Consumer Protection: Federal Actions Are Needed to Improve Oversight of
the Household Goods Moving Industry (Letter Report, 03/05/2001,
GAO/GAO-01-318).

For moving services, the primary responsibility for consumer protection
lies with consumers to select a reputable household goods carrier,
ensure that they understand the terms and conditions of the contracts,
and understand and pursue the remedies that are available to them when
problems arise. Available information indicates that consumer complaints
in the household goods industry are increasing. In addition, there was
widespread agreement among the government, industry, and consumer
organizations GAO contacted that the Department of Transportation's lack
of action has contributed to the growth of problems. The Department
defends its limited actions by stating that safety activities are the
primary focus of its motor carrier efforts. However, the Department has
not taken steps to understand the nature and extent of problems in the
industry--and therefore to determine whether its limited approach to
oversight and enforcement is appropriate. Nor has it made more than
minimal efforts to provide information to consumers that would assist
them in making more informed choices. Consumer education as a
preventative tool takes on increased importance if the motor carrier
administration is to pursue its course of limited oversight and
enforcement. The motor carrier administration has recently recognized
the need to be more active in this area and has outlined plans to
increase its involvement.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GAO-01-318
     TITLE:  Consumer Protection: Federal Actions Are Needed to Improve
	     Oversight of the Household Goods Moving Industry
      DATE:  03/05/2001
   SUBJECT:  Consumer protection
	     Household goods
	     Motor carrier operations
	     Consumer education
IDENTIFIER:  Internet

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Testimony.                                               **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-01-318

Report to Congressional Committees

March 2001 CONSUMER PROTECTION

Federal Actions Are Needed to Improve Oversight of the Household Goods
Moving Industry

GAO- 01- 318

Letter 3 Appendixes Appendix I: Scope and Methodology 26

Appendix II: Complaints Recorded by Selected Federal and Industry
Organizations 31

Appendix III: Role of States Regarding Consumer Complaints 36 Figures Figure
1: Complaints Recorded by Selected Federal Motor

Carrier Safety Administration Division Offices, January 1996- September 2000
32 Figure 2: Complaints Recorded by the Council of Better Business

Bureaus, 1996- 99 34 Figure 3: Requests for Arbitration Received by the
American

Moving and Storage Association, 1996- 2000 35

Abbreviations

FTC Federal Trade Commission ICC Interstate Commerce Commission

Lett er

March 5, 2001 The Honorable John McCain Chairman The Honorable Ernest
Hollings Ranking Member Committee on Commerce, Science, and Transportation

United States Senate The Honorable Thomas Petri Chairman The Honorable
Robert Borski Ranking Minority Member Subcommittee on Highways and Transit

Committee on Transportation and Infrastructure House of Representatives

The ICC Termination Act of 1995 transferred federal responsibilities for
protecting consumers who move their household goods across state lines using
commercial moving companies to the Department of Transportation. A 1998
congressional hearing brought to light a number of instances in which
unscrupulous movers preyed on consumers. The hearing also

demonstrated a lack of effective oversight and enforcement of the industry
by the Department of Transportation. The Motor Carrier Safety Improvement
Act of 1999 directed that we assess the effectiveness of the Department of
Transportation's consumer protection activities for the interstate household
goods moving industry

and identify alternative approaches for providing consumer protection in the
industry. Accordingly, this report discusses (1) the nature and extent of
consumer complaints about household goods carriers since 1996, (2) the

roles of consumers in preventing and resolving disputes and of government
agencies in providing consumer protection, (3) the Department of
Transportation's oversight and enforcement activities with respect to this
industry, and (4) issues associated with an expanded state role in this
area. This report focuses on commercial moves of individual households and
does not discuss interstate moves arranged by governments or corporations
for their employees.

To address these topics, we contacted or met with officials from a variety
of industry, law enforcement, consumer, and alternative dispute resolution
associations involved with the household goods moving industry or consumer
protection activities. We also met with officials from the Department of
Transportation's Federal Motor Carrier Safety Administration (the motor
carrier administration)- the federal agency that has oversight and
enforcement responsibility for this industry- and met with or contacted
officials from 14 of the 52 division (state) offices within the motor
carrier administration. We chose these locations because they represented
the states with the greatest number of interstate moves or

because our discussions with federal agencies, industry associations, and
consumer groups indicated that these states appeared to be experiencing the
most problems with interstate household goods moves. (See app. I for a
detailed discussion of how we carried out our work.)

Results in Brief Information is not collected in a way that would readily
provide a national perspective on the extent and nature of consumer
complaints about the interstate household goods moving industry. The
information we compiled from selected federal agencies and industry
organizations indicated that the complaints they received- covering both
interstate and intrastate carriers- generally doubled between 1996 and 1999
and may number several thousand a year. The information from these
organizations and

from consumer groups further suggests that some complaints result from
consumers' failure to protect themselves (by, for example, getting estimates
over the telephone rather than having a moving company physically determine
the amount of goods to be moved). Other complaints occur because carriers do
not follow federal law and regulations and bill consumers excessively when
consumers' goods are delivered. Still other complaints result from
apparently unscrupulous carriers that demonstrate a desire to prey on
consumers.

For moving services as for other major goods and services, the primary
responsibility for consumer protection lies with consumers to select a
reputable household goods carrier, ensure that they understand the terms and
conditions of the contract, and understand and pursue the remedies that are
available to them when problems arise. The Congress authorized the
Department of Transportation to regulate the interstate household goods
moving industry for the purpose of protecting consumers. A House Committee
report accompanying this authorization directed the Department not to
attempt to resolve individual households' disagreements with carriers.
Rather, the Congress required carriers to establish neutral

arbitration processes to help resolve loss and damage disputes. Consistent
with this congressional directive, the Department has generally not become
involved in attempting to settle disputes between individual consumers and

carriers. Instead, when it has undertaken enforcement actions, it has
focused its efforts on carriers that appear to exhibit patterns (e. g.,
multiple instances) of noncompliance with its regulations. In these cases,
the

Department takes action against the carrier, such as issuing compliance
orders, assessing monetary penalties, and revoking the carrier's operating
authority.

The Department of Transportation has provided limited oversight of and taken
little enforcement action in consumer protection issues because this
responsibility is a relatively low priority compared with promoting motor
carrier safety. Accordingly, few resources were transferred to this activity
when the Department assumed responsibility for this industry, and the
Department has not subsequently asked for additional resources. Among

other things, it has not systematically collected and analyzed information-
such as complaint information- about the industry that would help it carry
out its responsibilities; it has conducted little public education to help
consumers make more informed choices; it has not studied the

effectiveness of arbitration as a means of resolving disputes, as required
by law; it could not provide the number of reviews it has undertaken of
carriers' compliance with consumer protection regulations but estimated

there have been very few; and it has taken few enforcement actions.
Government, consumer organization, and industry officials we contacted
believe that the Department's lack of action has created a vacuum that has
allowed unscrupulous carriers to flourish and take advantage of consumers.
In December 2000, the motor carrier administration approved plans to
increase public education, information collection, and

enforcement, among other things. Although it has begun to take some action,
such as establishing a toll- free hotline, many of the outlined plans
consist of broad objectives and lack specific steps for implementation. We
are making recommendations to assist the Department in carrying out its
oversight and public education activities for this industry.

An expansion of the states' role in the regulation of interstate household
goods carriers has the potential to enhance protection for consumers.
Federal law currently allows the states to address abusive business
practices that extend beyond their borders in other areas of interstate
commerce, such as telemarketing and fair credit reporting. As in these
areas, legislation could be enacted to authorize the states to enforce
federal statutes and regulations applicable to interstate carriers of
household

goods. The moving industry opposes state enforcement against interstate
carriers because of concerns about the potential for inconsistent
interpretation and enforcement among states. In addition, changes to the

federal statute governing carriers' liability for loss or damage in
interstate shipments, which limits state law claims, have the potential to
improve protection for consumers. Federal legislation could limit the
preemptive effect of the statute to allow individual consumers to recover
damages from interstate household goods carriers under state law under
specified circumstances. Such legislation might also explicitly authorize
the states to enforce state consumer protection statutes against household
goods

carriers. We are not recommending that the Congress make these legislative
changes, in part because we believe that the Department could take a number
of actions to strengthen its oversight of this industry that might lessen or
eliminate the need for legislative changes.

