate for 
obvious errors and omissions and continually evaluates performance of 
our sales representatives. We have a robust carrier screening process 
that goes above and beyond what is required by law. We are developing a 
smart phone application that will help us provide a visual tool to aid 
in producing more accurate estimates. Budget Van Lines is at the 
forefront of the industry in trying to improve the customer experience. 
Changes to the regulatory scheme should be considered if such changes 
could reduce the frequency of customer complaints where the price of a 
move based on a nonbinding estimate increases above 110 percent. In our 
testimony of September 20th, we included 17 individual proposals 
recommendations for brokers, carriers and the FMCSA to improve the 
process and commend them to the Committee's consideration.
    Budget Van Lines believes the comprehensive fact situations 
surrounding each of the specific case examples involving Budget Van 
Lines are not fully acknowledged in the report. There are specific 
circumstances surrounding each of the cases analyzed in the report 
which were not sought out by the Committee nor included in the report. 
In each situation cited, Budget Van Lines attempted to resolve the 
conflict at issue. From our perspective, these cases are not indicative 
of systemic problems with the company's processes. We would welcome the 
opportunity to walk through the fact situations surrounding these 
examples for the benefit of the Committee.
    In conclusion, we appreciate the work of the Committee and the 
opportunity to respond to the staff report. We look forward to working 
with the Committee going forward to address the concerns that have been 
raised.
            Sincerely yours,
                                             Jason Romrell,
                                                 President and CLO,
                                                  Budget Van Lines Inc.
cc: Ranking Member, Senator Jim DeMint
                                 ______
                                 
          Statement of the UniGroup, Inc. Move Rescue Program
    The Move Rescue program was launched by UniGroup, Inc. in 2003 as a 
resource for consumers who fall victim to criminals when moving across 
state lines. Just four years later, our program was the only consumer 
advocacy group recognized by the U.S. Government Accountability Office 
in its report to Congress on the household goods moving industry.\1\
---------------------------------------------------------------------------
    \1\ GAO, Consumer Protection: Some Improvement in Federal Oversight 
of Household Goods Moving Industry Since 2001, But More Action Needed 
to Better Protect Individual Consumers, GAO-07-586 (Washington, D.C., 
May 16, 2007).
---------------------------------------------------------------------------
    UniGroup is the parent corporation of two of the Nation's largest 
household goods movers, United Van Lines, LLC and Mayflower Transit, 
LLC. The Move Rescue program leverages the UniGroup-owned van lines' 
combined decades of quality industry service to aide all consumers 
regardless of which mover they chose. The moving public can access Move 
Rescue services by going online at www.MoveRescue.com, or by calling 
the toll-free Move Rescue Help Line [telephone number removed]. Using 
Move Rescue, consumers will find a large breadth of educational 
resources--including what to look for when moving and how to avoid 
falling victim--and their options if they believe they have already 
been scammed.
    In addition to real-time consumer advocacy, Move Rescue also 
provides consumers with access to a nationwide network of 
transportation attorneys who make pro bono commitments to our program. 
Moreover, in extreme cases of hostage goods or abandonment UniGroup's 
two licensed moving companies can be counted on to provide emergency 
transportation services known as ``Shipment Rescues'' at no cost to 
consumers.
    Over the last nine years, Move Rescue's toll-free Help Line has 
received around 2,500 calls from moving consumers in need of our free 
assistance and education services. Move Rescue strives to develop 
collaborative relationships with state and Federal regulatory agencies 
and law enforcement officials to in order to effectively combat the 
criminals who prey on moving consumers, including through the 
coordinated location and recovery of consumers' property. All Move 
Rescue callers are asked to also file their complaints with the FMCSA 
complaint database, and we refer the most egregious matters directly to 
FMCSA personnel.
                                 ______
                                 
                          Statement for Record
    On behalf of UniGroup's Move Rescue program, we appreciate this 
opportunity to provide the Committee with a statement for its hearing 
entitled ``Taking Consumers for a Ride: Business Practices in the 
Household Goods Moving Industry.''
    For nearly a decade, the Move Rescue program has committed industry 
expertise and assets toward educating consumers and finding innovative 
ways to protect them from the actions of criminals posing as movers. 
While the frequency of actual crimes committed against moving consumers 
is relatively low, various government reports \2\ suggest that on 
average less than one-half of 1 percent of the approximate 1.3 to 1.5 
million moving consumers annually report actual crimes, we nonetheless 
recognize that such crimes are financially and emotionally devastating 
to the consumers involved.
---------------------------------------------------------------------------
    \2\ See, GAO, Consumer Protection: Some Improvement in Federal 
Oversight of Household Goods Moving Industry Since 2001, But More 
Action Needed to Better Protect Individual Consumers, GAO-07-586 
(Washington, D.C., May 16, 2007); GAO Consumer Protection: 'Household 
Goods Moving Industry: Progress Has Been Made in Enforcement, but 
Increased Focus on Consumer Protection Is Needed, GAO-10-38 
(Washington, D.C., November 30, 2009) and U.S. Senate Committee on 
Commerce, Science and Transportation Staff Report: Internet Brokers: A 
New Consumer Protection Problem in the Household Goods Moving Industry, 
September 19, 2012.
---------------------------------------------------------------------------
    This Committee's interest in Internet brokers is appropriate. In 
fact, the two Internet brokers identified in the Committee's early 
investigation and hearing are, in terms of total complaints received by 
Move Rescue in its history, the most serious of the offenders 
investigated by the Committee.
    Move Rescue receives on average 300 consumer calls per year, and 
has responded to around 2,500 consumer complaints in its nine-year 
history. Based on our observations, the thousands of legitimate, hard-
working, licensed household goods movers are not committing the 
egregious crimes against moving consumers. Instead, we believe that it 
is usually online brokers and other fly-by-night individuals who pose 
as legitimate, licensed household goods carriers in order to perpetrate 
such frauds on moving consumers.
    Today it is just too easy for criminals to prey upon the moving 
public via the Internet. Indeed, we believe that this problem exists 
because the creation of attractive-to-consumer websites is the only 
practical barrier to market entry for illegal online brokers, who often 
ignore Federal licensing requirements. During the course of assisting 
moving consumers, Move Rescue has found many Internet-based brokers who 
operate from apartment homes, while their websites suggests that they 
are instead sophisticated nationwide van lines.
    Move Rescue is concerned that moving consumers can be easily 
mislead by flashy Internet marketing tactics and unrealistically low 
moving quotes, and are subsequently victimized through such Internet 
brokers' outright deception. We have observed from assisting our 
callers that Internet-based brokers do not perform visual surveys of 
the property to be moved and provide low-ball moving estimates. These 
consumers are asked to pay significant amounts of money in disguised 
broker fees, and ultimately end up handing their worldly possessions 
over to undisclosed third-parties that they never heard of before the 
trucks show up in their driveways. In the most egregious cases, the 
Internet brokers then seemingly disappear, and the so-called movers 
hold the consumers' property hostage until they pay significantly more 
money than quoted by the brokers.We concur with the Committee, without 
reservation, that there is no place for such deceptive Internet brokers 
in the interstate household goods moving industry, whose customers have 
been given special protections by the Federal Government. The industry 
is in a unique position with relation to its consumers, as its service 
providers are in a position to enter into its customers' private homes; 
to personally interact with their consumers' family members; and to 
take possession of all the consumers' personal property.
    Move Rescue urges Congress to provide Federal enforcement officials 
with the resources that they require to fully enforce existing Federal 
laws and regulations. Based on our industry knowledge and years of 
experience in helping victims of fraud, Move Rescue is confident that 
enforcement of existing regulatory requirements is the solution to this 
problem, and more resources are needed.
    According to one government report, in 2009 the FMCSA had assigned 
14 of its roughly 1,100 staff to oversee the interstate household goods 
moving industry--5 staff at its headquarters and 9 staff in field 
offices. Among the 9 field staff, 8 were our household goods 
specialists.\3\ Only 1 of the 8 was dedicated 100 percent of his time 
to household goods enforcement, while the others were also responsible 
for enforcing safety regulations.\4\ A little less than half of the 255 
safety investigators in FMCSA's field offices had taken household goods 
training and could assist in enforcement,\5\ though they also had other 
duties.
---------------------------------------------------------------------------
    \3\ GAO-10-38.
    \4\ Id.
    \5\ Id.
---------------------------------------------------------------------------
    Move Rescue believes that increased funding for the FMCSA's 
household goods enforcement efforts could permit the agency to devote 
significantly more staff exclusively to combating illegitimate Internet 
brokers and protecting the moving public. We believe that funding 
enforcement and consumer education efforts will permanently rid the 
industry of criminals and help all of the million or more consumers who 
move annually to avoid illegitimate Internet brokers.
    New laws, regulation or programs are neither necessary nor helpful 
for combating the bad Internet brokers. In fact, any additional rules 
or penalties are unlikely to influence the behavior of criminals as 
long as the current enforcement levels are maintained. Rather, 
additional regulations stand to harm both legitimate, hard-working, 
licensed movers and the consumers they serve, who will pay higher costs 
for lawful services or may be even more tempted to unwittingly select a 
seemingly low-cost criminal online.
    We believe that existing Federal laws and regulations already 
successfully target and prohibit the improper practices of Internet 
brokers. Through SAFETEA-LU and MAP-21, Congress provided the FMCSA 
with powerful enforcement resources to ensure regulatory compliance and 
impose fines and penalties. With adequate funding, the FMCSA could 
provide protection to consumers without detrimentally affecting 
legitimate, hard-working, licensed moving companies.
    Finally, Move Rescue considers increased education as part of an 
overall approach that, along with increased enforcement, will help 
guard consumers against the acts of unscrupulous Internet brokers. We 
support the efforts of the FMCSA in proactively educating moving 
consumers about their rights through their ``Protect Your Move'' 
Website and consumer pamphlets, ``Your Rights and Responsibilities When 
You Move'' and ``Ready to Move.'' Consumers must be well-informed when 
deciding upon a mover--just as they would for any other major consumer 
purchase. Move Rescue believes that working together, the agency, 
industry, and the American Moving and Storage Association and its 
ProMover program are collectively taking positive steps to increase the 
effectiveness of consumer education.
    Move Rescue thanks the Committee for allowing us to provide our 
perspective.
                                 ______
                                 
