Brokers: Are You Compliant with the New Broker Bond Requirement?
Oct. 1 has come and gone. Most $10,000 freight broker bonds have been cancelled by sureties. Don't let the "grace period" confuse you.
October 2013, TruckingInfo.com - WebXclusive
As of Oct. 1, the MAP-21 provision requiring all FMCSA registered freight brokers to provide proof of a $75,000 surety bond or trust fund is in effect. Federal law was also broadened to include freight forwarders who were not previously subject to the trust or bond requirement.
While much has been reported about the FMCSA’s 60-day phase in period, the fact remains you need a $75K bond or trust in place now in order to legally operate.
In fact, if you have brokered loads since Oct. 1, the bond must reflect the first date you operated in this capacity. Similar to insurance, surety companies may be willing to backdate a bond, but this will vary by the surety and the applying freight broker. If you are entering the industry as a new freight broker or forwarder, the date of the bond should coincide with the start of your business.
To allow for the heavy influx of electronic submissions, the FMCSA released official guidance they will allow a grace period for filing, but has clearly stated the requirement stands at Oct. 1. In other words, proof of filing with the agency is not required until Dec. 1, but the bond or trust needs to be effective Oct. 1 for current brokers and forwarders. Any broker or forwarder not in compliance as of Oct. 1 leaves themselves open to thousands in potential fines and even revocation of their authority.
Although the doors are closed at many federal agencies due to the government shutdown, the FMCSA remains at work and is accepting electronic submissions of BMC-84 and BMC-85 filings.
Now is the Time to Get Compliant
In addition to potential fines and penalties, brokers and forwarders without the $75,000 broker bond in place are in jeopardy of being left behind from a business perspective as well. Predictably, across the country carriers are requiring brokers be bonded before entering into contracts to ensure they will be paid.
Although a lawsuit has been filed to fight the bond increase, an overturn of the financial security minimum does not look promising. However, if the security required is modified in the future, bond agencies should be able to readily refund the difference in premium. Address this with your agent specifically to ensure your funds will not be locked up indefinitely if there is a reduction.
Surety bonds have become readily available since MAP-21 went into effect. Seek the assistance of an experienced bond agency; one that can help you wade through the new regulation and find the most appropriate freight broker bond program for your needs.
JW Surety Bonds is a surety bond agency offering instant online freight broker bond approvals.
September 2013: Options for the New $75,000 Freight Broker Security Requirement
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