In commenting on a draft of this report, the Department said that it
recognizes its responsibilities in the area of household goods consumer
protection and will work to the best of its ability, within established
resource constraints, to fulfill its responsibilities while it fulfills its
motor carrier safety responsibilities. The Department also believes that its
December 2000 plans to establish a new oversight and enforcement approach
will be effective. We agree that this new approach has the

potential to improve oversight and enforcement. However, it will be
important for the Department to demonstrate to the Congress and to the
public that it can follow through with its consumer protection efforts over
the long term.

Background Each year, between 1.3 million and 1.5 million households have
commercial moving firms move their household goods to another state,
according to industry estimates. 1 There are approximately 2,900 motor
carriers

registered with the Department of Transportation that are active in
transporting household goods across state lines. These 2,900 carriers
represent a small percentage of the approximately 654, 000 commercial 1 This
estimate includes moves of individual households, moves arranged by
governments, and moves arranged by corporations for their employees because
industry officials do not separately track moves in these categories.
Industry estimates indicate an additional 1. 3 million to 1.5 million
households move themselves with their own or rented trucks each year.

motor carriers engaged in all aspects of interstate commerce (and registered
with the Department).

Household goods carriers are of three types: national van lines, independent
carriers, and short- haul movers. Most interstate moves are conducted by
approximately 25 van lines- companies that market and dispatch moves in
which agents, acting on the van lines' behalf, perform the actual moves. 2
These agents are local moving companies that own the moving equipment and
storage facilities used in interstate moves. Independent carriers lease or
own their own equipment and storage facilities but do not have agents.
Independent carriers often share storage facilities and some equipment in an
effort to provide enough capacity and flexibility to compete with the van
lines. According to industry officials, short- haul movers typically
undertake moves of around 500 miles that do not require storage facilities
or return trip loads of goods.

Because most consumers seldom use moving companies for their household
goods, they are less prepared to protect themselves financially than are
commercial shippers. Until 1996, the Interstate Commerce Commission (ICC)
had regulatory responsibility for interstate household goods carriers,
including issuing regulations, conducting oversight activities, and taking
enforcement actions. The ICC Termination Act of 1995, among other things,
dissolved ICC and transferred these consumer protection functions (called
“economic regulation”) to the Department of Transportation.
These functions were further assigned to the motor carrier safety office
within the Federal Highway Administration. The Motor Carrier

Safety Improvement Act of 1999 transferred these consumer protection
functions to a new organization within the Department, the Federal Motor
Carrier Safety Administration. In addition to its headquarters facilities,
the Federal Motor Carrier Safety Administration maintains a field office
structure consisting of 4 service centers and 52 division offices- one in

each state, Puerto Rico, and the District of Columbia. 2 A single move could
involve several agents. For example, one agent might estimate the cost of
the move, and a second agent might pack the household goods and move them to
temporary storage at a third agent's location. Finally, a fourth agent might
pick up the goods from storage and deliver them to their final destination.

Information on the Data weaknesses do not allow us to assess the nature and
extent of the

Nature and Extent of problems consumers have had nationwide with various
aspects of the

interstate moving industry since 1996. One reason is that the government
Problems Is Limited offices and business and industry organizations we
contacted that receive complaints from consumers do not centrally compile
information on the nature of the complaints and often do not differentiate
between complaints against interstate and intrastate moving companies. 3
Another reason is that organizations did not collect information on how the
complaints were resolved. The federal motor carrier administration estimates
that it receives 3,000 to 4,000 complaints about interstate moves each year.

Available information indicates that consumers have complained about a broad
range of problems in dealing with household goods carriers in recent years.
Some alleged problems reflect misunderstandings between

consumers and carriers about (1) when services were to be paid for or (2)
what services were included in the original cost estimate provided to the
consumer. For example, a carrier arrived at the destination with the
consumer's goods on the scheduled delivery date but the consumer was not
present; the carrier then took the consumer's goods to a storage facility-
at an extra cost to the consumer- until the consumer arrived, and the
consumer complained about the extra cost. In another example, the

consumer failed to obtain complete information about the services, accepting
a telephone estimate of the expected moving charges rather than having the
moving company provide an on- site estimate- and then complained when the
actual cost of the move included charges for services that were not covered
by the estimate.

3 For example, records were available only at the Department's 52 division
offices and at the 160 local Better Business Bureau Offices. It was not
feasible to obtain or review these documents from so many locations.

Other problems occurred when a carrier lost or damaged the consumer's goods
but the consumer and the carrier disagreed on the amount of compensation or
the carrier took a long time to settle the claim. In some instances, the
disputed amounts involved thousands of dollars. Consumers have also
complained that carriers held their goods “hostage” by refusing
to unload them from the moving truck until the consumer paid the entire
balance of money due, even though the consumer is not required to pay more
than 110 percent of the estimated amount to the carrier at the time of
delivery. 4 Yet some carriers required payment in full- over and above the

110 percent amount- in cash at the time of delivery. And when the consumer
did not pay the amount above 110 percent of the estimate, the carrier stored
the goods at an added cost to the consumer.

Finally, available information indicates that some consumer complaints arose
because unscrupulous carriers had no regard for the rights of consumers or
for the law. In some instances, carriers provided unreasonably low estimates
that they had no intention of honoring. Some carriers also extracted
unreasonably high fees from consumers by imposing unjustified and exorbitant
charges for packing, boxes, tape, and other ancillary services. In addition,
some carriers engaged in a practice

called “weight bumping,” in which they artificially inflated the
weight of a shipment by including the weight of another household's goods
when calculating the final bill. 5 Consumers have complained that, in some
instances, even when they have won judgments against carriers in court, they
have been unable to collect damages because the carrier has hidden its
assets.

4 This applies to collect- on- delivery shipments for which nonbinding
estimates were made. The carrier must defer demand for payment of any
remaining charges for 30 days following delivery. 5 One common way moving
companies determine freight charges is by weighing the goods to be
transported. To determine the weight of goods, a moving van is weighed
before and again after the consumer's goods are loaded. Large moving vans
can hold more than one household's possessions. After the van is weighed
initially, unscrupulous carriers add the weight of another household's
possessions to increase the weight of the van- and of the final charge to
the consumer.

The limited information that is available from selected federal and industry
organizations suggests that the number of complaints against household goods
carriers is increasing. The complaints recorded by 12 federal motor carrier
administration division offices about interstate household goods carriers
doubled from 318 in 1996 to 659 in 1999. (Two other division offices we
contacted did not record complaints received.) Nationwide data maintained by
the Council of Better Business Bureaus 6 indicate a nationwide increase in
complaints against interstate and intrastate household goods carriers from
about 3,000 in 1996 to about 5, 100 in 1999.

Another measure- consumer requests for formal arbitration proceedings to
resolve disputes with carriers- indicates an increase in consumer
dissatisfaction. 7 Such requests submitted to the American Moving and
Storage Association 8 increased between 1996 and 2000 from about 100 to over
700. While all consumer complaints or requests for arbitration may not have
merit, they represent consumer dissatisfaction that consumers want
addressed. (See app. II for additional information.)

Consumers Have To resolve individual disputes over interstate shipments of
household Primary Responsibility

goods, consumers are expected to avail themselves of self- help mechanisms,
such as neutral arbitration. Under the ICC Termination Act of for Preventing
and

1995, the Department of Transportation is authorized to conduct oversight
Resolving Problems; and provide enforcement activities, among other things,
to protect these

Government Has a consumers.

