On Thursday, November 16, the FMCSA published a ruling called Broker and Freight Forwarder Financial Responsibility. The ruling marks a big win for carriers who, all too often, are victimized by brokers who are unwilling or unable to pay their debts.

We’ll explain what the ruling says and why it’s particularly beneficial for owner-operators and small fleet managers.

First, what is a broker surety bond?

Before we get into the ruling, it’s important to understand that brokers are already required to have a $75,000 surety bond or trust fund agreement on file with the FMCSA. This requirement is designed to protect carriers from non-payment.

If a broker chooses to withhold payment from a carrier, the carrier can submit a claim on the bond to receive payment.

However, there isn’t any visibility about the status of brokers’ bonds. In practice, the only way you might find out that a carrier didn’t get paid for a load and had to file a claim was if they told you about it directly or wrote about it on social media.

In fact, in the ruling itself, the FMCSA quoted an estimate that about 1.3% of brokers (429 in 2022) “will experience a drawdown on their surety bond or trust fund within a given year”.

Of those brokers, 18% will receive total claims amounting to more than $75,000. And when claims add up to more than $75,000, they end up in court, resulting in lengthy and costly legal proceedings for carriers.

Like most problems in the trucking industry, this one hits small fleets and owner-operators the hardest. If you’re hustling on the spot market, you don’t have the time and money bigger carriers spend on collections and legal battles with brokers.

This is the problem the FMCSA is trying to solve with the new ruling.

So, what does the ruling say?

The final rule on “Broker and Freight Forwarder Financial Responsibility” amends the rules about the financial responsibilities of freight forwarders and brokers in five areas.

We don’t need to go into detail about every one of these areas, but here’s a quick summary in plain English. (To read the full ruling, find it here on the FMCSA website.)

Assets Readily Available

The law (Moving Ahead for Progress in the 21st Century Act, or MAP-21) says that trust funds (surety bonds) for brokers and freight forwarders must have assets that can be used to pay claims quickly, without relying on personal guarantees or collecting owed money.

The ruling defines what types of assets are acceptable for these trust funds. They want assets that are stable in value and can be turned into cash within a week if needed to cover a payment.

This is good news for carriers because it ensures brokers’ bonds are liquid enough to pay carriers’ claims quickly.

Compliance date: January 16, 2026

Immediate Suspension of Broker/Freight Forwarder Operating Authority

This is the one we’re most excited about!

The $75,000 surety bond brokers are required to have can dip below $75,000 if they take out money, don’t respond to a valid claim notice from an insurance or trust company, or if a claim turns into a court order.

Right now, when this happens, a broker can continue to operate while their surety bond decreases in value.

According to the new ruling, however, if a broker or freight forwarder’s bond drops below $75,000, the FMCSA can suspend their operating authority.

If the bond goes below $75,000 and the broker or freight forwarder doesn’t add more money within a week after being told by FMCSA, the FMCSA will send a notice saying their operating permission is suspended.

The ruling also says that the FMCSA plans to use a new system (the Unified Registration System) to get information from insurance companies, trustees, brokers, and freight forwarders.

Compliance date: January 16, 2025

Surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency

According to the ruling, if a broker or freight forwarder is in financial trouble, the insurance or trust company must tell the FMCSA and cancel the financial responsibility. The FMCSA will then announce the failure in its official register.

If the broker or freight forwarder later fixes the problem and the insurance or trust is reinstated, the FMCSA will remove the suspension notice and update its register.

Similarly to the section above, this part of the ruling is great for carriers. It holds financial institutions that provide bonds to brokers accountable for improving transparency.

Compliance date: January 16, 2025

Enforcement Authority

With section rule, the FMCSA is putting into action a requirement from MAP–21 that allows them to stop a surety or trust fund provider’s authority in specific situations. The government will first let the provider know about the suspension and give them 30 days to respond before making a final decision.

The FMCSA is also adding fines and a mandatory suspension for breaking these new rules.

Again, this holds financial institutions accountable for ensuring that brokers’ bonds meet regulatory requirements.

Compliance date: January 16, 2025

Entities Eligible to Provide Trust Funds for BMC-85 Filings

With this new rule, the FMCSA is getting stricter about the types of financial institutions that can provide surety bonds to brokers. Loan and finance companies can’t offer BMC–85 trusts (bonds) anymore unless they get certified to operate as a different kind of institution.

Compliance date: January 16, 2026

A Win For Small Carriers And Owner-Operators

Needless to say, this FMCSA ruling is a game-changer for small carriers. It addresses the challenges they face with brokers who don’t pay up, offering more transparency and quicker resolutions.

These new rules will also make it much harder for unscrupulous brokers to create and sustain “overnight” operating authorities to commit fraud.

While we would like these regulations to become effective immediately, it will take the government some time to get everyone to meet these new rules.

More can be done to protect carriers from fraud and enforce broker transparency. But, as OOIDA president Todd Spencer said, it’s a step in the right direction.
If you’re a small carrier, staying informed about future FMCSA rulings is crucial. Keep an eye on their website for updates.