                   Prepared Statement of Aldo DiSorbo
    Mr. Chairman, I commend you for initiating this hearing into the 
unfair practices that can occur within the moving industry. I am sorry 
that I could not be here today. Please accept this written testimony in 
my place, and I look forward to working with your staff to help the 
Committee prepare its report.
    As a long-time veteran of the moving industry--and an owner of nine 
carrier and broker companies--I strongly believe the Federal government 
must do more to protect consumers from the dishonest practices some 
moving and broker companies may engage in. I have advocated for 
stronger consumer protection laws in the past and I was pleased that, 
as part of the 2012 Federal surface transportation bill, Congress 
recently enacted some of the stricter regulatory standards I have been 
publicly advocating for since 2007, such as requiring carriers to pass 
a proficiency exam before becoming licensed.
    Mr. Chairman, the moving industry has unfortunately become home to 
too many unscrupulous and dishonest scam artists that create the 
hostage situations you read about today. This is due to several 
reasons.
    First, consumers in the market for moving services are particularly 
vulnerable to scam artists because consumers have little leverage or 
recourse when a carrier or broker company takes advantage of them. 
Consumers often need to move by a certain date and often must have 
their household goods delivered by a certain date. Accordingly, 
consumers can be put in a difficult situation if a carrier wrongly 
changes the price at the last minute. The consumer can object, but the 
carrier sometimes either refuses to conduct the move or deliver their 
goods. Alternatively, the consumer can pay the increased price and 
later challenge the company. But bad actor companies often make it very 
difficult for a consumer to recover the overpayment. Many times, 
consumers turn to my companies for assistance in these situations.
    Second, in recent years, there has been a large increase in 
bargain-seeking consumers and bargain carrier and broker companies; 
many of whom have no experience in moving but who offer great deals and 
then later raise their prices. The increase in bargain-seeking 
consumers may be attributed to these difficult economic times. And the 
increase in bargain companies stems from the Internet, which has made 
it easy for anyone to start one of these companies.
    In short, your Committee's investigation is badly needed. My 
employees and I support your efforts and have worked with your staff 
over the last nine months to assist your Committee with this 
investigation. We have produced over 12,000 pages of documents and have 
responded to dozens of staff inquiries about my business.
    The Committee also asked me to produce consumer complaints I have 
received. I have produced 180 complaints from 2011. I have given you 
full complaint files, some of which contain comments from unhappy 
consumers. In reviewing these complaints, I have three important points 
I would like to the Committee to acknowledge:

  1.  Not all the complaints I produced were against my company; the 
        documents include complaints against independent carriers that 
        consumers asked my companies to help with.

  2.  I produced complete files, several of which described difficult 
        consumer experiences. In consideration for producing the files, 
        I would like to explain the rest of the story, and how things 
        were resolved.

  3.  Further, the complaints documented in these records represent 
        just a small fraction of the moves my companies arranged or 
        conducted. Specifically, my companies arranged or conducted 
        14,507 moves in 2011. Of those 14,507 moves, roughly 180 
        prompted complaints to the Better Business Bureau, state 
        attorney generals, or the Department of Transportation on the 
        subjects that the Committee is interested in (price changes, 
        late deliveries, and goods being held in custody). That is 
        about one percent of the moves my companies arranged or 
        conducted. In other words, the vast majority of customers who 
        book moves through my companies--about 99 percent of them--do 
        not experience these issues.

    I have voluntarily cooperated with the Committee's requests because 
I share your concerns about protecting consumers and am optimistic this 
Committee can help solve the serious problems in the moving industry. 
In fact, I have several legislative and regulatory recommendations that 
I have included at the end of my testimony to improve the broker 
industry.
    Mr. Chairman, solutions are needed for two reasons: to protect 
consumers who are taken advantage of by bad actors and to protect the 
honest businessmen's reputation in the moving industry from scam 
artists that openly flout the law. But Mr. Chairman, the only way to 
truly address the problems in the moving industry is through an honest, 
balanced, and fair discussion. Here is probably the most important 
thing I can say today: Not every price increase is the result of an 
unfair business practice. As my testimony will show, moving prices 
quite frequently vary from the initial estimate to the final delivery 
price for a variety of legitimate reasons: consumers making additions 
to the list of goods to be shipped, changes in packing and moving 
instructions, and changes in delivery times and dates. I believe I can 
help the Committee sort out the legitimate from the illegitimate 
reasons--the good from bad and the honest from dishonest--to find 
solutions to address what can cause hostage situations.
    In this statement, I will touch on the following topics that I hope 
are helpful to your work:

  A.  What are interstate broker companies and how do they operate?

  B.  Why do prices sometimes increase when a consumer books a move 
        through a broker company? How do my companies address these 
        issues?

  C.  How can the broker industry be improved to protect consumers from 
        unfair price increases and other related practices?
A. Background on Interstate Broker Companies
    The moving industry in the United States is a diverse and 
competitive industry. Consumers have a wide range of choices for types 
of moving services--from companies that do everything for the consumer 
to companies that just drop off a pod so the consumer can do-it-
themselves.
    Generally speaking, full-service, all-inclusive major van lines 
offer the most comprehensive service. These traditional van lines 
usually take care of everything for a consumer, including providing an 
in-home estimate and packing a consumer's household goods. The major 
van lines are large, sophisticated companies with thousands of 
employees nationwide. But these companies' services are very expensive; 
indeed, they are often too expensive for lower or middle-class 
families.
    Consumers who do not need, or cannot afford, major van lines' 
services often turn to regional independent carriers. These carriers 
are often the proverbial ``two guys and a truck.'' They are simple 
operations that do not have dedicated customer service personnel and 
cannot send employees to a consumer's home to provide an in-home, 
visual estimate. And the only way these carriers can profitably perform 
long-distance, inter-state moves is by moving several consumers in one 
trip. For example, a regional independent carrier may pick up a 
consumer's goods in Boston, a second consumer's goods in Washington, 
D.C., a third consumer's goods in Richmond, Virginia, and then drop off 
each consumer's goods at various locations along the East Coast. While 
regional independent carriers generally do not provide the same level 
of comprehensive service as the major van lines, they fill an important 
need in the industry by offering affordable services.
    Broker companies perform the sales and marketing function for 
regional independent moving companies. Generally speaking, a broker 
markets moving services through the Internet, is contacted by a 
consumer, takes an inventory of the consumer's property over the 
telephone, identifies the origin and destination addresses, provides an 
estimate of the costs of services, accepts a booking deposit from the 
consumer, and then refers the booked job to an independent carrier 
within its network to conduct the move. A good broker helps guide a 
consumer through the stress and complex logistics of a long-distance 
move, something regional independent carriers often do not have the 
resources or expertise to handle. This often saves the consumer time, 
headaches, and money.
    Many regional independent interstate moving companies could not 
exist--and their more affordable moving services could not exist--
without broker company services. Some benefits of using a good broker 
company include:

   Reputable broker companies have a large network of regional 
        independent carriers. This often allows a broker company to 
        generate more competitive options and prices for a consumer 
        than a consumer can negotiate with just one carrier on their 
        own.

