What Can a Carrier Do When a Freight Broker Doesn’t Pay?

Who is liable for payment: the broker on the rate con or the shipper?

Start with the broker. In plain terms, the rate con and the broker-carrier agreement are the broker’s promise to pay the carrier’s rate, so the statement, the demand and any bond claim run against the broker named on them. Check that name and MC number against the company now not paying before writing to anyone.

Whether the shipper or the receiver can be made to pay instead is a harder question. Federal law has a section on liability for payment of rates among the shipper, the consignee and the beneficial owner (49 U.S.C. §13706), and the bill of lading may carry its own terms. Whether either reaches a shipper that already paid its broker turns on the documents, the facts and case law this guide does not cover; bring it to a transportation attorney with the rate con, bill of lading and agreement in hand. If the agreement restricts contact with the broker’s customers, read that clause with the attorney before anyone calls the shipper.

One fact helps either way: did the shipper pay the broker? Under 49 CFR 371.3 a broker keeps a record of each transaction for three years, including the compensation it received “and the name of the payer,” and “the amount of any freight charges collected by the broker and the date of payment to the carrier.” Paragraph (c) gives “each party to a brokered transaction” the right to review that record. Check the agreement for a waiver of that right first; the detention guide linked below covers the waiver and FMCSA’s pending proposal on these records.

If the company that booked the load was not the broker it claimed to be, the problem is fraud, not slow pay. FMCSA’s guidance tells a carrier that hauled a fraudulently brokered load to “identify who is paying the freight on the load,” notes the real broker may also be a victim, and says: “Holding loads hostage until you get paid is illegal.”

What to send first, in order, and when late fees apply

A bond claim is only as good as the record behind it, so every step below is in writing and dated. One person owns the sequence for each broker, by name.

• The day terms run out: rule out a packet problem. Was every document the rate con requires sent, to the address it names, with the broker’s load number on the invoice? Then call payables and ask: received, approved, and scheduled to pay on what date? Write the answer, the name and the date on the load.
• If the load was factored, the factor holds the invoice and is collecting it. The factoring guide covers who the broker must pay once it has notice of the assignment, and what a recourse agreement sends back to the carrier. Agree with the factor who sends what, so the broker does not hear two different numbers.
• After a missed promise: a written statement of account to payables, copying whoever booked the load. One line per open load: load number, delivery date, invoice date, amount, terms, days past terms.
• No payment and no date: a demand letter naming the loads and amounts, quoting the rate con’s payment terms, attaching the packet, setting a pay-by date, and saying what follows: a bond claim, an FMCSA complaint where the facts fit, or a court filing. Send it to the agreement’s notice address, by a method that shows delivery.
• From the first missed promise: no new loads for that broker without the owner’s yes, and every reply logged with who, when and what was promised.

Late fees apply when the broker agreed to them. If the rate con or the agreement has a late-payment or interest clause, bill it exactly as written, as its own line on the statement. If neither does, a fee added to an invoice after delivery was not part of what the broker accepted when it booked the load; whether it can be collected, and any state interest statutes or usury limits, are questions for an attorney. A separate guide quotes four state statutes on interest and why the contract comes first. For the next load, put late-payment terms in the carrier’s own terms, accepted before dispatch.

What an FMCSA complaint does, and when to file one

An FMCSA complaint feeds the regulator’s decisions about whom to investigate. FMCSA says it uses complaints, “along with other sources, to make decisions about which companies to investigate”; a complaint “will be maintained in the company’s file as part of its permanent record”; and filing does not affect the right to go to court: “One action has no effect upon the other.” FMCSA tells the filer whether the complaint is actionable. Nothing on those pages describes recovering money for the filer.

Nonpayment alone is not among FMCSA’s examples. Its Complaint Center says property broker complaints within its jurisdiction “are related to operating authority and/or financial responsibility issues”: misrepresenting operations to a carrier, improper rebating or compensation, working under a name other than the registered one, operating without required authority, insurance or registration, or a broker that “did not maintain transaction records or financial accounts with the required information.” File when the facts fit, for example a broker still booking loads after its bond was cancelled, or a company with no broker authority at all.

