Consumer Protection: Federal Actions Are Needed to Improve Oversight of the Household Goods Moving Industry
Published: 2001-03-05T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: 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 contends 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 preventive 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.

section_title: Letter
paragraphs: 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.)
subsections: section_title: Background
paragraphs: 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. 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  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. 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.
section_title: Information on the Nature and Extent of Problems Is Limited
paragraphs: Data weaknesses do not allow us to assess the nature and extent of the  problems consumers have had nationwide with various aspects of the  interstate moving industry since 1996. One reason is that the government  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. 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.
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. 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. 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.
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 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. Such requests submitted to the American Moving and  Storage Association 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.)
section_title: Consumers Have Primary Responsibility for Preventing and Resolving Problems; Government Has a Broader Oversight and Enforcement Role
paragraphs: To resolve individual disputes over interstate shipments of household  goods, consumers are expected to avail themselves of self-help  mechanisms, such as neutral arbitration. Under the ICC Termination Act of  1995, the Department of Transportation is authorized to conduct oversight  and provide enforcement activities, among other things, to protect these  consumers.
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. 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  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, 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.)
section_title: The Department of Transportation Has Done Little to Oversee the Household Goods Moving Industry
paragraphs: Since the Department assumed authority for the oversight and enforcement  of the household goods moving industry 5 years ago, its activities in all  areas—consumer education, oversight, compliance, and enforcement— have been minimal. According to Department officials, no more than two  staff positions were transferred from ICC for household-goods-related  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.
subsections: section_title: Consumer Education Activities Have Been Minimal
paragraphs: Education helps consumers understand how they can make the choices  that will lead to more successful interstate moves. The Department has not  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 Department- developed “17 most frequently asked questions” document about moving  on the agency’s Internet Web site. The rights and responsibilities booklet  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. 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  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.  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  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.
section_title: The Department Has Undertaken Little Industry Oversight
paragraphs: Oversight efforts that would help the Department understand the industry  and shape its enforcement strategy have been minimal. The motor carrier  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. For example, one office recorded only complaints made in  writing and ignored complaints made over the telephone, even though the  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.
section_title: The Department Does Not Know the Extent to Which It Has Examined Carriers’ Compliance With Household Goods Rules
paragraphs: Agency officials could not tell us how many of the nearly 500 compliance  reviews of carriers that transport household goods conducted since 1996  involved ensuring compliance with consumer protection requirements,  such as the one for carriers to establish accessible and fair arbitration  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.
section_title: The Department Has Not Determined Whether Its Level of Enforcement Is Appropriate
paragraphs: The Department has not determined whether it is carrying out the  appropriate level of enforcement activity with respect to households goods  carriers relative to the other carriers it regulates. Departmental data  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.
section_title: The Motor Carrier Administration’s Plans Lack Specificity
paragraphs: Only recently has the motor carrier administration decided that increased  efforts are needed. As a result, in December 2000, it approved an outline of  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 toll- free 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.
section_title: Issues Associated With an Expanded State Role in the Regulation of Interstate Household Goods Carriers
paragraphs: Consumer protections have the potential to be enhanced by expanding the  states’ role in the regulation of interstate household goods carriers. The  Congress has already expanded state authority in certain other areas of  commerce, including telemarketing and fair credit reporting, in which the  Congress has recognized that the states can contribute to addressing  abusive business practices that extend beyond their borders. As in these  areas, the states could be authorized to enforce federal statutes and  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.
subsections: section_title: States Have Enforcement Authority in the Telemarketing and Fair Credit Reporting Industries
paragraphs: The Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994  required the Federal Trade Commission (FTC) to adopt rules prohibiting  deceptive and abusive telemarketing practices and authorized the states to  take enforcement action against those engaging in patterns or practices of  telemarketing that violate those rules. 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.
section_title: Industry Believes That State Enforcement Is Inadvisable
paragraphs: The industry position, as articulated by the American Moving and Storage  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.
section_title: The Carmack Amendment Limits Claims Under State Law
paragraphs: Consumer advocates and state officials we contacted also advocate  changes to the Carmack Amendment, a federal statute that preempts a  broad range of state law remedies in connection with loss and damage in  interstate shipments. 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  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.
section_title: Conclusions
paragraphs: 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.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of Transportation direct the  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.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Department of Transportation with a draft of this report  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.
section_title: Scope and Methodology
paragraphs: 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.
