Brokers-Record-Keeping Requirements- Confidentially:
1. I spoke with a potential client concerned about whether to use QuickBooks on-line or to hire an accounting firm to set up records for all transactions. This was the question, and my response.
Q) Title 49, chapter 111, Sec.9, chapter 111, Sec.371.3 indicates a broker’s requirement to maintain records on each transactions, and that “Each party to brokered transaction has the right to review the Record”. I am considering a start “broker service. My intention is to be completely honest with my clients on all subjects, including this requirement. My question is regarding service providers I choose, and use this information to help my company grow. Do I have any protections or legal recourse in this event?
I don’t think many shippers are aware of this right, and have never heard of carriers taking advantage of it.
A) You are correct in observing all the FMCSA, (formerly ICC) regulations governing these requirements for property brokers, which include record-keeping . If one of your concerns is “back solicitation” by your carriers, the best way to deal with this is to include a non-compete agreement as a restriction in a written-broker-carrier agreement.
TFS generally recommend brokering clients that they have written agreements with, this include all of their shippers and carriers. You should consult an experienced transportation attorney, or if you need assistance in this matter please contact TFS for further guidance.
2. Another issue from a carrier was concerning being a lead provider and it’s consequence.
Q:) In general, would a person who provided leads to the freight forwarder or moving companies be considered a broker? Would there be any federal /state regulations regarding the activity?
A:) The term “broker” is defined in the Interstate Commerce Act as a person, other than a motor carrier or forwarder, you would be consider a broker or an employee or agent of a motor carrier that acts as principal of providing or arranging for transportation by motor carrier for compensation under “49 U.S.C. Sections 13102 (2).
If you are acting as an agent of a carrier or forwarder, and are paid a fee or commission by the carrier or forwarder, you would not be considered a Broker. If you arrange for transportation as a middleman you are compensated by the difference paid by a shipper, and the amount paid to the carrier or forwarder you would be considered a broker. Brokers are required to be registered with the FMCSA (formerly the ICC and/or FHWA).