   Good broker companies work with consumers to generate a 
        reliable estimate for their move. Rather than conducting an in-
        home review, the Broker makes an estimate based on an interview 
        with the consumer about what they plan to move and whether 
        there are any unique aspects to their manifest or the origin or 
        destination locations, such as multiple flights of stairs or 
        narrow streets that require shuttle services. If a consumer 
        wants to use an independent carrier then, broker companies play 
        a valuable role by using their software, expertise, and 
        consumer service training to provide a consumer with an 
        estimate of how much their move should cost. Thus, a good 
        broker company can help a consumer in two important ways: (1) 
        it can save consumers money by performing a phone estimate 
        rather than an in-home estimate; and (2) if the consumer 
        completely describes their move, it can provide an estimate 
        that is just as accurate as an estimate generated by a more 
        expensive company that would conduct an in-home estimate.

   Many independent carriers generally do not have their own 
        dedicated customer service personnel. This means that when a 
        consumer encounters a problem with their move, their 
        independent carrier is not able to (and sometimes is not 
        willing to) adequately assist them. Good broker companies have 
        trained customer service personnel who mediate disputes between 
        consumers and independent carriers. My broker companies help 
        consumers throughout the duration of the move, advocate for the 
        consumer when problems arise with the independent carrier, and 
        take punitive action against bad actor companies in my broker 
        companies' network. We even pay for part of a consumer's move 
        if an irreconcilable dispute occurs.

    In sum, broker companies are a critical component of the modern 
moving industry. Without brokers, consumers would be left with the 
options of full-service national van lines--an option that is 
financially out-of-reach for many Americans--or trying to find an 
independent carrier that may have the resources or capabilities to 
provide the level of customer service most Americans expect. The 
problem is: how do we separate the good brokers from the bad.
B. Price Fluctuations Often Occur Because the Circumstances of the Move 
        Change, Not From Unfair Business Practices
    Mr. Chairman, your staff has advised me this investigation has 
primarily focused on one issue: Why can prices fluctuate from the time 
a consumer receives an initial estimate to the time a carrier charges 
them for the actual move? The Committee is absolutely correct to focus 
on this issue because many problems in the moving industry can be 
traced back to price variations between consumers' initial estimates 
and final prices. To address this problem, it is necessary to 
understand why final prices sometimes vary from initial estimates. It 
is my hope that I can help the Committee identify the root causes of 
this problem and, in turn, identify solutions that address these 
causes.
    To identify why final prices sometimes vary from initial estimates, 
it is useful to break the consumer-broker-carrier interaction into its 
most basic form using a simple example like the following:
    Let's say a consumer needs to move a six-foot couch from his 
Washington, D.C. apartment to an apartment in Chicago, Illinois. The 
consumer sees an advertisement on the Internet for a broker company. 
The consumer calls the broker company to ask for an estimate and speaks 
with the broker company's salesperson. That salesperson generates an 
estimate for moving a six-foot couch from Washington, D.C. to Chicago, 
Illinois. The broker company then finds a carrier within its network to 
conduct the move. But: let's say the carrier arrives at the consumer's 
apartment, and it turns out the consumer decides to move a coffee table 
in addition to the couch. The carrier must give the consumer the option 
to approve a new estimate on the spot before moving the couch and the 
additional coffee table. Next, the carrier takes the couch and the 
coffee table and begins the move. Before delivering the furniture, the 
carrier provides the consumer with a price which is based on the actual 
weight of the property. The carrier determines the actual weight of the 
property by weighing it on a certified scale (as we all know: some 
couches and coffee tables weigh more than others). Lastly, the carrier 
delivers the property once consumer pays the final price.
    While a typical move will of course involve more goods than just a 
couch and a coffee table, that basic sequence will remain the same. In 
a perfect world, the initial estimate and Carrier's final price should 
not vary significantly. But as the Committee knows, significant 
variations between a consumer's move list, the broker company's 
estimate, and the carrier's final price do occur. Here are several 
causes:
1. Cause # 1: Communications Breakdowns Between Consumer and Estimator 
        and Last-Minute Changes to Consumer's Moving Plan
    In the above example, the carrier's final price will be higher than 
the initial estimate because the initial estimate was based on moving 
just a couch while the consumer actually needed to move a couch and a 
coffee table. In addition, if the consumer orders last minute packing 
services--for example, disassembly and reassembly of the coffee table--
the carrier's final price will be higher than the estimate. The same 
will be true if the estimate fails to account for unique factors 
related to the delivery destination that will require additional 
services, such as a narrow street at the delivery destination that will 
require the carrier to rent a smaller truck to complete the move. In 
some cases, these discrepancies between the information upon which the 
estimate is based and the consumer's final moving plan are due to 
communication breakdowns between the consumer and the estimator. In 
other cases, these discrepancies are simply due to the fact that 
unexpected problems sometimes arise during a move.

    How the law addresses this issue:

    There are no specific laws or regulations that help prevent 
communications breakdowns between consumers and estimators.

    The DiSorbo Broker Company's Safeguards to Address this Issue:

    To generate an accurate estimate, it is critical that an estimator 
obtain as much information as possible from a consumer. If there are 
communication breakdowns, this will likely lead to an inaccurate 
estimate. The DiSorbo Broker Companies have the following procedures in 
place to minimize the likelihood of communication breakdowns between a 
consumer and a DiSorbo Broker Company estimator.

   Intensive Employee Training: The DiSorbo Broker Companies 
        have an intensive two-week training session for new 
        salespeople. During this training, my salespeople are trained 
        how to solicit all relevant information from consumers. I have 
        provided the Committee with my training materials, which I 
        believe are the best in the industry.
   Require Consumer Review of Estimate and Packing List: After 
        my salespeople develop an estimate and packing list based on 
        the consumer's description of their goods and services 
        requested, my salespeople generate a draft list for consumers 
        to review. This list must be approved by the consumer. And the 
        consumer must expressly confirm that they have reviewed, and 
        agree with, the packing list when they sign the estimate. 
        Again: my companies' price estimates are based on the 
        consumer's description of the property they are moving.
   Quality Assurance Department: My companies have a Quality 
        Assurance Department that follows up with the consumer several 
        days before their move to inquire whether their packing list 
        has changed or if they need additional services. This is 
        important because a consumer's packing list often changes 
        between the time they first call a broker company several 
        weeks, or even months, before the move and when they are closer 
        to the move.
2. Cause #2: The Estimator Fails to Generate an Accurate Estimate
    An estimate and a final price will vary if the estimator fails to 
generate an accurate estimate. There are two main reasons why an 
estimator may fail to generate an accurate estimate. First, an 
estimator could unintentionally fail to solicit all items on a 
consumer's packing list. Second, an estimator could intentionally 
provide a consumer with a lower estimate. This is a classic example of 
a bait-and-switch scam--the salesperson intentionally baits the 
consumer with a low estimate knowing full well that the actual price 
will be much higher.

    How the law addresses this:

    There are no specific Federal laws or regulations that address this 
issue, except that, under FMCSA regulations, a consumer must be 
provided with a ``reasonably accurate estimate.'' General consumer 
protection laws and criminal fraud, extortion, and related laws can 
apply when an estimator intentionally provides a lower estimate as part 
of a bait-and-switch scam.

