Sept. 20 (Bloomberg) -- U.S. consumers are increasingly victims of moving and storage fraud, with their furniture and valuables held hostage by companies demanding thousands of dollars in extra fees, a Senate investigation found.
Internet-based moving brokers and carriers often provide a price quote without visiting a home to estimate a move’s real cost, and later demand exorbitant markups before delivering the goods, according to a Senate Commerce Committee report released in connection with a hearing today in Washington.
“These sketchy companies routinely jack up the price after they load customers’ goods onto their trucks,” Commerce Committee Chairman Jay Rockefeller, a West Virginia Democrat, said. “It’s extortion.”
The instances identified by the committee investigation amount to criminal activity, Rockefeller said. “It’s when people go to jail that the signal gets delivered to the industry,” he said.
Probes by the U.S. Department of Transportation’s inspector general “have shown that the dishonest broker, with full knowledge, provides customers a low-ball estimate knowing the carrier will grossly inflate it once the goods are loaded,” Timothy Barry, principal assistant inspector general for investigations, said in written testimony.
In one example described at the hearing, an elderly couple moving from Colorado to Nevada was provided a $1,340 estimate, then charged $7,400. While the couple’s goods were being held, the customer asked the company to release his wife’s wheelchair.
The mover refused to give back the wheelchair or any other property, Barry said. The company owner was later found to be using the couple’s computer and flat-screen television, he said.
Reana Kovalcik, a 28-year-old New York City resident, told lawmakers that an Internet broker’s $898 price mushroomed to $2,434 after her move from Chicago. After months of negotiation, she paid the extra fees in return for a key to a storage unit in New Jersey. Sentimental items were gone, and about $10,000 worth of her goods were stolen, missing or damaged, she said.
The inspector general has 14 open investigations involving companies operating under 108 names, Barry said. That covers more than 3,800 potential victims and about $1.9 million in damages, he said.
Lack of adequate oversight is one factor in the growing number of abuses, according to the committee. Until 1995, moving was regulated by the Interstate Commerce Commission, which no longer exists. Today, it’s overseen by the Federal Motor Carrier Safety Administration, where the main mission is to reduce fatalities from truck and bus crashes.
The ICC had more than 100 inspectors dedicated to household-goods movers, while the FMCSA has 10, said Linda Bauer Darr, president and chief executive officer of the American Moving and Storage Association, which unsuccessfully sought more money for investigation and enforcement in the two-year highway bill Congress passed earlier this year.
There are 7,000 companies operating in the industry, completing about 800,000 moves a year, said Darr, whose group represents companies including Allied Van Lines Inc. and United Van Lines LLC.
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