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  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.
subsections: section_title: Organizations Contacted
paragraphs: Aviation Consumer Protection Division Federal Highway Administration Federal Motor Carrier Safety Administration Federal Trade Commission Surface Transportation Board Office of the Attorney General  Corporation Commission Department of Commerce Department of Transportation Office of the Attorney General  Public Utility Commission Office of the Attorney General Department of Transportation Public Utilities Commission Office of the Attorney General Department of Agriculture and Consumer Services Office of the Attorney General Governor’s Office of Consumer Affairs Public Service Commission Office of the Attorney General Commerce Commission Office of the Attorney General Department of Transportation Office of the Attorney General Utilities Commission Office of the Attorney General Department of Safety Department of Law and Public Safety Division of Consumer Affairs Office of the Attorney General Department of Transportation Office of the Attorney General Public Utilities Commission Office of the Attorney General Public Utility Commission Office of the Attorney General Department of Transportation 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 American Arbitration Association Fulcrum Institute Dispute Resolution Clinic Interstate Dispute Resolution Greenmount Moving and Storage, Inc.
section_title: Complaints Recorded by Selected Federal and Industry Organizations
subsections: section_title: Complaints Recorded by the Federal Motor Carrier Safety Administration
paragraphs: The motor carrier administration does not centrally compile information  on the number or nature of the consumer complaints it receives about  interstate household goods carriers. However, motor carrier administration  officials estimated that the agency’s division offices receive between 3,000  and 4,000 complaint calls each year about interstate household goods  carriers. 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.
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). 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  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).
section_title: Complaints Recorded by the Council of Better Business Bureaus
paragraphs: The Council of Better Business Bureaus has also received an increasing  number of complaints against household goods carriers. Complaints  increased from 2,970 in calendar year 1996 to 5,097 in 1999, an increase of  about 72 percent. (See fig. 2.) These data include both interstate and  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, 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.
section_title: Complaints and Requests for Arbitration Received by the American Moving and Storage Association
paragraphs: The American Moving and Storage Association also receives informal  complaints from consumers about loss and damage, untimely service,  inadequate service, and other matters. The Association advises consumers  to file a claim with the mover but also notifies member carriers about any  complaints received. The Association does not track the number of such  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 keeps a record of how often consumers request an arbitration  proceeding through its Dispute Settlement Program. The number of  requests for such arbitration increased from 96 in 1996 to 727 in 2000. (See  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.
section_title: Role of States Regarding Consumer Complaints
subsections: section_title: Federal Law Limits State Law Claims Against Interstate Household Goods Carriers
paragraphs: The federal statute governing interstate carriers’ liability for loss and  damage to goods (called the Carmack Amendment) limits state law claims  against interstate household goods carriers. Under the Carmack  Amendment, carriers are liable, to the person entitled to recover under a  receipt or bill of lading, for actual loss or damage to property, but they may  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. 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. Others have suggested that the Carmack  Amendment does not preempt claims that stem from injuries separate and distinct from loss or damage, but have identified little actionable conduct.  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.  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  court agreed to order that the mover’s phone lines be disconnected to  prevent continued illegal business activities.
section_title: Views on State Enforcement of Federal Statutes and Regulations
paragraphs: In the areas of telemarketing and fair credit reporting, the Congress has  enabled the states to enforce federal statutes and regulations. According to  our discussions with FTC officials, authorizing the states to enforce federal  statutes and regulations can result in more investigations and enforcement  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.