Broader Oversight and Enforcement Role

6 One of the best- known consumer complaint organizations is the Better
Business Bureau. The Council of Better Business Bureaus is the national
umbrella organization for over 160 local Better Business Bureaus. These are
nonprofit organizations dedicated to promoting ethical relationships between
businesses and consumers. 7 Arbitration is the submission of a dispute to
one or more impartial persons for resolution.

8 The American Moving and Storage Association is the national trade
association of the moving and storage industry. It is the largest industry
association and represents approximately 2,000 movers, van lines, and their
agents that are engaged in the interstate transportation of household goods.

For moves of household goods across state lines, as for other services,
consumers are primarily responsible for protecting their own interests. It
is up to them to select a reputable carrier, ensure that they understand the
terms and conditions of the contract, and understand the remedies that are
available to them when problems arise so that they can resolve disputes
directly with the carrier. Typically, a consumer first tries to work with
the

carrier directly or through state or local government agencies, if such help
is available, to resolve a dispute. If the results are not satisfactory, the
consumer can seek further recourse- arbitration- through industry and
business associations, such as the American Moving and Storage Association,
the Council of Better Business Bureaus, and other independent arbitration
organizations nationwide. 9 Alternatively, the consumer can pursue civil
litigation for violations of the household goods consumer protection
statutes and regulations.

Since 1996, the Department of Transportation has had primary federal
authority for regulating the interstate household goods moving industry-
specifically, for issuing regulations to protect consumers, conducting
oversight activities (including reviewing carriers' compliance with those

regulations), and taking enforcement actions. Among other things, the
Department's existing consumer protection regulations cover the (1) types of
cost estimates carriers can provide to consumers, (2) guidance that carriers
must provide to consumers about their rights and responsibilities when they
move, (3) approved methods for carriers to weigh shipments of household
goods used to determine the final costs of the move, (4) process through
which carriers handle inquiries and complaints, and (5) maximum charges
consumers are required to pay at the time their goods are delivered to the
final destination. Historically, the Department's oversight activities for
all types of commercial motor carriers- not just household goods carriers-
include collecting information on the state of the industry, such as
complaints lodged against registered carriers. The Department also reviews
compliance with regulatory requirements (called “compliance
reviews”) at a carrier's base of operations. When it identifies
instances of

noncompliance, the Department can rely on a variety of enforcement 9 The
Congress required, under the 1995 act, that household goods carriers offer
consumers the option of neutral arbitration as a means of settling disputes
over household goods transportation. Required arbitration covers only the
loss of or damage to goods, not other problems such as rate disputes, delay
claims, or service.

activities. For example, it can issue orders to compel compliance, impose
civil monetary penalties, revoke the carrier's operating authority, or seek
federal court orders to stop regulatory violations. While the Congress
provided the Department with the authority to regulate the interstate
household goods moving industry, a House Committee report accompanying the
1995 act directed the Department not to intervene and

help resolve individual complaints- as was the practice of ICC. According to
Department officials, the Department has followed this direction and, when
it undertakes enforcement actions, focuses on patterns of behavior (e. g.,
multiple complaints) by a carrier.

Another federal agency, the Surface Transportation Board, 10 has the
authority to determine whether a moving company's charges to consumers are
consistent with its tariff (a published list of charges for specific
services provided). Consumers can use the Board's opinion in negotiating
with the carrier or in court.

The states may regulate the transportation of household goods within their
boundaries (intrastate transportation). In addition, 9 of the 14 states we
contacted attempt to help consumers with complaints involving interstate
transportation. According to state officials, this involvement is generally
limited to informal mediation of the complaint with the carrier, unless
state officials believe the carrier has violated that state's consumer
protection or

fraud statutes. State involvement in matters involving interstate carriers
is limited, at least in part, by a federal statute that preempts a broad
range of state law claims for loss or damage in interstate transportation.
(See app. III for additional information on states' roles.)

10 The Board is a bipartisan, independent adjudicatory agency
administratively housed within the Department of Transportation, with
jurisdiction over certain surface transportation economic regulatory
matters. It was created by the ICC Termination Act of 1995 and received
responsibility for many rail and nonrail functions previously the
responsibility of ICC.

The Department of Since the Department assumed authority for the oversight
and enforcement Transportation Has

of the household goods moving industry 5 years ago, its activities in all
areas- consumer education, oversight, compliance, and enforcement- Done
Little to Oversee

have been minimal. According to Department officials, no more than two the
Household Goods

staff positions were transferred from ICC for household- goods- related
Moving Industry

functions. Typically, the Department has devoted about 5 staff years to its
household goods consumer protection activities and has not requested more
resources for these activities from the Congress. Rather, it has

devoted its attention to motor carrier safety issues, which are its primary
motor carrier responsibility. The Department undertook few, if any,
activities related to the industry between 1996 and 1998. In 1998, after a

congressional hearing on growing problems with certain carriers, it formed a
task force to provide increased enforcement against egregious carriers. This
task force initiated 29 enforcement actions against carriers but was
disbanded in 2000 to be replaced with a permanent enforcement team as part
of the Department's plans to increase its efforts in this area. The

Department also published proposed rules implementing the ICC Termination
Act and addressing certain consumer protection issues, but the rules have
not been finalized because of work on other, safety- related rules. In 2000,
when the authority for these activities was transferred to the motor

carrier administration, the Department established the Office of Enforcement
and Compliance within the motor carrier administration, with enforcement and
compliance responsibilities for all carrier types, including household goods
carriers. Through January 2001, this unit had established a minimal system
for recording complaints about household goods carriers, established a toll-
free telephone consumer complaint hotline, and produced an outline of plans
for public education and enforcement efforts, among other things. However,
significant elements of the outline- including plans for public education
and outreach, as well as training of field investigators on the household
goods regulations- lack specific steps.

Officials of the government, industry, and consumer organizations we
contacted agreed that this minimal activity has created a vacuum that has
allowed egregious carriers to flourish and take advantage of consumers.
According to these officials, carriers are aware that the Department does

little to enforce the consumer protection regulations or provide much
oversight of the industry. As a result, these officials believe that while
most moves are completed by reputable carriers with few or no problems,

unscrupulous carriers are taking advantage of the lack of oversight and are
operating without concern for the regulations or the rights of consumers.
Consumer Education

Education helps consumers understand how they can make the choices
Activities Have Been

that will lead to more successful interstate moves. The Department has not
Minimal

made an effort to reach out to consumers and organizations, such as consumer
groups, to promote a message of how consumers can protect themselves and get
redress when problems arise. Given that consumers have primary
responsibility for preventing and resolving problems with moving companies,
such outreach could help prevent consumer problems. The Department
recognized the importance of consumer education when it continued to make
available an ICC- developed booklet on consumers'

rights and responsibilities. In addition, the Department continued an ICC
requirement that all interstate household goods carriers provide this
booklet to their customers. The Department's consumer education efforts have
been minimal, limited

mostly to placing the rights and responsibilities booklet and a
Departmentdeveloped “17 most frequently asked questions”
document about moving on the agency's Internet Web site. The rights and
responsibilities booklet 11 and the frequently asked questions document
contain much useful consumer information. However, making the booklet
available on the

Department's Web site may not be sufficient because many households do not
have Internet access. 12 In addition, some movers may not be making the
booklet available to their customers, as required. In this regard, motor
carrier administration officials who receive consumer complaints in
California and New York and the Executive Director of the Illinois Movers
and Warehouseman's Association told us that, according to consumers who
contact their organizations after a move has taken place, some carriers

11 The motor carrier administration has not updated the booklet since
assuming responsibility for this area a year ago. As a result, the booklet
still refers to the Federal Highway Administration as the federal point of
contact for consumers. 12 According to a Department of Commerce report, the
percentage of American households with Internet access in the home is
growing. About 42 percent of all households had computers with Internet
access as of August 2000, up from 26 percent in December 1998. However, only
about 59 percent of all persons using the Internet at home use it to search
for

information (such as to help them with moving their household goods). The
report also estimated that about 10 percent of households that never had
Internet access at home had access elsewhere (such as at work or at a public
library). See Falling Through the Digital Divide: Toward Digital Inclusion
(Oct. 2000).