To file: complaint.fmcsa.dot.gov or 1-888-DOT-SAFT (1-888-368-7238). Choose industry professional, then property broker, find the company by name or USDOT number, upload the rate con, bill of lading, invoices and demands, and save the case number.

Bond claim, small claims or an attorney: which one, and when

Every registered broker must keep $75,000 as a surety bond (Form BMC-84) or a trust fund (Form BMC-85), which under 49 CFR 387.307 pays shippers or motor carriers “if the broker fails to carry out its contracts, agreements, or arrangements for the supplying of transportation by authorized motor carriers.” A claim goes to the surety or trustee named on the broker’s FMCSA record, not to FMCSA, and the one $75,000 is shared by every carrier the broker owes. It is the step to take when the broker has stopped answering, refuses without a reason the rate con supports, or shows a financial failure notice in the FMCSA Register. Where to find the surety, the claim packet, the clocks in the current rule and what happens when claims exceed the bond are in the guide to filing a claim against a freight broker’s bond. The other two routes:

• Small claims court, when the amount fits the state’s limit and the broker can be reached there. Limits, and whether a business may file, are set state by state. A broker must designate an agent for court papers (49 U.S.C. §13304) in each state “in which its offices are located or in which contracts are written,” per FMCSA’s Motus notice; whether a local court can hear the case is for the clerk or an attorney.
• An attorney, when the amount is over that limit, the broker disputes the charges, the shipper question is on the table, the bond is spent or contested, or the broker filed for bankruptcy, which 49 CFR 387.307 says “does not constitute financial failure or insolvency” for the bond rule.

Watch the calendar. Under 49 U.S.C. §14705(a), a carrier “must begin a civil action to recover charges” within 18 months after the claim accrues, which subsection (g) sets “on delivery or tender of delivery.” Whether that period governs a claim against a broker or its bond is for the attorney; get that answer well before 18 months from delivery, not near the end of it. This explains the rules; it is not legal advice.

How to stop booking with slow-paying brokers

A broker about to stop paying can show it first in the carrier’s own records: days to pay that stretch, promised dates that slip, partial payments. Read those signs weekly, before dispatch books the next load.

• The open broker invoice list, same day each week: broker, load, delivery and invoice dates, terms, days past terms, promised date, next step, and one owner by name.
• Days to pay by broker, from the deposit or the factor’s statement: the 90-day average, the longest open invoice, and any short-pays.
• Rules written in advance: no new loads for a broker past terms by more than a number of days the owner sets; a cap on any one broker’s open balance; a lower cap on a new broker’s first loads.
• A check before the first load: broker authority active on its FMCSA record, a BMC-84 or BMC-85 on file, no financial failure notice in the FMCSA Register, and a phone number matching the one in SAFER, which FMCSA’s fraud guidance says to call if the numbers differ.
• If the fleet factors, one question before booking a new broker: will the factor buy its invoices? A no is information.

Then price what is left. A broker that pays in 50 days is not paying the same rate as one that pays in 20, and what the days until the money arrives cost belongs in the rate, or in the decision to haul for that broker at all.

When not to hire anyone for this, and where the Review fits

One broker late on one invoice is a phone call, a letter and, if needed, a bond claim or an attorney. It needs no consultant; this guide is the checklist. If the broker has disappeared or filed for bankruptcy, call a transportation attorney, not us.

The Review fits a different picture: nobody can say on a Monday which brokers owe what and for how long, promised dates live in someone’s phone, and factoring statements, short-pays and open invoices are never set side by side. The Revenue Review counts this under the Invoice → Payment hand-off. From read-only exports of the TMS, the factoring statements and the bank, it lists every open broker invoice with days past terms, measures days to pay by broker, and flags loads nearing the dates above. It files no claims and gives no legal advice. It takes two weeks and ends in a written report the company keeps.

The next step is a free 20-minute call, where we say whether the weekly list above, kept in-house, already covers it, which may well be the honest answer.