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New Rules Urged to Rein In Rogue Interstate Movers

Commerce: Fraud in $7-billion-a-year industry has worsened since federal regulatory panel was abolished.

May 10, 1999|DAVAN MAHARAJ | TIMES STAFF WRITER

Fly-by-night interstate moving companies--emboldened by a vacuum in federal law enforcement--are proliferating rapidly across the nation, many profiting from practices that effectively hold consumers' goods hostage until they pay the ransoms.

"It's out of control," said Larry Kaplan, president of the National Assn. of Consumer Agency Administrators. "The rogue movers have long figured out that there is no federal cop on the beat."

Each year, 20 million American households move, about 2 million across state lines. By far, most movers are legitimate, but the growing number of swindlers is giving the entire industry a black eye, industry leaders say.

Consumer fraud in the $7-billion-a-year moving industry has grown worse since the Interstate Commerce Commission was abolished by Congress in 1995 as part of an effort to downsize the government and balance the federal budget. Consumers now have nowhere to take complaints, allowing unscrupulous companies to go unpunished for years. No agency even keeps statistics on how many consumers lose or suffer damage to their possessions.

Since the ICC's demise, many consumers also say reputable moving firms have been less responsive to their complaints. "The incentive to be helpful has been diminished," Kaplan said. Industry officials counter that their customer service policies haven't changed since the ICC days.

The growing problem is a byproduct of Washington's highly trumpeted effort to create a federal budget surplus, which last year amounted to $70 billion.

For decades, the ICC--which regulated rail and highway traffic--helped resolve consumers' grievances with interstate movers. But the agency, which was often criticized as a weak regulator, with just 30 staffers assigned to deal with moving complaints, was one of many federal operations that were excised to help balance the budget.

When Congress and the Clinton administration eliminated the 108-year-old agency, they told consumers to take their complaints to private arbitrators or sue in small claims court. It hasn't worked.

Instead, consumers often end up paying exorbitant rates to bandit movers. Here's what typically happens:

* A consumer calls directory assistance for the number of a well-established moving company and instead is given the number for a rogue company with a strikingly similar name.

* That company provides a low-ball estimate and the consumer signs a contract.

* Movers pack and take the consumer's belongings but then refuse to deliver until new, much higher fees are paid.

In effect, movers have kidnapped the goods and won't return them until a ransom is paid. Consumers have few options, because state courts generally lack jurisdiction and court orders against fly-by-night companies are difficult to enforce. This practice has become so common that the National Assn. of Consumer Agency Administrators in Washington has even come up with a name for it: hostage freight.

Faced with an epidemic of moving rip-offs, a coalition of state attorneys general and consumer watchdogs is urging Congress to give them the authority to prosecute interstate movers. Such authority is now limited by the Constitution and federal laws regulating interstate commerce.

Even the American Moving and Storage Assn., a Washington-based trade group that has historically resisted regulation, is urging the federal government to act.

"Right now, it's gotten to be open season for interstate moving," said Joseph Harrison, the trade group's president. "Because no one's guarding the chicken coop, the foxes--in the skin of unscrupulous companies--are running wild."

Law enforcement officials agree. "It's high time they make these changes," said Missouri Atty. Gen. Jay Nixon, who has joined other state prosecutors to lobby for consumer protection laws. "Just because someone drives a truck across the border shouldn't make him exempt from state prosecution . . . just like they aren't exempt from our speeding laws."

So far, the only federal intervention has come from an unlikely source: the U.S. Forest Service, better known for overseeing logging and grazing on federal lands.

The agency shut down a Los Angeles-based company that allegedly cheated about 600 households of several million dollars by refusing to deliver belongings until consumers paid many times the original estimates. The Forest Service said it acted because no other government office would help one of its employees retrieve property from a moving firm.

Gwen Smith, an office receptionist who was transferred nearly two years ago by the Forest Service from Berlin, N.H., to Los Angeles, couldn't find anyone to help her when a moving company refused to deliver her bed, her 160-year-old antique dresser and other belongings until she paid $25,000. That was $9,000 more than the Forest Service had agreed to pay when Smith hired the firm, court records show.

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