Not since the 1970s has the broker bond been raised from $10,000.
However, broker reform will soon become a reality once the president signs the new surface transportation bill into law, which was passed by both the House and the Senate on Friday, June 29.
Both the Owner-Operator Independent Drivers Association and the Transportation Intermediaries Association urged Congress to pass legislation to raise the broker bond, which also applied to freight forwarders, from the paltry $10,000 it had been for more than 30 years. OOIDA and TIA were pushing for $100,000, but were pleased to see the highway bill language raise the bond requirement to $75,000.
The provision in the bill requires brokers and freight forwarders be registered and satisfy the financial requirements outlined in the legislation, which also includes civil penalties for “unauthorized brokering.”
The provision also requires that surety providers respond to claims “on or before the 30th day following the date on which the notice was received” and to notify the U.S. Department of Transportation of surety cancellations. It also outlines enforcement and civil penalties for brokers who fall below the required amount.
OOIDA Executive Vice President Todd Spencer cited a “classic example” of why broker reform was needed in the trucking industry and why the current bond needed to be raised.
A broker named Kulwant Singh Gill, 53, of Antelope, CA, was recently sentenced to 10 years in prison after scamming more than 100 truckers, including several OOIDA members. According to court documents he used at least two dozen fraudulent brokerages over a 10-year period. Gill also engaged in a double-brokering scheme that fleeced truck drivers out of more than $400,000.
“We have some in this industry who say that no reform is needed, that everything is fine, but we know how wrong those comments are,” Spencer said.