    The DiSorbo Broker Companies' Safeguards Create Accurate Estimates:

    The DiSorbo Broker Companies have implemented the following 
procedures and safeguards to prevent inaccurate estimates:

   Intensive Employee Training: As described above, the DiSorbo 
        Broker Companies require all new employees to undergo an 
        intensive two-week training program where they are trained on 
        how to accurately solicit all relevant information from 
        consumers about their move.
   Automated Estimate Process that Minimizes Possibility of 
        Human Error: The DiSorbo Broker Companies use a proprietary 
        software program that generates accurate, complete, and 
        detailed estimates for our customers. This software calculates 
        the weight of each item on a consumer's packing list using the 
        industry standard American Moving and Storage Association 
        (AMSA) 400N weight tables. For example, if a salesperson inputs 
        a six-foot couch into this software program, the program will 
        generate an estimated weight for a typical six-foot couch. 
        Based on the consumer's origin and destination, this software 
        program also calculates the total number of miles to be 
        travelled. The software program uses Google Maps for this 
        function. Once the software program has generated weight and 
        distance calculations, it automatically generates an estimate 
        based off those figures (and the cost of any special services 
        needed such as packing). This portion of the estimate is based 
        on fixed numbers derived from the tariff of the independent 
        moving company that will actually conduct the move (or whose 
        agent will conduct the move).

    This automation means that, with few exceptions, the DiSorbo Broker 
Company estimators receive automated weight formulations of a 
customer's property. The only variable is that estimators must gather 
all relevant information from the consumer and correctly input this 
information into the software program.

   Compliance with 49 C.F.R Sec. 371.113(b): On January 28, 
        2011, an important new Federal Motor Carrier Safety 
        Administration (FMCSA) regulation went into effect. This 
        regulation requires broker companies to base their estimates 
        ``upon the published tariffs of the authorized motor carrier 
        who will transport the shipper's household goods.'' Before this 
        law, it was perfectly legal for a broker company to base an 
        estimate on an arbitrary tariff and then try to find a carrier 
        that would conduct the move at that arbitrary tariff rate. If 
        the broker company failed to find a carrier to conduct the move 
        at the arbitrary rate, the consumer either had to pay a higher 
        price or cancel the move. As you can imagine, this system was 
        ripe for abuse and made it incredibly difficult for a consumer 
        to rely on a broker company's estimate. This practice is now 
        specifically prohibited by the regulation that went into effect 
        on January 28, 2011.

    To comply with the January 28, 2011 regulation, the DiSorbo Broker 
Companies have entered into arrangements with several carriers who act 
as ``primary carriers'' for the DiSorbo Broker Companies. When my 
software program generates an estimate, this estimate is based on the 
primary carrier's published tariff. Accordingly, the estimate is based 
on a tariff that will not change. Unfortunately, it is my understanding 
that the DiSorbo Broker Companies are the only companies in the 
industry that comply with this regulation. And it is also my 
understanding that the FMCSA has never pursued an enforcement action 
for a broker company's violation of this regulation.
    This regulation is not easy to follow and it is a substantial 
burden on my business. Indeed, the burden of complying with this 
regulation has contributed to a significant decline in my business in 
recent years (approximately 30 percent decline from 2009 to end of 
2011). Despite the negative impact on my business, I have followed the 
law and I am proud of my companies' work to come into compliance with 
this important regulation. In fact, on the day the new laws went into 
effect, I invited the FMCSA into my office to see the changes we 
undertook. In addition, last year, my attorney Michael Garcia wrote to 
Secretary LaHood asking that FMCSA begin enforcing this regulation (I 
have attached Mr. Garcia's letter as Exhibit A). I am so confident in 
my software and personnel that I would invite the Committee to come to 
my office and watch actual moves being originated, priced, and booked. 
We could even engage in hypothetical moves your staff may create.
    It is my hope other companies will follow my lead in complying with 
this important consumer protection law. It is also my hope that the 
FMCSA will begin to take action against companies that fail to comply.

   Fee Structure that Disincentivizes Up-charging: Some broker 
        companies structure their fee as a percentage, or commission, 
        not on the initial estimate of the move, but on the final cost 
        of the move. This may sound like a minor difference, but it is 
        very important. A final-cost fee structure gives the broker an 
        incentive to give a low estimate at the beginning and then reap 
        the benefits when the carrier raises the price on the consumer 
        at the end. The DiSorbo Broker Companies do the opposite--we 
        take a commission only on the initial estimate. In other words, 
        the DiSorbo Broker Companies derive no benefit if a carrier 
        increases fees on customers after the move. This practice 
        creates an incentive for my Salespeople to provide higher, and 
        more accurate, estimates.

   Periodic Reviews of Salespeople's Estimates: As a result of 
        this Committee's investigation, I have decided to institute 
        additional new safeguards to monitor my sales personnel's 
        estimates. The procedure will work as follows: On a regular 
        basis, I or another member of my management team will review 
        each sales person's performance to determine whether they are 
        generating accurate estimates. I will do this by comparing the 
        final price to the estimate each salesperson generates for 
        their customers. If the average fluctuation between the 
        estimate and the final price continually exceeds ten percent, 
        my management team will undertake a review of that 
        salesperson's performance. If the review demonstrates the 
        employee is failing to provide adequate estimates, I will 
        require the employee to be retrained. If the employee does not 
        improve, he will be subject to progressive discipline, which 
        will include probation, suspension, and termination.

    I am also putting an additional procedure in place to more closely 
monitor significant price fluctuations so that they will automatically 
come to my attention. My companies' current practice is for management 
to review all consumer complaints involving significant variations 
between initial estimates and final prices. If we determine the 
variation was our company's fault, we take corrective action including 
compensating the customer for the error.
    I am now in the process of putting in place an additional system to 
pro-actively monitor price fluctuations. Under this procedure, if there 
is a variation of twenty percent between a customer's final price and 
their estimate, I or another member of my management team will conduct 
an immediate review. If we determine that the salesperson caused the 
variation by failing to provide an accurate estimate, my company will 
take automatic corrective action. This may include compensating the 
customer the difference between the final price and the estimate. These 
procedures go well beyond what is required by law and I am confident no 
other company in the business has put in place stronger safeguards to 
prevent variations between the broker estimate and the final move 
price. If the Committee would like, I can report back in a year on how 
these changes have made a difference.
3. Cause #3: Carrier Manipulates the Final Weight of Consumers' 
        Property
    A third reason why initial estimates and final prices vary is that 
carriers sometimes fail to general accurate final weights for 
consumers' goods. In the typical moving sequence, a carrier will 
generate a final weight by first weighing their empty truck on a 
certified scale without a consumer's property, then weighing the truck 
with the property, and then calculating the difference. Unfortunately 
there are a variety of ways for unscrupulous carriers to manipulate 
this weight.
    For example, I know of carriers that weigh their empty truck with 
little gasoline in the tank. The carrier will then fill the gas tank 
before weighing their truck with the consumer's goods. This added 
gasoline can increase the second weight by hundreds of pounds, which 
will increase the consumer's final price. Similarly, I have heard of 
carriers that manipulate the initial weight of the empty truck by 
positioning the tires of the truck in such a way that the scale does 
not capture the full weight of the truck. This will lead to a lower 
initial weight, which will increase the difference between the full 
truck and the empty truck and, in turn, increase the price.

    What the law requires:

    FMCSA regulations provide that carriers may base their final price 
on the actual weight of a consumer's goods or on the cubic feet of the 
consumer's goods. If the price is based on weight, carriers must advise 
consumers that they are entitled to observe the weighing of their 
goods. FMCSA regulations also require carriers to provide consumers 
with the location and time of the weighing and a reasonable opportunity 
for them to be present. If a consumer disputes the weight of the 
shipment, they have the right to a re-weighing of the property at no 
charge. The carrier must provide the consumer with a copy of the weight 
certificate.

    The DiSorbo Broker Company Safeguards:

    The DiSorbo Broker Companies have implemented the following 
procedures and safeguards that go beyond what is legally required to 
prevent unfair final prices:

   Standard Operating Procedures: All carriers in the DiSorbo 
        Broker Companies' network must comply with the terms of my 
        standard operating procedures. These procedures expressly 
        incorporate the FMCSA re-weighing regulations described above. 
        A carrier's failure to comply with my network's standard 
        operating procedures will lead to that company's termination 
        from the network.

