Federal Motor Carrier Safety Administration Office of Registration Director Ken Riddle went on a podcast on Monday to give an update on the agency’s fight against freight fraud, which has led a 600% rise in cargo theft, countless millions lost to double brokering and load payment theft, and very little in the way of punishment for bad actors.
On “The Bodacious Cowboy Podcast,” Riddle joined hosts in former shipper and transportation provider Jeff Dickinson and Kristy Knichel, president of broker Knichel Logistics, as well as a special guest in Dale Prax, a well-known freight fraud vigilante and expedited broker. The talk centered on actual progress on updates to FMCSA’s registration system.
Already, the agency has begun moving on invalid registrations and has hired a new five-person Registration Fraud team carriers can contact in the event of identity theft. Further efforts from the agency include a new partnership for identity verification that regulators will soon use to verify the real identity of new applicants for authority. As for regulators’ plans to use business verification tools to vet every existing motor carrier and broker entity already registered in its database, contracts with another third party service for that purpose are in the works.
Truckers and brokers’ complaints and criticism pushed FMCSA to act
Dale Prax has long criticized FMCSA for not enforcing regulations barring anyone from registering without a valid principal place of business [PPOB]. Think of P.O. Box addresses, UPS stores, so-called “virtual offices,” anything else that isn’t a real, physical address capable of housing a fleet or broker’s operational and safety paperwork.
[Related: FMCSA’s confusing excuse for not enforcing its own rules]
“Not everyone” who lists a P.O. Box on FMCSA registration forms “is a criminal,” said Prax, “but 99% of criminals work out of a PPOB that’s a P.O. Box” or something similar.
Prax set up an automated tool that protests to FMCSA every time someone registers an entity there with a bad address, and had long heard crickets in response as the authority applications nearly always were then granted. Prax confronted FMCSA about this lapse at the Mid-America Trucking Show back in March, during a somewhat scathing talk he gave at the time.
But now, Prax said he’s seen a “massive improvement” from FMCSA.
“You made a promise to me that you were going to take that back to the agency and work on it even harder than you have been,” Prax said to Riddle. “During that time, we were doing about 45 bad PPOBs [a week] getting accepted,” he added. “We ran the report again.” Last week, Prax noted, there were just three that he found. “When you made a promise, you kept it,” he added.
Riddle thanked Prax and the hosts for their input, noting FMCSA relies closely on industry perspectives. “We don’t like to work in a vacuum from a building from Washington, D.C.,” he said. “We were aware we had PPOB issue,” he added, saying then that Prax’s insights “helped us to get to the bottom of it and improve our system’s ability to detect bad PPOBs.”
Prax recently published a letter from FMCSA denying an applicant’s DOT registration due to a bad PPOB, and here FMCSA has confirmed they’re already taking steps to block bad actors. “We heard loud and clear from industry they needed our help with fraud,” said Riddle. “Fraud is coming at the industry from every angle.” Riddle mentioned electronic logging devices, insurance policies, motor carrier and broker registrations and more. “It’s rampant. … It’s at an all-time high.”
Calls from the trucking industry, Riddle said, pushed “fraud prevention to the forefront” of a planned IT system modernization effort, likewise in “everything we do” building a new registration system for motor carriers and brokers. Riddle said FMCSA is “well down the road on building the new system,” which he continues to hope will be operational in the first half of 2025.
“One of the main changes we think will significantly help the industry,” Riddle said, is a partnership with Ideamia, an identity verification company that already works with the Transportation Security Administration clearing passengers for shorter security lines. “With a new modernized system, our IT department can better track IP addresses” to see who is accessing FMCSA’s system.
[Related: House committee moves on bill to help FMCSA attack fraud]
The new identity verification system, which Riddle promised no later than the first half of 2025, will show applicants a QR code that sends them to begin a session with Ideamia. The session starts by requiring a driver’s license upload — or one of four other forms of identification, including a passport, resident card or ID card. The Ideamia tool has “ways to detect fraudulent credentials,” he said.
Next, the applicant will need to upload a “selfie of yourself,” Riddle said, that the software will then “match to the ID card.” Ultimately, FMCSA won’t retain the data scanned by Ideamia, which will send a simple “pass or fail” message to the agency on identity verification.
Prax added that Ideamia’s system can determine the location a picture was taken in by a margin of error as little as 25 feet, offering a way for FMCSA to know whether an applicant is in “Pittsburg or Pakistan,” said Prax.
FMCSA’s still in the process of acquiring a contract for business verification, Riddle said, designed to make sure the authority applicant is “authorized to register the business they’re registering. … Most businesses need to be registered with Secretary of State.” Yet that’s not 100% the case for many sole proprietor owner-operators and other businesses. Riddle felt thorough personal ID verification sidesteps that issue. “We’re going to verify their ID, and they are the business. We think those two things together will go a long way to ensure only valid registrants.”
Riddle said FMCSA has “also taken steps to stand up a Registration Fraud Team.” FMCSA often cites lack of staff as a constraint in enforcing regulations, but Riddle said he “got permission to hire five people that are solely focused on registration-related fraud.” The team’s “main effort right now is to help customers and make them whole again” after incidents of identity theft.
That means any victim of fraud who had their information changed in their account, or someone falsely using their credentials, can expect the team to change the information back and investigate how the breach happened.
Riddle said the team is mostly internal, and gave information on how to contact them: “We need to know if you’ve been a victim of fraud, so if you contact FMCSA’s contact center” at 800-832-5660, “your incident will get elevated up to the fraud team.”
Clean-up of the database coming
Not only should FMCSA registration protocol changes stem the flow of bad actors registering anew, this screening process is coming to a DOT number near you in the near future.
“We want to run all existing registrants through the process to make sure we don’t have any bad actors already in our system,” said Riddle, reiterating a point he made when he announced the coming changes at MATS in March.
This total audit will include carriers, brokers, freight forwarders, BOC-3s, and everyone else who uses the system, he said.
“Problems will disappear left and right with just that,” Prax felt about the ID and business verification two-step applied to every single registered entity.
It remains unclear exactly what registered motor carriers, including owners with authority, can expect from that process, likewise an exact timeline for it, yet Riddle has noted in past he hoped the agency could get it done this year, prior to launching its new system. The agency is hosting a stakeholder session October 21 in part to solicit viewpoint from carriers, brokers and other registrants about what they want from a user-experience standpoint in a new registration system.
In that audit of all system users, it seems FMCSA might have the last word with the “WTFFMCSA” crowd, a group of registered brokers and carriers who seemed to mock FMCSA’s old lax system by registering hundreds of carriers at a single physical address and using the email address “[email protected].”
[Related: ‘WTFFMCSA’: Carriers mocking the agency through its own registration system?]
Finally, Riddle reiterated FMCSA’s plans to do away with MC numbers. Registered entities will only have a USDOT number, but that number will have a “suffix” that shows if it’s registered to move passengers or freight — or whatever other distinction. The suffix will not be a “marking requirement on the truck,” said Riddle.
The modernization effort also “expands our safety jurisdiction over some carriers that we didn’t have before,” said Riddle, including private hazmat and exempt-for-hire carriers. “Right now, private hazmat and exempt-for-hire don’t fall under our safety regulation. Under the new system, we will issue them a safety registration, which means we now have safety jurisdiction over them. They’ll have to file insurance and BOC-3 process agents, whereas they didn’t before.”