have not offered them this booklet. The motor carrier administration also
offers a “self- help” package to those who request it. However,
the usefulness of this package is questionable. It consists of photocopies
of federal regulations and statutes without explanation to help the reader

understand them. One means of consumer education would be through concerted
outreach to consumers, such as through consumer and industry groups and
state consumer protection and enforcement agencies. The motor carrier
administration endorsed the concept of this approach in December 2000, but
it will not develop concrete activities for carrying it out until June 2001.
(The motor carrier administration's plans to increase its presence in this
area are discussed at the end of this section.) We agree that such outreach

could be useful in helping consumers understand how to make a move more
successful and how to seek redress when problems arise. It would also be
helpful to state agencies when consumers complain to them about interstate
household goods movers. Over half of the state agencies we contacted did not
know which federal agency regulates these movers, or that any federal agency
had any role since the termination of ICC. 13 Therefore, they were unable to
forward complaints they received about

interstate moves to the motor carrier administration. Another opportunity
for the Department to help consumers make informed choices is to make
complaint information available to the public. For example, the motor
carrier administration receives complaints from some consumers about
household goods carriers but does not share this

information with the public because it believes that by doing so it may
violate consumers' privacy. Such concerns would have merit if the Department
identified the complainant when making the information public. However, the
complaints could be aggregated by carrier and type of complaint (e. g.,
damage to goods shipped, hostage freight) without revealing the identity of
the complainant. This approach is used by the Department's Aviation Consumer
Protection Division. The Aviation Consumer Protection Division routinely
shares complaint information

(e. g., damage to luggage, poor service) collected from consumers through
its Air Travel Consumer Report. The Aviation Consumer Protection 13 Of 24
state agencies we contacted, including offices of the attorney general, 14
did not know to refer consumers to the motor carrier administration for
help. For example,

officials with six agencies told us they referred consumer complaints to
ICC, the Surface Transportation Board, and the Federal Highway
Administration.

Division shares this information with consumers through its Internet Web
site to help them make choices about which airlines to use. According to the
Assistant Director for Aviation Consumer Protection, publishing these data
assists consumers in assessing the airlines' service quality while
encouraging the airlines to improve their service. In addition, Department
officials are concerned about providing the public with complaint
information that has not been substantiated by the Department. However,

the Assistant Director for Aviation Consumer Protection explained that his
office and the airline industry generally agree that complaints, as
reported, are real and valid from a consumer's perspective regardless of
whether there has been a violation of regulations or simply a disagreement
over policy and procedures.

Similarly, in 1998, the Department proposed rules that would implement the
requirements of the 1995 act and would require carriers to file annual
reports with the agency that, among other things, include information on the
number of claims filed with the carrier. The Department planned to make this
information available to the public, further indicating that privacy
concerns could be addressed. (The Department has not finalized these rules
and, therefore, has not implemented this action.) Previously, ICC required
similar reports and made this information available to the public.

The Department Has Oversight efforts that would help the Department
understand the industry

Undertaken Little Industry and shape its enforcement strategy have been
minimal. The motor carrier Oversight

administration has not collected information on the nature and extent of
complaints in a way that could be used in overseeing the industry. Even
though it required its division offices to collect information on all
complaints that came in to them in a complaint register, 2 of the 14
division offices we contacted were not using complaint registers because the
officials in charge of those offices decided that the complaints were so
infrequent that the registers were unnecessary. The other offices collected
the information inconsistently, hampering the motor carrier administration
in understanding the nature and extent of problems reported by consumers. 14
For example, one office recorded only complaints made in

writing and ignored complaints made over the telephone, even though the 14
After we discussed this issue with the motor carrier administration official
in Texas responsible for entering complaints into that office's register,
the state director developed procedures to ensure that all telephone
complaints were recorded in the complaint register.

motor carrier administration's guidance specified that information from
telephone complaints be recorded. Agency guidance indicates that a primary
purpose of the complaint register is to identify substantial patterns of
noncompliance that would aid in targeting unscrupulous carriers for
enforcement actions. However, the motor carrier administration did not issue
any guidance to its division offices on how and when to report complaint
data to headquarters. Division office staff told us that the registers were
primarily used to log complaints because the agency guidance did not ask for
complaints to be

supplied to headquarters for analysis. In addition to having data quality
problems, the complaint register system is not designed to share information
across state lines or with headquarters: The databases that each office
maintains are “stand- alone”- not electronically linked to each

other or to headquarters. This design limits the register's usefulness in
oversight and enforcement. According to Department officials, the motor
carrier administration plans to create a new, national consumer complaint
database by April 2001 for use in enforcement and oversight. While this

database will accept complaints from all sources- including the general
public- motor carrier administration staff at headquarters, service centers,
and division offices will have limited access to the entire system. Finally,
the Department has not undertaken a study of the effectiveness of
arbitration as a means of settling household goods disputes, despite the
requirement in the ICC Termination Act that it complete this study within

18 months. A study of arbitration- required for the first time by the 1995
act- would be useful in determining the degree to which carriers have
established accessible and fair arbitration programs. The motor carrier
administration has no plans to undertake the study. The Department Does Not

Agency officials could not tell us how many of the nearly 500 compliance
Know the Extent to Which It reviews of carriers that transport household
goods conducted since 1996 Has Examined Carriers'

involved ensuring compliance with consumer protection requirements,
Compliance With Household

such as the one for carriers to establish accessible and fair arbitration
Goods Rules

programs. Agency officials told us that unless specific complaints have been
made against a carrier, compliance reviews typically do not include checks
of the carrier's compliance with the consumer protection

regulations because (1) the focus of compliance reviews is to determine the
operating safety of the carrier; (2) investigators' training, limited to 1
day, is insufficient for them to evaluate compliance with the regulations;
and (3) departmental manuals on how to conduct compliance reviews include

guidance on only one of the consumer protection regulations (that carriers
participate in an arbitration program). While the Department's December 2000
plans include providing additional training to field safety investigators on
the household goods regulations, the plans do not indicate the extent of
training to be provided. In addition, this training is not scheduled to be

completed until September 2001. In commenting on a draft of this report,
Department officials noted that the Department began updating its compliance
review manual to include additional household goods

regulations in January 2001. The Department Has Not

The Department has not determined whether it is carrying out the Determined
Whether Its

appropriate level of enforcement activity with respect to households goods
Level of Enforcement Is carriers relative to the other carriers it
regulates. Departmental data Appropriate suggest that disproportionately
fewer household goods carriers are targeted for enforcement than are other
types of carriers. In connection

with routine enforcement activities, the Department has opened 11 cases
involving household goods carriers (of the approximately 2,900 carriers
registered with the Department) as compared with completing about 13, 000
enforcement cases involving over 650,000 carriers of all types
departmentwide since 1996 for all regulatory violations. The 11 cases opened
against household goods carriers were for (1) violating consumer

protection regulations, (2) failing to register with the Department, or (3)
failing to have insurance. The Department had settled these cases, including
assessing civil penalties against the carriers, as of February 2001. In
response to congressional concerns in 1998 about such limited enforcement,
the Department established a temporary task force with seven members,
including three former ICC investigators, to inspect household goods
carriers reported to the agency for egregious behavior.

The task force investigated 29 household goods carriers and brokers that
appeared to exhibit patterns of abusive activities. Various criminal and
civil actions were imposed against 22 of them. In December 2000, the motor
carrier administration proposed to evaluate its compliance and enforcement
efforts to ensure the effectiveness of its enforcement activities. The
Department plans to establish a tracking and monitoring system to evaluate
its efforts by May 2001. In addition, it plans to prepare press releases (as
needed) of civil penalties and other significant enforcement actions taken
against household goods carriers or brokers.