   Review of weight tickets: All carriers in the DiSorbo Broker 
        Companies network are required to submit certified weight 
        tickets for approval and inspection. Although not required by 
        law, my broker companies act on behalf of the consumer by 
        double checking each weight ticket for compliance with the 
        governing regulations and accuracy. We do not allow a carrier 
        to charge a consumer without proper certified weight tickets. 
        If there is any doubt as to the accuracy of the weight we 
        instruct the carrier to re-weigh the property.

   Prohibition of cubic foot charging: Current law allows a 
        carrier to charge a consumer based on either the weight of the 
        consumer's goods or the cubic feet of their goods. While a 
        price based on weight can be easily verified by reviewing the 
        weight tickets, there is no way to easily verify a carrier's 
        cubic foot measurement. Not surprisingly, bad actor companies 
        prefer the cubic foot method over the weight method because it 
        is easier to overcharge a consumer using this method. To 
        prevent this practice, I prohibit carriers in my broker 
        companies' network from using the cubic foot method.

   Accountability for Bad Actor Moving Companies: The DiSorbo 
        Broker Companies do everything in their power to prevent 
        problems that arise from bad actor carriers in its network, 
        help consumers through problems when they arise, and hold 
        carriers accountable. For example, I periodically hold 
        mandatory training meetings for carriers in my network. These 
        meetings have included training session and speeches by FMCSA 
        special agents.

    In addition, over the last few years, my broker companies have 
        terminated relationships with approximately 100 carriers that 
        have demonstrated patterns of regulatory non-compliance or 
        generated too many consumer complaints. For example, on 
        November 11, 2010, I terminated Able Moving, Inc., a Chicago 
        based carrier, from the DiSorbo Broker Companies' network after 
        a routine quality assurance review determined they had forged a 
        consumer's signature and flagrantly violated important consumer 
        protection laws (a copy of Able Moving, Inc.'s termination 
        letter is attached to this testimony as Exhibit B). In fact, I 
        have provided the Committee with a list of all carriers I have 
        terminated from my network. I encourage the Committee or FMCSA 
        to investigate these carriers.

   Customer Service: Broker companies have no legal obligation 
        to assist customers who experience issues with carriers during 
        a move the broker company arranged. Because there is no legal 
        obligation, most brokers refuse to help consumers who 
        experience problems with the carrier that conducted the move. 
        The DiSorbo Broker Companies, on the other hand, do not wash 
        their hands after they book a move. My companies stay involved 
        with consumers from the beginning to the end of the move. My 
        companies accept customer complaints and work with the carrier 
        to ensure consumer complaints are adequately addressed. Indeed, 
        I often help pay for a customer's move even when the customer's 
        issues entirely unrelated to my broker company's conduct to 
        ensure customer satisfaction.
C. Solutions For Price Increase Problems in Moving Industry
    In July 2012, Congress passed, and President Obama signed into law, 
a surface transportation reauthorization bill (MAP-21). This law 
contains a number of important new consumer protection provisions 
related to the moving industry, including imposing stricter 
registration requirements for brokers and directing the Secretary of 
Transportation to establish minimum solvency and bonding requirements 
for brokers. While these changes are encouraging, they are not enough. 
There are a number of additional straightforward, common sense actions 
the Federal government can take to better protect consumers from unfair 
price increases and hostage situations that could occur during a move. 
I outline below a number of my recommendations.
1. More FMCSA Enforcement
    The first and easiest solution to addressing the problem of price 
increases in the moving industry is for FMCSA to enforce the 
regulations that are currently on the books. As detailed in this 
testimony, the FMCSA has not aggressively enforced some of its most 
important consumer protection regulations. For instance, as described 
above, the FMCSA does not appear to aggressively enforce 49 CFR 
Sec. 371.113(b), the regulatory requirement that brokers base their 
estimates on carriers' tariffs. A second important regulation FMCSA 
does not appear to enforce is 49 CFR Sec. 371.107, which requires 
brokers to prominently disclose to consumers that they are not 
carriers. One frequent complaint about brokers is that consumers 
sometimes book broker services without fully understanding that brokers 
do not actually conduct moves. 49 CFR Sec. 371.107 is designed to 
prevent this type of consumer confusion. While my broker companies 
strictly comply with this regulation, it is my understanding that many 
in the industry do not and the FMCSA has not aggressively enforced it. 
I urge this Committee to work with the FMCSA and to ensure the agency 
has the resources and authority it needs to aggressively enforce its 
mandate.
2. Require Broker Companies to Provide Consumers with the Opportunity 
        to Review a Written Itemization of their Packing List
    One of the most important consumer protection practices that my 
broker companies have implemented is to always provide consumers with 
an itemized list of the packing list that my estimators use when they 
generate an estimate. A customer must confirm in writing that they have 
reviewed and agree with this list. This practice helps ensure that the 
customer's packing list is accurate and helps generate more accurate 
estimates.
    My companies provide this list even though there is no legal 
requirement for a broker company to provide a customer with a written 
packing list as part of the estimate process. I strongly urge Congress 
or the FMCSA to make this a legal requirement. This simple and common-
sense proposal would help ensure that consumers are provided with 
reliable estimates.
3. Require Broker Companies to Proactively Follow up with Consumers 
        within One Week of Move
    One reason the final price sometimes fluctuates from a broker 
company's estimate is that consumers often book moves with a broker 
months in advance of their move date. Between that booking date and the 
moving date, the consumer's packing list could change considerably. 
Indeed, it is highly likely that the consumer did not have a full 
understanding of all they had to move at the time they booked the move.
    My companies' Quality Assurance Department follows up with all 
customers within one week of the move to go over their packing list. 
This follow-up ensures my customers have a more accurate idea of what 
their move will cost before the carrier shows up on the day of the 
move. I urge Congress or FMCSA to require all broker companies to 
contact customers within one week of the move date to confirm the 
customer's packing list.
4. Prohibit Broker Companies From Tying Commissions to Final Move Price
    One of the biggest problems in the industry is that some broker 
companies link their commission to the final price charged by carriers. 
Naturally, this gives those broker companies an incentive to give 
consumers an initial low estimate to get their business in the door and 
then reap the benefits when the carrier charges them a significantly 
higher price. As described above, the DiSorbo Broker Companies do the 
opposite--the DiSorbo Broker Companies' fee is linked to the initial 
estimate. Accordingly, the final price has no bearing on my companies' 
fee and there is no incentive for my companies to pull the bait-and-
switch scams that too often occur in the moving industry. I urge 
Congress or the FMCSA to expressly prohibit broker companies from 
linking their fees to the final cost of the move.
5. Stricter Registration Requirements for Brokers
    The July 2012 surface transportation reauthorization bill included 
a provision requiring carriers to complete a proficiency examination to 
demonstrate that they know how to, and intend to, comply with law 
related to consumer protection, estimating, and liability limitations. 
But the law did not include a similar requirement for broker companies. 
There is no reason that brokers are not subjected to the same 
requirements and I strongly urge Congress or the FMCSA to implement 
proficiency requirements for broker companies.
6. Provide Broker Companies with More Information About Carriers
    One obstacle for broker companies that want to hold bad actor 
carriers within their networks accountable is that broker companies 
have access to only a small amount of information about those carriers. 
For instance, it may be the case that a broker company never learns 
about an issue that occurred between a customer and a carrier during a 
move booked by the broker because the customer never reports the issues 
to the broker company. If a carrier in my network harms one of my 
customers, I want to know so that I can help the customer and take 
action against the carrier.
    The FMCSA could provide broker companies with this information by 
taking the simple step of advising broker companies about all 
complaints it receives about moving companies in the broker's network. 
I wrote to the FMCSA in 2007 asking the agency to implement this 
change. The FMCSA has not yet acted on my recommendation.
7. Prohibit the Use of Cubic Foot Calculations to Determine Consumer 
        Charges
    As described above, it is easy for a carrier to overcharge a 
consumer by basing the price of the move on a cubic foot measurement 
rather than the weight of the property because it is very difficult for 
a consumer to verify the accuracy of the carrier's cubic foot 
measurement. I urge Congress or the FMCSA to prohibit carriers from 
basing final prices on cubic foot measurements.
8. Require Advance Disclosure of A Menu of All Services and Prices to 
        Consumers
    A common problem that arises during a move is that consumers are 
surprised when a carrier charges them more to complete the move because 
the carrier encounters an unexpected variable. For example, if the 
consumer's new home is on a very narrow street, the carrier may have to 
pay to shuttle the consumer's goods from their truck to the consumer's 
home by renting a smaller truck that can fit down the street. Or it may 
sometimes be the case that a consumer requires packing help that the 
consumer did not expect when he booked the move. While it is a good 
business practice to clearly disclose to consumers that extra services, 
such as shuttle and packing services, are not included in their 
estimate, no disclosure laws mandate this practice. I urge Congress or 
FMCSA to implement strict disclosure requirements so that consumers 
know exactly what they are paying for.
D. Conclusion
    Mr. Chairman, when time allows, I would like to extend my testimony 
to further discuss ``hostage'' situations and why (or how) there has 
been an increase in the numbers of unregistered brokers and unlicensed 
carriers, many of whom cause the problems you are investigating today. 
There are serious problems in the moving industry and I again commend 
the Committee for holding this hearing to get to the bottom of those 
issues. But identifying problems is just a start; Congress and the 
FMCSA must find solutions to better protect consumers and the honest 
broker companies that cannot compete with the rogue companies that 
flout the law.
    I have voluntarily cooperated with this Committee's investigation 
because I am hopeful that this hearing and this investigation will lead 
to solutions. In particular, I have provided the Committee with 
complete copies of consumer files and consumer complaints sent to my 
companies. I have willingly provided these documents because I believed 
they would aid the Committee's investigation. All I ask in return is 
that I have the opportunity to tell the story from my perspective.
    Moving is a difficult business and coordinating a move is a 
difficult task. There are a variety of complex logistical variables 
that go into a move, including the availability of moving company 
trucks and personnel, ensuring that drivers do not exceed the maximum 
number of hours they are legally allowed to drive in a day, weather 
issues that may cause travel delays, and the inherent difficulty of 
predicting the weight of a consumer's goods (and, in turn, the price of 
the move). It is unfortunately the case that things occasionally go 
wrong and a consumer has a bad moving experience.
    And there is no doubt that some of the documents I produced 
illustrate bad moves. I acknowledge that, at times, my customer's 
expectations, and my expectations, were not satisfied and I acknowledge 
that some of these files document these shortcomings. I wish I could 
personally broker and conduct every move. But, of course, I cannot; I 
must rely on others to broker and conduct moves for my companies.
    If the Committee deems my specific business practices important to 
its investigation, I urge the Committee to avoid just focusing on a few 
of the complaints in my production. My commitment to providing 
customers with reliable moving services cannot be assessed based on a 
review of a small percentage of the customer's story about the move. 
Like any business, there are instances where my employees do not follow 
their training and do not comply with the company's rules. Instead of 
focusing on these isolated incidents, I encourage the Committee to 
focus on the practices I have put in place. As detailed in this 
statement, these practices go above-and-beyond what the law requires 
and what is standard in the industry.
    Finally, many of the complaints do not relate to my companies' 
performance. Instead, most of the consumers' complaints in those files 
relate to the carriers' failures. As you can see by reviewing those 
documents, consumers often call broker companies to complain about 
carriers because the broker company has served as the consumer's point-
of-contact. While most broker companies refuse to help consumers at 
that point since there is no legal obligation to do so, my companies 
mediate disputes between consumers and carriers and often serve as a 
consumer's advocate with the carrier. Indeed, as the documents I 
produced illustrate, I often wind up compensating consumer's for their 
issues with carriers even though I have no legal or business obligation 
to do so.
    Mr. Chairman, it is time for this Committee and this Congress to 
take action to clean up the moving industry. I believe this Committee 
can best help in this effort by focusing its time and resources on the 
questions of why bad moves occur and what are the solutions to address 
these causes. Please know that you and your Committee have my continued 
support as you continue your important work on this issue. Thank you 
for the time and attention to my ideas and recommendations.
                               Exhibit A






