Taylor Nelson attends FMCSA Event
On May 29, 2024, the Federal Motor Carrier Safety Administration (“FMCSA”) held its second Registration Modernization Stakeholder Day where industry stakeholders, such as Taylor Nelson, learned about the FMCSA’s plans for creating a new, more user-friendly registration system (“Registration System”) and provided insight and feedback directly to the FCMSA.
The FMCSA is building a new Registration System to take advantage of new technology and operating design, add fraud prevention and security measures, simplify the complex application process, improve data quality and safety, and improve interoperability between the FMCSA, State, and industry systems. Although the FCMSA promises many positive changes with the implementation of the new system, some of the most notable changes include enhanced security requirements, the elimination of paper applications, and requiring identity proofing for all registrants and third parties.
Fraud has increased exponentially in the past few years, and the FCMSA has iterated its commitment to combatting fraud by increasing transparency and verifying registrant information. Although there are many new rules and changes under consideration, we have highlighted the following key expected changes:
- An entity’s USDOT number will be the sole operations identifier and suffixes will be added so an entity’s specific operating authorities can be quickly identified;
- The new Registration System will trigger immediate suspension of Broker or Freight Forwarder Operating Authority if a Broker’s or Freight Forwarder’s surety bond or trust fund falls below $75,000, which will help protect those who do business with Brokers and Freight Forwarders;
- Each entity’s insurance information (including amounts) will be publicly available to improve transparency between shippers, brokers, and carriers;
- The new Registration System will incorporate a new and improved principal place of business verification and provide a mechanism for BOC-3 blanket companies to notify FMCSA of a change in process agent representation directly from the BOC-3’s account; and
- Third parties will no longer be able to register on behalf of a registrant. The registrant themselves must fill out all the identity and business information so that the registrant’s identity can be verified. Only after this information is filled out can the registrant designate third parties to complete the remaining information. The third party must also go through their own identity verification. This change is intended to help prevent fraudulent account activity and protect registrants.
Before the Registration System is rolled out to the public, the FCMSA plans to run all existing registrants through the new system to get rid of any bad actors. BOC-3 companies will also be reviewed to determine whether they are still active. Unfortunately, in listening to many of the proposals, it seems very few go to the heart of the matter…preventing fraud by bad actors. In advising my clients in best practices to prevent fraud and to respond to fraudulent occurrences, I have never heard any express concerns over cancelled bonds or whether a USDOT or MC number is best. Further, knowing the actual value of a motor carrier’s auto liability policy is unlikely to deter or prevent any cargo theft, fraudulent or fictitious pickups, or an unlawful brokering freight payment scheme. Having the FMCSA enforce regulations and create systems to catch and prevent PO Box registrations and fraudulent identification of industry participant owners would be a welcomed advancement if done properly. Regardless of what the FMCSA does or does not do following this announcement, it is important that all shippers, brokers, carriers, and freight forwarders create and implement detailed policies and procedures to limit and prevent third parties from causing disruptions to their operations. Taylor Nelson can assist with developing and implementing such polices and procedures.
Although all these changes are all still under consideration, the FCMSA is hoping its first release of the updated system will be rolled out in early 2025 with rulemaking taking place thereafter. Prior to the Registration System’s release, identity proofing will be implemented to avoid overwhelming the platform. For anyone who is interested in trying out the new system before the formal rollout, the FCMSA is hoping to have an in-person “test run” at the next FMCSA Registration Modernization Stakeholder Day. If you would like to stay informed on the Registration System, you can subscribe to the FCMSA’s news updates here.
If you would like to speak with one of our transportation lawyers about how the changes to the registration system may impact your business, please contact us.