Registering New Trucking Company will have more Stringent Questions to Identify Chameleon Carriers
posted in Alerts by Brian Gray
Registering New Trucking Company will have more Stringent Questions to Identify Chameleon Carriers
Special attention will be paid by states trying to catch a Chameleon Carrier. Also known as reincarnated carriers, chameleon carriers are companies that artificially shut down and resurrect as a new legal entity for reasons such as circumventing fees or regulatory compliance.
*Quick note, reincarnated carriers are technically different as they are groups of companies that move assets around in order to prevent fees or compliance issues, whereas chameleon carriers shut down and start new companies to prevent fees and compliance issues. IRP and FMCSA are looking to prevent both scenarios.
While a majority of motor carriers go to great lengths to comply with government regulations and follow public safety laws, here are two main ways a motor carrier may have its registration suspended or revoked due to suspected chameleon carriers or reincarnation: due to affiliation or due to regulatory non-compliance.
Affiliation, the most common, is a determination that the carrier was reincarnated based on common ownership, control, management or a familial relationship. This is usually done as an innocent mistake, however there are many dangers the FMCSA and IRP are trying to prevent.
In August 2016, the IRP (International Registration Plan) community met to discuss how to better identify both chameleon carriers and reincarnated and what do about them. They came up with a new registration verification checklist – more stringent questions to help identify these carriers.
Why Chameleon Carriers are bad for the Trucking Industry
Many of these carriers are unsafe operators who have little to no regard for hours of service compliance, equipment maintenance, or customer service. There are horror stories of such operations that use cardboard signs and change their company name and DOT number on the road. In some of these stories, drivers receive a text or call to pull over and swap signs.
The U.S. Government Accounting Office (GAO) estimates that chameleon carriers are involved in up to 18 percent of severe crashes, nearly three times the rate of new applicants who are believe to be in compliance with the law.
In 2011, a bus tour crash in Virginia killed four people and led to the shutdown of Sky Express by the FMSCA. The company reopened in a matter of days under the name 108 Tours and 108 Bus. Although FMSCA officials were quick to close the new operation, authorities and law makers are concerned that far too many chameleon carriers fall through the cracks.
The History of Regulations to Prevent Chameleon Carriers
After the 2011 Virginia incident, Senator Charles Schumer of New York announced an initiative to close the loopholes that facilitate the opening of chameleon carriers.
FMCSA spokesperson Marissa Padilla says the agency has “taken aggressive steps” in recent years to better vet new entrant carriers and upped fines for carriers who do reincarnate under new names. In 2014, the FMCSA published a final rule expanding its ability to shut down motor carriers who display a pattern of “egregious disregard” for compliance with federal safety rules.
In August 2016, the IRP (International Registration Plan) community met to discuss how to better identify chameleon carriers and what do about them. They came up with a new registration verification checklist – more stringent questions to help identify these carriers.
Interesting Takeaways from the 2016 IRP Meeting
Why do some carriers reincarnate themselves? What is their purpose?
- Currently operating under a federal out of service order and want to operate
- As soon as they receive audit letter of intent– they have no records. It’s easier for them to run and not file
- Once they receive an audit assessment
- When they are not compliant with all taxes
- Legal issues, such as running from child support
- They receive a notice of DOT audit
What are some red flags?
- They do not have a valid CDL
- If they give a driver’s license for someone who has bad record
- The company opening the account has a different DOT number than the Motor Carrier responsible for safety and it is not a leasing relationship
- Hopping from jurisdiction to jurisdiction
- Same VIN from one company immediately going to another company
- Frequently transferring the vehicles. When letters go out advising of out of service – then start moving them, or start moving vehicles right before the notification goes out. Eventually will come back around to same out-of-service company.
- DOT number for motor carrier responsible for safety changes
Questions New Trucking Companies will be asked to better Identify Chameleon Carriers
The following questions can be used in an application process to check for possible chameleon carriers. IRP was helped by Illinois, Minnesota, and South Dakota sample questions.
- List the Name, Address and Phone Number of any person (including yourself), officer, partner, spouse, family member, trustee, or other entity (including other business names or corporations) that have more than a 10% ownership stake in this business
- Have any of the above named persons had IRP-based vehicles in any Jurisdiction?
- Have any of the above ever been denied IRP registration by any Jurisdiction?
- Have any of the above ever had a USDOT number?
- Has there ever been an “Out-of-Service” or unsatisfactory/unfit order applied to you, your vehicles or any business or vehicles associated with any of the named parties
- Do any of the vehicles listed on the IRP application have actual distance (past distance history) in any jurisdiction?
- Explain where are these vehicles currently registered?
- Could the USDOT Number for Safety change in the next 12 months?