                               Exhibit B


                                 ______
                                 
     Response to Written Questions Submitted by Hon. Jim DeMint to 
                           Hon. Anne S. Ferro
    Question 1. Please explain the consumer outreach and public 
awareness initiatives undertaken by the FMCSA regarding the household 
goods moving industry, including the ``Protect Your Move'' website.
    Answer. FMCSA continues to maintain wide scale outreach and 
education awareness for consumers. The outreach and education includes 
communications with household goods industry associations and State and 
Federal agencies. The four main initiatives that are used by FMCSA are:

  1.  Protect Your Move website: www.protectyourmove.gov

  2.  Household Goods Working Group

  3.  Moving Fraud Working Group

  4.  National Consumer Complaint Database (NCCDB)

    In December 2004, FMCSA developed a Household Goods (HHG) Consumer 
Information Program Plan outlining its enforcement and outreach 
strategies, which included market research, a new website, outreach and 
education materials, and links to State and industry Websites.
    In February 2005, FMCSA established a HHG partnership with other 
Federal agencies, State law enforcement agencies, consumer protection 
groups, and several moving industry associations to provide consumers 
information to protect themselves against dishonest and rogue movers.
    In June 2005, FMCSA launched its Protect Your Move website 
(www.protect
yourmove.gov). The website provides information for consumers to plan a 
successful HHG move and to avoid becoming victims of moving fraud. 
There have been more than 15 million hits on the website since its 
launch. The average daily hit rate is 11,600, with the average visit 
lasting 12 minutes.
    In December 2009, FMCSA established a HHG Working Group with other 
Federal agencies, State law enforcement agencies, consumer protection 
groups, and several moving industry associations to develop ways to 
effectively communicate and share information to aid in law enforcement 
efforts.
    In May 2012, FMCSA overhauled its Protect Your Move website. The 
website is an interactive tool/resource for consumers who are seeking 
to move their HHGs. Additionally, FMCSA has partnered with State 
counterparts to allow States access to specific tools within the new 
website to assist in HHG investigations. The website includes Consumer 
Protection Advisories and information to help protect consumers from 
fraud, Public Service Announcements, and links for consumers to do 
research and file complaints. The website also features a Moving Fraud 
Prevention Checklist. This document provides a list of steps the 
consumer should take to avoid being a victim of moving fraud, and is 
translated into 9 languages. Another new feature of the website is the 
FMCSA Spotlight. This section provides targeted information for 
consumers and updates that consumers can use to assist them in planning 
for a move. Last, the website has a section of important resources 
where: (1) the consumer may check the registration status and complaint 
history of a carrier in advance of his/her relocation; and (2) obtain 
information about State resources pertaining to HHG moves.
    The FMCSA continues to feature its Protect Your Move website in the 
``mover's disclaimer box'' in the ``Movers'' section of the Yellow Book 
USA directory. There are over 975 Yellow Book directories printed each 
year with an annual distribution of nearly 123 million copies.

    Question 2. Do household goods moving brokers provide a service 
that consumers can realize value from using?
    Answer. Legitimate brokers can be of benefit to consumers if the 
brokers have a large client base and volume of business that allows 
individual customers to benefit from competitive pricing. In addition, 
good brokers research, pre-qualify, and recommend moving companies that 
are properly licensed and insured. Brokers can arrange and recommend 
specialty packing service providers and assist customers in filing 
valuation and/or insurance claims with the moving company after the 
move. However, most HHG brokers conclude their transaction with the 
consumer after securing payment and linking the consumer with a motor 
carrier.

    Question 3. Do household goods moving brokers provide a service 
that household goods carriers can realize value from using?
    Answer. A broker works to determine the needs of the shipper, and 
connects the shipper with a carrier willing to transport the items at 
an acceptable price. If performed in accordance with the regulations, 
broker services can be valuable, especially to small household goods 
companies which have more of a challenge finding loads during non-peak 
moving season. Many small operations do not have the resources to 
solicit business, so this market arrangement is beneficial. By using a 
broker, the carrier can fill his/her truck with products going on the 
same route, allowing them to earn more money. Brokers can be used to 
coordinate and schedule the loads and interact with the shipper.

    Question 4. Are household goods carriers and brokers required to 
place FMCSA contact information on their websites? If not, does the 
FMCSA have authority to require such action?
    Answer. FMCSA does not currently require HHG carriers and brokers 
to provide FMCSA contact information on their websites. Pursuant to its 
statutory authority to regulate HHG carriers and brokers at 49 U.S.C. 
Subtitle IV Part B, FMCSA believes that it has the authority to require 
carriers and brokers to provide such FMCSA contact information. Such a 
requirement would need to be adopted pursuant to notice and comment 
rulemaking.