The Motor Carrier Only recently has the motor carrier administration decided
that increased

Administration's Plans Lack efforts are needed. As a result, in December
2000, it approved an outline of Specificity

plans to take a more active role in public education, oversight, compliance,
and enforcement in the household goods moving industry. The outline proposes
establishing two motor carrier administration teams dedicated to addressing
consumer problems in the industry. The consumer affairs team, comprising two
motor carrier administration staff and five contract employees, would
provide guidance for the public and others about

available consumer protections, take consumer complaint calls on a tollfree
telephone hotline, and log complaints into a national complaint database.
Team members would be responsible for handling any hostage

goods complaints through negotiation and appropriate exercise of agency
authority. If this team was not available to handle the complaint, the
complaint would be forwarded to the second team, the enforcement team,

for further handling. This latter team, to consist of four headquarters and
three field staff members, would monitor complaints and investigate
household goods carriers on the basis of such factors as the kinds of
alleged violations, the number of complaints relative to the size of the
carrier, and the degree of harm to consumers. Enforcement actions would

then be taken in response to those violations for which the agency
determined such actions were warranted. The team would also work to provide
information for the news media, public interest groups, industry

groups, state governments, and others about consumers' rights and
responsibilities and about enforcement remedies within the motor carrier
administration's jurisdiction through such means as presentations and
Internet postings.

The approved plans did not include milestones for implementing the
Department's proposed actions. In commenting on a draft of our report, which
pointed out this omission, the Department announced that in January 2001, it
had approved milestones for elements of its planned approach. However, these
plans consist of little more than objectives, lacking specific steps needed
for implementation. For example, the plans lack details on the duration and
frequency of training for field investigators

on the household goods regulations. In addition, the Department's plans do
not address the possible retirements within 3 years of several motor carrier
administration staff with institutional knowledge of the household goods
regulations.

Issues Associated With Consumer protections have the potential to be
enhanced by expanding the

an Expanded State states' role in the regulation of interstate household
goods carriers. The Congress has already expanded state authority in certain
other areas of Role in the Regulation

commerce, including telemarketing and fair credit reporting, in which the of
Interstate

Congress has recognized that the states can contribute to addressing
Household Goods abusive business practices that extend beyond their borders.
As in these areas, the states could be authorized to enforce federal
statutes and Carriers regulations applicable to interstate carriers of
household goods. Industry representatives we contacted opposed such changes,
stating that

inconsistent interpretations of federal statutes and regulations by states
would damage legitimate carriers. Changes to the federal statute governing
carriers' liability for loss or damage in interstate shipments, which limit
state law claims, also have the potential to improve protection for
consumers.

States Have Enforcement The Telemarketing and Consumer Fraud and Abuse
Prevention Act of 1994

Authority in the required the Federal Trade Commission (FTC) to adopt rules
prohibiting Telemarketing and Fair

deceptive and abusive telemarketing practices and authorized the states to
take enforcement action against those engaging in patterns or practices of
Credit Reporting Industries telemarketing that violate those rules. 15 The
act reflects congressional findings that interstate telemarketing fraud had
become a problem of such magnitude that FTC's resources were not sufficient
to ensure adequate consumer protection. Although FTC does not regularly
track state activities, an official estimated that at least 21 individual
state actions have been brought and that joint actions number in the
hundreds. An FTC official also pointed out that since 1996, in joint FTC and
state investigations of telemarketing fraud, the resources of all 50 states
and FTC

have been efficiently used to benefit consumers nationwide. The states also
share enforcement authority with FTC with respect to credit reporting under
the 1996 amendments to the Federal Fair Credit Reporting Act. The act
authorizes the states to take enforcement action on

behalf of consumers to bring a stop to violations and recover damages.
According to an FTC official, the states have generally not yet used their
authority under the act and may be allocating enforcement resources to other
law enforcement priorities.

15 Among other things, the states may obtain injunctions against illegal
telemarketing activities and damages on behalf of their residents.

Industry Believes That State The industry position, as articulated by the
American Moving and Storage

Enforcement Is Inadvisable Association, is that authorizing the states to
enforce federal statutes and

regulations would result in “ . . . a firestorm of inconsistent,
varying interpretations of federal law that present the potential for
injunctive relief, threatening the continued operations of legitimate
movers.” The

Association has also argued that a small minority of consumers would push
their grievances, even when carriers had complied with federal regulations,
and that some states would improperly move against the carriers.

To address the potential for inconsistent state interpretation in connection
with the telemarketing and fair credit reporting statutes, FTC works with
the states to address interpretation issues before cases are initiated. Both
statutes require the states to notify the Commission before taking
enforcement action or, if that is not possible, immediately upon taking

action. The Carmack Amendment

Consumer advocates and state officials we contacted also advocate Limits
Claims Under State

changes to the Carmack Amendment, a federal statute that preempts a Law

broad range of state law remedies in connection with loss and damage in
interstate shipments. 16 The Carmack Amendment imposed a uniform scheme of
liability for loss or damage to eliminate the uncertainty

associated with conflicting state laws regarding interstate shipments.
Courts have consistently held that the Carmack Amendment bars consumers from
filing claims under state law, including those for a carrier's

breach of contract, negligence, deceptive practices, and fraud. However, the
extent of the Carmack Amendment's preemptive effect in connection with
individual consumer claims is not as clear. Furthermore, there is some
question about the states' authority to take enforcement action against
interstate carriers unrelated to loss or damage under state consumer
protection statutes. The National Association of Consumer Agency
Administrators and several state officials have suggested that the

Congress explicitly authorize the states to enforce such statutes against
interstate movers to remove any questions concerning their enforcement
authority in light of the Carmack Amendment. In addition, the preemptive
effect of the Carmack Amendment could be limited to allow individual

consumers to recover damages under state law under certain 16 The Carmack
Amendment is set forth in section 14706 of title 49, U. S. Code.

circumstances. For example, an official from one state suggested that the
Carmack Amendment be modified so as not to preempt state law with respect to
household goods carriers operating without tariffs in violation of federal
law. (See app. III for additional information.)

As discussed in the previous section, a number of areas exist in which the
motor carrier administration could better oversee the household goods moving
industry and help consumers make informed choices when they move their
household goods. We believe that actions in these areas could lead to
improved compliance with federal laws and regulations. We also believe that
action by the Department in areas in which it currently is exercising little
authority should precede state involvement in this area.

Once the Department completes its December 2000 plans and effectively
implements the recommendations contained in this report, it will be in a
better position to determine what additional benefits, if any, would accrue
from legislative changes that would expand the states' role with respect to
interstate household goods carriers.

Conclusions Available information indicates that consumer complaints in the
household goods industry are increasing. In addition, there was widespread

agreement among the government, industry, and consumer organizations we
contacted that the Department's lack of action has contributed to the growth
of problems. The Department defends its limited actions by stating that
safety activities are the primary focus of its motor carrier efforts.
However, the Department has not taken steps to understand the nature and
extent of problems in the industry- and therefore to determine whether its
limited approach to oversight and enforcement is appropriate. Nor has it
made more than minimal efforts to provide information to consumers that
would assist them in making more informed choices. Consumer education

as a preventative tool takes on increased importance if the motor carrier
administration is to pursue its course of limited oversight and enforcement.
The motor carrier administration has recently recognized the need to be more
active in this area and has outlined plans to increase its involvement. We
are making recommendations for actions to better ensure that these actions
are fully implemented and achieve the intended results.

