Hearing of the Senate Commerce, Science, and Transportation Committee - Taking Consumers for a Ride: Business Practices in the Household Goods Moving Industry

Hearing

Today's hearing is about a consumer scam that takes advantage of American families at one of their most vulnerable times -- when they load all of their worldly possessions into a moving truck and move to a place where they have found a new job, a new opportunity, or a new home. Long ago, Congress recognized that a household move is a unique category of interstate commerce, a type of commerce that requires special consumer protections.

American consumers use moving companies only a few times in their lives, so we shouldn't expect them to understand the complicated rules governing interstate shipping. And even if they do their homework before they hire a moving company, consumers don't understand all of the fine print on the paperwork (the "bill of lading") they are asked to sign as their possessions are loaded on to a moving truck.

It is an ugly fact that there are some moving companies in this country that are willing to take advantage of consumers' lack of information and experience. One of our witnesses today, Reana Kovalcik, is going tell us how dishonest moving companies can turn the already stressful circumstances of a household move into a full-blown personal disaster. This Committee and others in Congress have been aware of problems in the moving industry for many years. On several occasions, we have written laws that we hoped would put an end to these abusive practices. Just a few months ago, in fact, in the surface transportation reauthorization law ("MAP-21") we adopted some important new consumer protections that Senator Lautenberg and others worked very hard to develop.

Other groups are also working to clean up the moving industry. Our witness from the Department of Transportation Inspector General's office, Mr. Timothy Barry, is going to tell us about the great work he does with law enforcement agencies across the country to track down and prosecute moving companies that defraud consumers. But let's be honest. These efforts have not succeeded in putting an end to the abuses. A new Commerce Committee staff report I released today finds that consumer complaints about overcharges and hostage situations have actually increased over the past several years. I ask unanimous consent to enter this staff report in the record of this hearing.

One of the reasons moving scams are not going away is that dishonest companies are getting better at using the Internet. Some moving brokers have figured out how to use the Internet to lure consumers into a bait and switch game. Here's how it works: Internet moving brokers sign up consumers by offering them very low, so-called "binding" estimates for their moves. But these brokers don't own any trucks. And they aren't up front with consumers about that. On the day of their moves, many consumers learn for the first time that an entirely different company will be moving their possessions. A company they've never heard of. And the sketchy companies that show up on consumers' moving days routinely jack up the price of the moves after they have loaded all of the consumers' worldly possessions in the back of their trucks.

Even though consumers have received so-called "binding" estimates, they usually agree to pay these price increases, because they feel they have little choice. When consumers don't agree to pay the additional charges, these moving companies hold the consumers' goods "hostage." They threaten consumers and say--"you will never see your things again unless you agree to pay thousands of dollars in additional charges." It's extortion.

Today, we are going to learn more about how Internet moving brokers and their moving carrier partners are causing substantial harm to consumers. These companies are not only hurting consumers. They are also damaging the reputation of the moving industry, and the vast majority of moving companies that follow the law and give the customers good service at a fair price. We need to redouble our efforts to end these abuses, whether that means improving consumer education or passing tougher laws. We need to give our regulators and law enforcement agencies more authority and resources to track down these companies and put them out of business.

And this Committee will keep doing our part. We will continue working to improve federal policy. And when we find information indicating potentially criminal activities by these companies, we will share it with the Department of Justice, the DOT Inspector General, or any other appropriate authority. These abuses have to end.

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