    Question 5. What changes could FMCSA make to improve the household 
goods moving experience for consumers?
    Answer. The new surface transportation reauthorization law, Moving 
Ahead for Progress in the 21st Century (MAP-21), sets forth 
requirements pertaining to the standard for entry into the interstate 
HHG industry. MAP-21 directs the Secretary of Transportation to issue 
distinctive registration numbers to a person for each authority they 
request to provide transportation or services such as brokering or 
freight forwarding. MAP-21 increases the level of financial 
responsibility necessary to be registered as a HHG broker, from $25,000 
in surety bonds or trust funds, to $75,000, in order to help address 
claims from failure to pay freight charges under a contract or 
agreement. HHG motor carriers also will be required to pass an 
examination to demonstrate knowledge of safety and consumer protection 
regulations before entering the industry. These changes will improve 
the HHG moving experience for consumers.
    In addition, FMCSA will continue its multi-layered approach to 
ensuring consumers are protected against moving fraud and abuses. The 
main components of FMCSA's efforts to maintain high standards in the 
HHG industry are the National Consumer Complaint Database (NCCDB), the 
Top 100 Household Goods Prioritization list, and the hostage goods 
resolution program.
    The Agency also is considering other outreach methods including the 
development of a smart phone application that would allow shippers to 
check FMCSA's data before hiring a moving company or broker.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Jim DeMint to 
                            Timothy M. Barry
    Question 1. Please explain the impetus for ``Operation Boxed Up.''
    Answer. We recognized the significant, negative impact that rogue 
HHG motor carriers and brokers can have on our Nation's consumers and 
workforce, and developed a risk-based strategy to direct investigative 
resources in this area of fraud. In March 2011, we launched ``Operation 
Boxed Up,'' a proactive, cooperative initiative aimed at removing 
unscrupulous HHG movers before they further victimize American 
consumers. Operation Boxed Up involved the analysis of databases from 
FMCSA's HHG regulatory program and then identifying the most egregious 
hostage load complaints consumers filed against HHG carriers and 
brokers. We focused, in particular, on groups of interrelated carriers 
and brokers engaged in hostage fraud schemes. Currently we have 14 open 
investigations involving companies operating under 108 different names 
with over 3,800 potential victims.

    Question 2. Are brokers and carriers involved in DOT IG 
investigations generally registered with FMCSA?
    Answer. Of the approximately 108 names being used by companies that 
are associated with our investigations, approximately 58 percent have 
either a DOT and/or MC number from the FMCSA.

    Question 3. Do household goods moving brokers provide a service 
that consumers can realize value from using?
    Answer. We would agree with Ms. Bauer Darr's testimony \1\, wherein 
she indicated that legitimate brokers can perform an important function 
as intermediaries between consumers and reputable movers, if consumers 
are adequately educated about brokers' role in the moving process. 
However, due to the nature of our work we are exposed to only the 
negative interactions between consumers and brokers, a relationship 
that appears to us to be valuable only to the broker.
---------------------------------------------------------------------------
    \1\ http://www.promover.org/content.asp?contentid=254&sl=3&pl=19.

    Question 4. Do household goods moving brokers provide a service 
that household goods carriers can realize value from using?
    Answer. A broker links household goods carriers with consumers, who 
might not otherwise find each other. Again, as Ms. Bauer Darr indicated 
in her testimony, legitimate brokers can perform an important function 
as intermediaries between consumers and reputable movers.
    As to the value of the relationship between HHG brokers and HHG 
carriers, based on our investigative work, we are not able to make any 
observations about that relationship.

    Question 5. What changes could FMCSA make to improve the household 
goods moving experience for consumers?
    Answer. We have not assessed the effectiveness of FMCSA's HHG 
program. However, the GAO has conducted three audits of FMCSA's HHG 
program over the past eleven years, the last of which was conducted in 
2009 and concluded that Increased Focus on Consumer Protection Is 
Needed.
    In July 2012, Congress and the President gave FMCSA additional 
authorities to directly assist the HHG consumer. Under the MAP-21 \2\ 
legislation FMCSA may now award an aggrieved consumer all or a portion 
of a civil penalty imposed against an unscrupulous household goods 
mover. Further, FMCSA may now act on behalf of the victim in these 
types of frauds by ordering, after notice and opportunity for 
proceeding, that a carrier holding a customer's HHG hostage return the 
goods.
---------------------------------------------------------------------------
    \2\ U.S. Public Law 112-141.
---------------------------------------------------------------------------
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Jim DeMint to 
                            Linda Bauer Darr
    Question 1. What does AMSA require of brokers and carriers to 
attain and maintain a membership?
    Answer. AMSA requires motor carrier and broker applicants for AMSA 
membership to agree in writing to abide by the AMSA Code of Ethics; 
compliance with Federal and state licensing and registration 
requirements; no use/display of AMSA or ProMover names and logos before 
authorization to do so; compliance with relevant FMCSA household goods 
broker, carrier and consumer protection regulations; no indication of a 
pattern or excessive number of consumer complaints; have a BBB rating 
of ``C'' or higher; and no evidence of holding goods hostage. Only AMSA 
interstate mover members are authorized to participate in the ProMover 
program. ProMover is AMSA's primary means of providing consumers with a 
guide to movers who will provide services in an ethical manner in 
compliance with all Federal consumer regulations. AMSA carefully 
monitors and annually reviews certified ProMovers to ensure compliance 
with the ProMover standards and Federal consumer rules and removes 
carriers that do not comply. In the first year of the ProMover program, 
AMSA terminated the membership of 200 carriers for failure to meet 
standards.

    Question 2. What benefits are offered to consumers when they use 
the services of a household goods broker?
    Answer. Brokers can act as a marketing bridge between consumers and 
household goods motor carriers. An ethical, experienced broker will 
have developed relationships with a number of responsible, competent 
household goods carriers and can provide an array of reasonably priced 
choices and options to the consumer.

    Question 3. How does a motor carrier benefit from the use of a 
household goods broker?
    Answer. The primary benefit of brokers to motor carriers is that 
they offer expanded marketing and consumer outreach capability, greater 
than what most motor carriers could afford on their own. This is 
particularly true for small household goods carriers.

    Question 4. What changes could FMCSA make to improve the household 
goods moving experience for consumers?
    Answer. On October 18, 2012, FMCSA published a Notice in the 
Federal Register announcing a new program to clamp down on motor 
carriers who wrongfully withhold household goods shipments by 
suspending carriers' authority to operate in interstate commerce from 
12 to 36 months. This is a promising development, but the program can 
be effective only if FMCSA has the resources to enforce it.
    FMCSA could improve consumers' household goods moving experience by 
establishing a joint cooperative program with the household goods 
moving industry to provide real-time consumer assistance and advice. 
This joint assistance program could be patterned after MoveRescue, an 
existing industry program to provide immediate advice and assistance to 
consumers with household goods moving problems, particularly in hostage 
shipment situations.
    FMCSA could also enhance the household goods moving experience and 
help safeguard consumers by modernizing the educational information 
that consumers receive from household goods carriers and brokers. FMCSA 
today requires the distribution of an information package, Your Rights 
and Responsibilities, that resembles 60 pages of the Federal Register. 
It is difficult to comprehend and often ignored by consumers. FMCSA 
could convene a group of education, consumer, and industry experts to 
refine that document and other educational materials into a more user 
friendly format that would be truly useful to consumers.