Recommendations for We recommend that the Secretary of Transportation direct
the

Executive Action Administrator of the Federal Motor Carrier Safety
Administration to

undertake activities that would help it better oversee the industry. These
actions should include ? undertaking and completing the study of alternative
dispute mechanisms required by the ICC Termination Act of 1995 and ?
ensuring that the motor carrier administration's division offices collect

and maintain information on consumer complaints consistently and that the
information be shared across division offices and with headquarters. We
further recommend that the Secretary direct the Administrator to determine
the adequacy of its enforcement efforts. These actions should include ?
assessing whether enforcement activities against household goods carriers
are effective and sufficient and, if not, increase enforcement actions
against interstate household goods carriers, as outlined in the motor
carrier administration's plans, and

? determining whether legislative changes are needed to supplement the
Department's efforts, including (1) authorizing the states to enforce
federal statutes and regulations and (2) changing the federal statute

limiting carriers' liability with respect to interstate shipments of
household goods. If such changes are needed, the Department should submit
them to the Congress. This determination should be made after the other
recommendations in this report have been implemented and sufficient time has
passed to assess the effects of the Department's actions.

We also recommend that the Secretary direct the Administrator to carry out
public education efforts that will promote awareness of means that consumers
can employ to protect themselves when they are moving their

household goods across state lines and on what they can do when problems
arise. These efforts should include

? reaching out to consumers, consumer and industry groups, and state
governments and using Internet postings and other means, consistent with the
motor carrier administration's plans; ? notifying state consumer and law
enforcement agencies and national consumer organizations that the motor
carrier administration is responsible for regulating the interstate
household goods industry; ? making information on the number and general
nature of complaints

made against individual carriers available to the public without disclosing
the complainants' identity; and

? publicizing the results of the Department's enforcement cases against
household goods carriers. Agency Comments and

We provided the Department of Transportation with a draft of this report Our
Evaluation for review and comment. We obtained comments from departmental
representatives, including the Director of the Federal Motor Carrier Safety
Administration's Office of Enforcement and Compliance. These representatives
told us that the motor carrier administration recognizes its responsibility
in the area of household goods consumer protection and has

been endeavoring to do the best it can with the limited resources available.
It will continue to work to the best of its ability, within established
resource constraints, to effectively fulfill its responsibilities in this
area. The officials indicated that the Department has received only a
fraction of the resources ICC devoted to the area and has augmented its
staffing to the degree it is able, while it continues to pursue the
ambitious safety agenda set out before it with the motor carrier community.
The representatives also told us that the motor carrier administration
recently established a new approach to deal more effectively and
comprehensively with issues in the household goods moving industry,
particularly those involving carriers and brokers that have demonstrated
persistent noncompliance with applicable economic and commercial
regulations. They said that this approach will focus on educating consumers,
tracking complaints, and formulating a

more effective approach to regulatory enforcement. We agree that the new
approach adopted by the Department has the potential to improve oversight
and enforcement over the household goods moving industry. However, since
many of the initiatives are still in their early stages, we cannot predict
the ultimate success of these endeavors.

The Department will need to demonstrate to the Congress and to the public
that it can follow through with its consumer protection efforts over the
long term. The Department also made several technical and clarifying
comments, which we incorporated where appropriate.

Finally, the Department did not comment on our recommendations. Our draft
report contained a proposed recommendation that the motor carrier
administration establish implementation and completion dates for actions

contained in its plans to improve oversight and enforcement activities
involving interstate household goods carriers. As discussed in this report,
the motor carrier administration has developed these milestones and
incorporated them into its plans. As a result, we deleted this
recommendation from this report.

We are sending copies of this report to congressional committees and
subcommittees with responsibilities for transportation and consumer
protection issues; the Honorable Norman Y. Mineta, Secretary of
Transportation; Ms. Julie Anna Cirillo, Acting Deputy Administrator of the
Federal Motor Carrier Safety Administration; the Honorable Linda J. Morgan,
Chairman of the Surface Transportation Board; and the Honorable Mitchell E.
Daniels, Director of the Office of Management and Budget. We will make
copies available to others upon request.

If you or your staff have any questions about this report, please call me at
(202) 512- 2834. Key contributors to this report were Lori Adams, Helen
Desaulniers, James Ratzenberger, Deena Richart, and William Sparling.

Phyllis F. Scheinberg Director, Physical Infrastructure Issues

Appendi Appendi xes x I

Scope and Methodology To attempt to determine the extent of complaints in
the interstate household goods moving industry, we obtained summary
information from several sources. We did so because detailed records on the
complaints were kept as paper records in individual offices where the
complaints were filed. In addition, some sources could not readily provide
information on whether complaints were for interstate or intrastate moves.
From 12 motor carrier administration division offices in Arizona,
California, Colorado,

Florida, Georgia, Illinois, Missouri, New Jersey, New York, Ohio,
Pennsylvania, and Texas, we obtained summary information from their Economic
Complaint Registers. We selected these offices because they represent the
states that (1) had the most interstate moves and, according to motor
carrier administration officials, (2) reported the most problems with
household goods movers. We did not verify the reliability of the data
maintained in these registers. We also obtained summary complaint
information and/ or summary requests for arbitration from the Council of
Better Business Bureaus and the American Moving and Storage

Association. To determine the number of motor carriers that might be
involved in interstate household goods moves, we obtained information from
the Department of Transportation and from the American Moving and Storage
Association. To determine the nature of the complaints, we interviewed
federal and state officials and a number of industry and law enforcement and
consumer protection organization officials. We relied on

interviews because information on the nature of problems was not available
without expending extraordinary efforts. We also reviewed the record for the
1998 hearing on consumer protection issues involving the household goods
moving industry. 1 To establish how consumer protection for this industry is
provided, we determined the Department of Transportation's role with respect
to the

household goods moving industry, as well as the roles of other federal
agencies and the states. To do so, we reviewed the ICC Termination Act of
1995 and the Motor Carrier Safety Improvement Act of 1999. We also reviewed
the Department of Transportation's applicable regulations, program guidance,
and self- help packages provided to consumers. We discussed with motor
carrier administration officials (at headquarters and in 14 division
offices- the 12 previously mentioned, as well as those in New Hampshire and
North Carolina) their duties and actions with respect to the

1 Motor Carrier Economic Regulatory Issues, Hearing before the Subcommittee
on Surface Transportation of the Committee on Transportation and
Infrastructure, House of Representatives (Aug. 5, 1998).

household goods moving industry, including consumer complaint tracking,
public education efforts, and enforcement efforts. We also contacted
officials at the Surface Transportation Board and the Federal Trade
Commission (FTC) to discuss their roles in consumer protection for this
industry. In addition, we contacted agencies in 14 states to determine what
activities they undertake with respect to this industry. (The organizations
we contacted are listed at the end of this appendix.) We chose these states

because they either had the most interstate moves or were identified through
our discussions with federal agencies, industry associations, and consumer
groups as those apparently experiencing the most problems with interstate
moves.

To assess the Department of Transportation's consumer protection activities
for the household goods moving industry, we reviewed the Department of
Transportation's documents and interviewed its officials on how it
implemented its responsibilities. Topics included its overall regulation and
enforcement philosophy, rulemaking, staffing, public education and outreach,
complaint resolution, enforcement actions, and

investigator training. We also reviewed and discussed with motor carrier
administration officials the agency's plans for increasing its activities in
this area. In addition, we obtained information on the Department of
Transportation's Aviation Consumer Complaint Database for air travel

complaint reporting and resolution. Finally, we met with a number of
industry, consumer, and alternative dispute resolution organizations and
with selected states to obtain their perspectives on the actions taken by
and the effectiveness of the Department of Transportation in this area. To
identify issues surrounding an expansion of the states' role with respect to
the interstate moving industry, we contacted officials from federal, state,
industry, consumer protection, and alternative dispute resolution
organizations that are knowledgeable about the household goods moving
industry and obtained their insights. We reviewed legislation and discussed

with officials from FTC, state offices of the attorney general, and the
National Association of Attorneys General how consumer protection is
provided and enforced for the telemarketing industry. We also discussed

consumer protection in consumer credit reporting with FTC and reviewed
applicable legislation. We selected these industries because they were cited
in an August 1998 congressional hearing on the Department of
Transportation's efforts to oversee the household goods moving industry as
possible models for federal oversight.

We conducted our review from June 2000 through February 2001 in accordance
with generally accepted government auditing standards.

Organizations

Federal Agencies

Contacted Department of Transportation

Aviation Consumer Protection Division Federal Highway Administration Federal
Motor Carrier Safety Administration Federal Trade Commission Surface
Transportation Board

State Agencies

Arizona Office of the Attorney General Corporation Commission Department of
Commerce Department of Transportation

California Office of the Attorney General Public Utility Commission Colorado

Office of the Attorney General Department of Transportation Public Utilities
Commission

Florida Office of the Attorney General Department of Agriculture and
Consumer Services

Georgia Office of the Attorney General Governor's Office of Consumer Affairs
Public Service Commission

Illinois Office of the Attorney General Commerce Commission

Missouri Office of the Attorney General Department of Transportation

North Carolina Office of the Attorney General Utilities Commission

New Hampshire Office of the Attorney General Department of Safety

New Jersey Department of Law and Public Safety Division of Consumer Affairs

New York Office of the Attorney General Department of Transportation

Ohio Office of the Attorney General Public Utilities Commission

Pennsylvania Office of the Attorney General Public Utility Commission

Texas Office of the Attorney General Department of Transportation

Industry Associations

American Moving and Storage Association California Moving and Storage
Association Florida Movers and Warehousemen's Association Georgia Movers
Association Illinois Movers and Warehousemen's Association National Council
of Moving Associations

Law Enforcement and Consumer Associations

American Association of Retired Persons The Better Business Bureau of
Chicago and Northern Illinois The Better Business Bureau of Los Angeles,
California The Better Business Bureau of Metropolitan New York Council of
Better Business Bureaus

National Association of Consumer Agency Administrators National Association
of Attorneys General

Alternative Dispute Resolution Associations

American Arbitration Association Fulcrum Institute Dispute Resolution Clinic
Interstate Dispute Resolution

Companies

Greenmount Moving and Storage, Inc.

Complaints Recorded by Selected Federal and

Appendi x II

Industry Organizations Complaints Recorded The motor carrier administration
does not centrally compile information by the Federal Motor

on the number or nature of the consumer complaints it receives about
interstate household goods carriers. However, motor carrier administration
Carrier Safety

officials estimated that the agency's division offices receive between 3,000
Administration

and 4,000 complaint calls each year about interstate household goods
carriers. 1 We contacted 14 of the agency's 52 division offices to obtain
data on the number and types of complaints recorded. For the 12 division

offices we contacted that collected this information, the number of
complaints increased from 318 to 659 between 1996 and 1999- an increase of
107 percent. (See fig. 1.) About 75 percent of these complaints came from
the division offices in three states- California, New Jersey, and New York.
However, the number of consumer complaints is understated because the
division offices said they did not record all complaints- such as those made
by telephone. Two other division offices we contacted- in New Hampshire and
North Carolina- did not have a database in place to record consumer
complaints.

1 The division offices are responsible for receiving and recording consumer
complaints.

Figure 1: Complaints Recorded by Selected Federal Motor Carrier Safety
Administration Division Offices, January 1996- September 2000

750 Total number of complaints

659

600

520 498

450

367 318

300 150

0 1996 1997

1998 1999 2000

Calendar year

Note: Data are from 12 motor carrier administration division offices. Year
2000 data are through September.

Source: Federal Motor Carrier Safety Administration.

Motor carrier administration data from 11 of the division offices we
contacted on the nature of the complaints show that almost all- 96 percent-
of the complaints concerned lost and damaged goods, untimely deliveries of
goods, and rates and charges (e. g., overcharges or final charges that
differed from original estimates). 2 However, the motor carrier
administration's records do not indicate the exact nature of each complaint

recorded or how it was ultimately resolved. According to motor carrier
administration officials, the most egregious complaints do not involve
agents of major moving companies; most concern small companies that act as
independent movers. They said most of these complaints come from two

corridors: (1) the West Coast and (2) the New York/ New Jersey area to
Florida. Officials noted that the worst cases arise from the latter corridor

2 The Illinois Division Office recorded more details on the nature of
complaints than required in the complaint register. Because this office's
recording format was not consistent with that of the other division offices,
its data could not be included in this summary.

and involve movers who prey on senior citizens- most of whom have never
moved before and are not very “move savvy.”

Motor carrier administration officials estimated that the dollar value of
individual consumer claims against interstate moving companies has ranged
anywhere from $500 to $10,000. An official with the American

Moving and Storage Association indicated that the average amount paid on a
claim is $610 (1995 data).

Complaints Recorded The Council of Better Business Bureaus has also received
an increasing

by the Council of number of complaints against household goods carriers.
Complaints increased from 2, 970 in calendar year 1996 to 5, 097 in 1999, an
increase of Better Business about 72 percent. (See fig. 2.) These data
include both interstate and

Bureaus intrastate moves. The Senior Vice President of the Council's Dispute

Resolution Division told us that if the number of complaints against
household goods carriers keeps rising, the moving industry could go into the
top 10 most- complained- about industries in the next couple of years.
Although the Council does not have readily available information on what
types of complaints have been lodged, whether they involve interstate or
intrastate carriers, or whether they are lodged against national or

independent carriers, 3 Better Business Bureau officials in New York,
Chicago, and Los Angeles told us that most complaints involve lost or
damaged goods, untimely deliveries, or “low- balling” estimates.
While the Chicago official estimated that the complaints lodged in that
office were against an array of movers, the Los Angeles and New York
officials

estimated that the majority of the complaints received in their offices were
against smaller, locally based movers.

3 This information is in the form of paper records at the over 160 local
Bureau locations across the nation.

Figure 2: Complaints Recorded by the Council of Better Business Bureaus,
1996- 99

6,000 Number of complaints

5,097

5,000

4,922 4,000

3,736

3,000

2,970

2,000 1,000

0 1996 1997 1998 1999 Calendar year

Note: The complaints reported are for both interstate and intrastate moves.
Source: The Council of Better Business Bureaus.

Complaints and The American Moving and Storage Association also receives
informal Requests for

complaints from consumers about loss and damage, untimely service,
inadequate service, and other matters. The Association advises consumers
Arbitration Received

to file a claim with the mover but also notifies member carriers about any
by the American complaints received. The Association does not track the
number of such Moving and Storage

complaints it receives or the nature of the complaints. However, for loss
and damage claims that are not resolved to the consumer's satisfaction, the

Association Association keeps a record of how often consumers request an
arbitration

proceeding through its Dispute Settlement Program. 4 The number of requests
for such arbitration increased from 96 in 1996 to 727 in 2000. (See 4 The
Association sponsors a Certified Mover and Van Line Program for the purpose
of promoting sound principles and acceptable practices in the industry.
Members opting to join the program agree to arbitrate disputes meeting the
Association's guidelines. Additional arbitration programs are offered by
organizations including the Council of Better Business Bureaus.

fig. 3.) The Association does not keep track of whether the arbitration was
completed or how the complaints were resolved. An Association official
familiar with the arbitration program told us that it is difficult to
determine why the number of requests for arbitration has increased, noting,
however,

that the program only started in 1996.

Figure 3: Requests for Arbitration Received by the American Moving and
Storage Association, 1996- 2000

900 Number of requests

800

712 727 700

600

532

500 400

372

300 200 100

96

0 1996 1997 1998 1999 2000 Calendar year

Source: American Moving and Storage Association.

Role of States Regarding Consumer

Appendi x I II

Complaints Federal Law Limits The federal statute governing interstate
carriers' liability for loss and damage to goods (called the Carmack
Amendment) limits state law claims State Law Claims against interstate
household goods carriers. 1 Under the Carmack Against Interstate

Amendment, carriers are liable, to the person entitled to recover under a
Household Goods

receipt or bill of lading, 2 for actual loss or damage to property, but they
may Carriers

limit their liability to a declared value or other amount agreed to by the
consumer as authorized by the Surface Transportation Board. The Carmack
Amendment was enacted to impose a uniform scheme of liability that would
eliminate the uncertainty associated with conflicting state laws on
interstate shipments.