    Question 5. Please provide the Committee any proposals you may have 
to improve the regulatory structure provided for the household goods 
industry.
    Answer. AMSA has provided legislative proposals to the Commerce 
Committee, which would implement most of the suggestions regarding 
establishing a new joint industry/government consumer assistance 
program and ways to improve consumer education. However, a critical 
shortcoming is that FMCSA needs additional resources to carry out a 
program of effective consumer protection and enforcement. The 
protection of interstate household goods shippers is an appropriate and 
important current Federal government function, but it must be improved. 
There are approximately 7,000 companies at 13,900 locations executing 
between 800,000 and 1.2 million interstate household goods moves 
annually, yet there are only 5-10 FMCSA employees trying to protect 
household goods consumers and catch rogues. AMSA has called for $3 
million annually to hire additional FMCSA household goods inspectors. 
We continue to believe that this is needed, at a minimum. When 
household goods regulatory responsibility rested with the Interstate 
Commerce Commission before its termination in the mid-1990s, ICC had a 
household goods staff of approximately 70-100.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Jim DeMint to 
                            Jason M. Romrell
    Question 1. What is your company's process for selecting carriers?
    Answer. Budget Van Lines has a robust carrier selection process 
that goes above and beyond what is required by law. We have contractual 
relationships with federally licensed and insured household goods motor 
carriers to whom we broker jobs. We only use motor carriers that are 
licensed by the Federal Motor Carrier Safety Administration and that 
are adequately insured. We created our own custom-built software system 
that checks the Federal licensing status of every motor carrier in our 
network each day to ensure they have not been placed out of service by 
FMCSA. This ensures that we do not book moving jobs with carriers who 
have unacceptable safety ratings or who have been suspended or revoked 
by the FMCSA. We are not aware of any other broker in the industry that 
has developed any type of similar software. If we find a carrier has 
been placed out of service, we suspend all jobs to that carrier 
immediately and will not book jobs for that carrier until they are back 
in good standing with FMCSA. Since 2005, we have terminated 
relationships with over 580 motor carriers for various reasons, 
including a lack of quality customer service and regulatory 
noncompliance.
    Before signing a carrier to our network, we consider the history of 
prior ownership, prior affiliations with other companies, service 
history, credit history, complaint history, claims-resolution processes 
and other important business information and practices to the extent 
such information is available to us. Because safety is also important 
to us, we also check the carrier's FMCSA Compliance, Safety and 
Accountability (CSA) score and will refuse or subsequently drop a motor 
carrier if the carrier's CSA score suggests serious ongoing concerns. 
In fact, the same software program we designed to check every carrier's 
licensing status on a daily basis also checks every carrier's safety 
ratings so carriers who are deemed `unsatisfactory'' by the FMCSA are 
flagged for immediate review and disqualification in our system.
    If we discover a motor carrier that exhibits an ongoing pattern of 
unprofessional performance or that fails to comply with Federal 
regulations, we will suspend or terminate that carrier from our 
network. We also provide motor carriers with our own Quality Control 
Guidelines, a checklist of issues to help them conduct business in 
compliance with the Federal regulations, and to help them avoid or 
reduce customer complaints. As evidenced here, we go well beyond our 
legal requirements. The only thing the law requires we do is to check 
that a carrier is licensed and insured.

    Question 2. What benefits are offered to consumers when they use 
the services of a household goods broker?
    Answer. Brokering is a common business model in many industries, 
from travel to insurance sales to the groceries on the supermarket 
shelves. Brokering is an effective and common business model because it 
increases options and saves businesses and consumers time and money. In 
the interstate moving industry, brokers like us arrange transportation 
services between customers and qualified household goods motor 
carriers. We help customers in a variety of ways, by providing easy 
access to more transportation options, lower costs and time savings. We 
help customers navigate a host of complicated and often unfamiliar 
decisions that must be made when arranging an interstate move. Many 
customers with smaller moves and smaller budgets, and those outside 
major urban areas, would not have access to an affordable household 
goods mover without the services of a broker.

    Question 3. How does a motor carrier benefit from the use of a 
household goods broker?
    Answer. Household goods brokers help federally licensed household 
goods motor carriers operate more efficiently by reducing their 
marketing costs and helping them connect with customers. We save motor 
carriers money and time by taking inventories and working with 
customers through the initial sales cycle. We also help motor carriers 
operate in a difficult economy by giving them a way to fill empty space 
on return trips and to fill partial loads. The majority of the motor 
carriers in our network are small businesses that would not survive or 
thrive without the services of qualified brokers such as Budget Van 
Lines. The services we provide create a win-win situation for both 
consumers and household goods motor carriers.

    Question 4. What changes could FMCSA make to improve the household 
goods moving experience for consumers?
    Answer. Budget Van Lines makes the following recommendations for 
FMCSA to improve the household goods moving experience for consumers:

        Require FMCSA to focus more attention on the enforcement of 
        household goods brokers and carriers.

        Require the FMCSA to create a short, easily readable, summary 
        consumer education document with key information necessary for 
        consumers to make informed decisions when considering 
        interstate moves.

        Require FMCSA to create a more accessible, user-friendly online 
        resource where shippers can evaluate brokers' and carriers' 
        performance and job histories, including the previous 
        suggestion that brokers and carriers report total jobs booked/
        carried so complaint ratios can be provided to consumers with 
        accuracy and reliability.

        Encourage or require more expeditious, responsive, and 
        aggressive license revocation processes for brokers and 
        carriers who are in violation of Federal regulations, thereby 
        protecting consumers from rogue movers and automatically 
        preventing brokers from using rogue movers.

        Encourage the FMCSA to create standard volume measurements for 
        common household items, thereby bringing some uniformity to the 
        inventory process.

        Require the FMCSA to deny licensing to individuals or 
        businesses who have been implicated in regulatory violations 
        previously, including the transfer or sale of existing 
        businesses already licensed, if the new owners have an adverse 
        or negative history in the moving industry.

    Because we believe that many rogue movers giving the moving 
industry a bad name are run by individuals who pay others to take 
record-ownership of the company to circumvent close FMCSA scrutiny and 
to obtain or retain carrier authority (straw-men strategies), require 
the FMCSA to conduct interview of new applicants or restrict the free 
transfer of motor carrier authority already assigned to an existing 
company, thereby reducing or eliminating straw-man strategies.
    If the FMCSA cannot or will not engage in faster or more aggressive 
license revocations, require the FMCSA to share with brokers its data 
on motor carriers so brokers can ensure they are not working with known 
problem carriers.

    Question 5. Please provide the Committee any proposals you may have 
to improve the regulatory structure provided for the household goods 
industry.
    In addition to the actions recommended for FMCSA in the previous 
question, Budget Van Lines has several recommendations for requirements 
on brokers and carriers to further improve the regulatory structure for 
the household goods industry and to improve the moving experience for 
consumers:

        Consider whether to require brokers and carriers to provide 
        estimates based only on weight, since shipments moved pursuant 
        to volume-based estimates can be easily manipulated upward by 
        carriers in the packing and loading process. NOTE: Budget Van 
        Lines requires our estimates to be done by weight, even though 
        Federal law currently permits either weight or volume.

        Require brokers and carriers to send the shipper's survey-based 
        inventory to customers separate from all other paperwork, along 
        with a simple explanation that the inventory is the basis for 
        the estimate and any changes to the inventory may results in a 
        revised estimate and additional fees on the day of the move.

        Require motor carriers to price overages based on the price-
        per-pound quoted in the estimate instead of allowing the motor 
        carrier to use a higher price-per-pound, even if that higher 
        rate is allowed under the motor carrier's tariff.

        Require brokers and carriers to notify customers that they may 
        review and revise their estimate's inventory of items up to 48 
        hours before the scheduled pick-up time, giving customers time 
        to see how such changes will affect the estimated cost.

        Prohibit brokers, motor carriers and their employees from 
        profiting from price adjustments, before, during or after a 
        move that do not meet regulatory requirements (in such cases, 
        the FMCSA could ``claw-back'' those profits and return them to 
        the consumer, along with other appropriate penalties assessed 
        against the offending entity.

        Require brokers and carriers to publish on their websites, 
        visible to consumers, the percentage of their loads booked 
        during a specified period that resulted in a known price 
        increase, the range of those increases, and average or median 
        increases (similar to airlines reporting their percentage of 
        on-time departures).

        Require motor carriers using a broker for booking jobs to 
        promptly provide the broker with data regarding price 
        increases.

        Mandate the inclusion of a prominent warning on the Bill of 
        Lading and on any revised written estimate above the shipper's 
        signature lines warning shippers not to sign documents with any 
        blanks (except those blanks that are necessary to be blank and 
        are authorized by Federal regulations).

        Require brokers and carriers to report to the FMCSA and display 
        on their websites the number of household goods shipments they 
        booked/carried each month, so consumers are able to evaluate 
        complaint ratios versus gross complaint numbers posted by the 
        FMCSA (a broker or carrier with 10,000 jobs and 200 complaints 
        may be providing far better service than a broker or carrier 
        with 1,000 jobs and 40 complaints.)

                                  
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