Courts have consistently held that the Carmack Amendment preempts a broad
range of state law claims relating to the loss or damage of goods in
interstate shipments. 3 Specifically, the Carmack Amendment bars

individual consumers from asserting claims that would enlarge the carrier's
responsibility for loss or affect the grounds or measure of recovery,
including those for violations of state consumer protection statutes, breach
of contract, negligence, and fraud. However, the extent of the Carmack
Amendment's preemptive effect is not as clear. Emphasizing the goal of
uniformity underlying the Carmack Amendment, some courts addressing

state law claims asserted by individual consumers have held that the
amendment essentially preempts every state law claim related to the contract
of shipment. 4 Others have suggested that the Carmack Amendment does not
preempt claims that stem from injuries separate and

1 Section 14706 of title 49, U. S. Code. 2 A bill of lading is a contract
issued to a consumer by a household goods carrier listing the goods shipped,
acknowledging their receipt, and promising delivery to the person named. 3
See Charleston & Western Carolina Ry. Co. v. Varnville Furniture Co., 237 U.
S. 597 (1915); Missouri, Kansas & Texas Ry. Co. of Texas v. Harris, 234 U.
S. 412 (1914); Adams Express Co. v. Croninger, 226 U. S. 491 (1912); Rini v.
United Van Lines, Inc., 104 F. 3d 502 (1 st Cir. 1997); Shao v. Link Cargo
(Taiwan) Ltd., 986 F. 2d 700 (4 th Cir. 1993) (and cases cited therein);
Underwriters at Lloyds of London v. North American Van Lines, 890 F. 2d 1112
(10 th Cir. 1989)

(and cases cited therein). 4 See, e. g., Moffit v. Bekins Van Lines Co., 6
F. 3d 305 (5 th Cir. 1993); Arnell v. Mayflower Transi t Inc., 968 F. Supp.
521 (D. Nev. 1997); Pietro Culotta Grapes, Ltd. v. Southern Pacific
Transportation Co., 917 F. Supp. 713 (E. D. Cal. 1996).

distinct from loss or damage, but have identified little actionable conduct.
5 Furthermore, there is some question about the states' authority under
consumer protection statutes to take enforcement action against interstate
carriers for claims unrelated to loss or damage. 6 Although at least one
state has successfully taken action against an interstate household goods
carrier

under such statutes and other states are currently pursuing such action,
officials from two states told us that they would not attempt to bring such
cases because of the Carmack Amendment's pervasive preemption of state law.

The states can provide for the regulation of intrastate household goods
carriers, and some states have decided not to regulate the household goods
moving industry. Of the 14 states we contacted, 11 regulate household goods
carriers through a state agency, such as a public utilities commission or a
department of transportation. The remaining three states (Florida, Arizona,
and Colorado) do not regulate the industry. The states that regulate
intrastate household goods carriers require them to follow regulations, such
as those to file tariffs, file proof of insurance, provide educational
material to potential consumers, maintain operating authority,

and pass examinations on state regulations to obtain authority. While all 12
state offices of the attorney general we contacted said they would bring
cases against intrastate carriers for violations of state fraud or business
fair practices laws, only 3 of the offices- in New York, Illinois, and

Pennsylvania- were pursuing intrastate household goods cases. The states'
enforcement authority includes imposing temporary restraining orders and
injunctions to halt practices, imposing monetary penalties, and revoking
carriers' authority to haul goods. For example, in three cases in which the
State of New York showed the court that the mover was performing moves
within New York without authority from the state, the 5 See, e. g., Rini v.
United Van Lines, Inc., 104 F. 3d at 506 (stating that the Carmack

Amendment would not have preempted a claim for intentional infliction of
emotional distress); Gordon v. United Van Lines, Inc., 130 F. 3d 282, 289 (7
th Cir. 1997) (holding that a claim of intentional infliction of emotional
distress was not preempted, but that the Carmack Amendment did preempt a
claim of fraudulent inducement to contract on the grounds that such a claim
was so closely related to the performance of the contract). See also Richter
v. North American Van Lines, Inc., 110 F. Supp. 2d 406, 411 (D. Md. 2000)

(explaining the logic favoring “a few state common law claims”
such as intentional infliction of emotional distress or assault by a carrier
on a consumer). 6 In response to an inquiry from a state official, the
Department of Transportation advised that there was “no real legal
precedent” regarding state enforcement actions unrelated to consumer
loss or damage.

court agreed to order that the mover's phone lines be disconnected to
prevent continued illegal business activities.

Views on State In the areas of telemarketing and fair credit reporting, the
Congress has

Enforcement of enabled the states to enforce federal statutes and
regulations. According to our discussions with FTC officials, authorizing
the states to enforce federal Federal Statutes and

statutes and regulations can result in more investigations and enforcement
Regulations actions if the states pursue cases that the Commission would
consider too local to pursue, given available investigation and enforcement
resources. The Commission allocates its investigative and law enforcement
resources to address practices that cause the greatest harm. As a result,
cases considered significant on a state or regional level may not spur the

Commission to initiate an investigation. While the states may be required to
use their enforcement resources in other areas, allowing 50 states to
enforce federal and state consumer protection statutes has an enhanced
deterrent effect not realized through FTC's enforcement alone, according to
Commission officials. Consumer advocates and household goods moving industry
representatives with whom we spoke see the states' enforcement of federal
statutes and regulations in very different ways. The industry position, as
articulated by the American Moving and Storage Association, is that
authorizing the states to enforce federal statutes and regulations will
result in “ . . . a firestorm of inconsistent, varying interpretations
of federal law that present the potential for injunctive relief, threatening
the continued

operations of legitimate movers.” Consumer advocates support an
expansion of the potential for enforcement against unscrupulous interstate
household goods carriers. Commenting on the similarities between

telemarketing and interstate moving, one state official noted that the
states are well positioned to identify the worst problems through their
established consumer- complaint- gathering function. Similarly, while the
National Association of Attorneys General does not have an official position
on state regulation in household goods transportation, it generally supports
federal legislative efforts to ensure that consumer protection laws are not
preempted and that the states have the option to enforce both federal and

state consumer protection laws in federal court. (348238) Lett er

GAO United States General Accounting Office

Page 1 GAO- 01- 318 Consumer Protection in the Moving Industry

Contents

Page 2 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 3 GAO- 01- 318 Consumer Protection in the Moving Industry United States
General Accounting Office

Washington, D. C. 20548 Page 3 GAO- 01- 318 Consumer Protection in the
Moving Industry

Page 4 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 5 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 6 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 7 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 8 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 9 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 10 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 11 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 12 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 13 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 14 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 15 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 16 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 17 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 18 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 19 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 20 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 21 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 22 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 23 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 24 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 25 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 26 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix I

Appendix I Scope and Methodology

Page 27 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix I Scope and Methodology

Page 28 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix I Scope and Methodology

Page 29 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix I Scope and Methodology

Page 30 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 31 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix II

Appendix II Complaints Recorded by Selected Federal and Industry
Organizations

Page 32 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix II Complaints Recorded by Selected Federal and Industry
Organizations

Page 33 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix II Complaints Recorded by Selected Federal and Industry
Organizations

Page 34 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix II Complaints Recorded by Selected Federal and Industry
Organizations

Page 35 GAO- 01- 318 Consumer Protection in the Moving Industry

Page 36 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix III

Appendix III Role of States Regarding Consumer Complaints

Page 37 GAO- 01- 318 Consumer Protection in the Moving Industry

Appendix III Role of States Regarding Consumer Complaints

Page 38 GAO- 01- 318 Consumer Protection in the Moving Industry

United States General Accounting Office Washington, D. C. 20548- 0001

Official Business Penalty for Private Use $300

Address Correction Requested Presorted Standard

Postage & Fees Paid GAO Permit No. GI00
*** End of document. ***