One of the biggest concerns for most Americans is the size and power of government,specifically the “regulatory arm” of the Federal bureaucracy. Truckers know this all too well. Many times, in the name of “safety,” the Federal Motor Carrier Safety Administration (“FMCSA”) broadens their reach by promulgating new rules and regulations as we, the members of the industry, stand by scratching our heads, knowing that these same regulations, which are supposedly enacted to increase safety, often actually create unsafe road conditions when implemented, as a matter of “unintended consequences.” (Example: Speed Limiters).
The following write up is in response to the Oct 17th Press Release that went out by the Federal Trade Commission.
FTC Charges Operators of Scheme That Used Fake Government Affiliation to Sell Commercial Trucking Registration Services
The overreach of Regulatory Power- How far can it go?
Imagine this: you’re running your online truck permit business, and all of a sudden you have all your assets frozen without notice or due process, not able to access any funds, and control of your business is wisked out of your hands, and placed into the hands of a court-appointed lawyer, and you have no idea what’s happened!
What would you do?
Recently, the United States Federal Trade Commission (“FTC”) convinced a Federal Judge into believing that a 15 year old small business truck permit company Dotauthority.com and its sister company Dotfilings.com, were allegedly engaged in deceptive business practices and that there was an emergency situation that required such extreme measures. FTC was granted, ex-parte, a temporary restraining order (“TRO”) by the United States District Court for the Southern District of Florida last month. That means that government lawyers secretly went to a Federal judge, told only their side of the story, convinced His Honor there was a bona fide emergency situation that required him to immediately act without giving the other side a chance to know about the request. The judge believed what he was told and he then immediately froze all of the owners’ personal and business assets and allowed the government to seize the businesses—all without a hearing!
Unbeknownst to the owners of these companies, including James Lamb. We have had Mr Lamb on our show numerous times (James has– through his volunteer efforts as chairman of his “Small Business in Trucking Coalition”– promoted safe truck parking for drivers, helped a trucker beat bogus ‘obstruction of justice’ charges when they woke the driver up during DOT mandated rest time, promoted truckers’ right to carry interstate with pro-gun legislation that is about to be introduced in the US Senate, and has generally promoted and protected the rights of small businesses against big business encroachment).
All of their personal and business assets, including bank accounts were frozen for 2 weeks until the September 29th hearing in front of the same Federal Judge. James was left with no means to feed his one year old baby daughter, other than the goodwill of friends and relatives and his cash on hand.
That’s when the judge learned the truth and then things drastically changed
(although the FTC is not telling that part of the story) …
After hearing the evidence, including James’ personal testimony on September 29th, the same judge reversed his prior decision and unfroze James’ assets and returned control of the businesses back over to James and his partner. While the judge did issue a preliminary injunction that will remain in place from now until the case goes forward for trial, the judge suggested the businesses should continue to be allowed to operate and he simply strengthened James’ existing disclaimers in the interest of clarity. It would appear the FTC is now trying to kill the businesses by declaring a public relations war on the businesses through the media in response. And that plan may very well be working.
Reading between the lines, what this basically means is: whereas the FTC got the judge to originally take over the businesses and freeze all assets immediately, as if James were part of some ISIS terrorist cell, the judge after hearing determined the government deceived him in its presentation of the “facts” before the hearing and determined that justice required for him to undo these harsh, intrusive actions… and that the alleged “emergency” purported by the government never actually existed in the first place.
Given the United States District Court for the Southern District of Florida promptly and fully lifted this previously-imposed asset freeze and terminated its previously imposed receivership, the ruling calls into question the propriety of the overbroad and aggressive tactics of the FTC and their motives for blindsiding the businesses instead of following the normal civil process of simply talking to the business owners first..
Dotauthority.com and UCRfilings.com are two of the websites that are used by the permit companies involved in the case to allegedly engage in deceptive practices. These are bona fide companies that have helped motor carriers comply with their regulatory filing obligations, apply for operating authority, and secure other related truck permits much like OOIDA does. And they have done so for fifteen years. There are scores– if not hundreds– of such companies across America servicing this industry. In fact, they are an entire industry within the industry in and of themselves. They act as third-party service providers that educate, consult with, and train small business carriers and brokers on federal regulations, and their compliance obligations; they offer services so owner-operators can outsource this part of their business to the experts so they can focus on the business of trucking.And these permit services declare themselves as such on their websites and marketing materials.
In fact, James is a former New York Department of Transportation Investigator who is admitted to practice before the US Surface Transportation Board and the Federal Maritime Commission, so he clearly knows his stuff and how to keep truckers and carriers out of trouble. Thus, his brand “DOT Authority” which offers a double entendre, playing on the term operating authority as he clearly is an authority on the DOT.
The FTC allegations of deceptive online advertising include allegations that James and his partner try to pretend to be the government (i.e. FTC alleges they are “government imposters”) and that their websites are made to look like government websites. Yet the look and feel of the DOTAuthority.com homepage is anything but a duplication of a government site; that is, it offers Youtube videos about getting authority and freight broker training. And it even specifically states: ”DOTAuthority.com is a consulting firm. It is not the Department of Transportation.”
And whereas the FTC would have us believe that these companies somehow “threaten” carriers, these companies simply warn carriers about the real civil penalties that they may face from the government if they fail to comply with their obligations. They merely offer a convenient way for carriers to meet their requirements to avoid getting fined (kind of like getting milk from the convenience store instead of making the trek to the grocery store), including a way for their annual permits to be renewed automatically so that they don’t ever forget to comply and then get reminded on January 2nd with a Happy New Year “gift” in the form of a $1,000 or more ticket by a state trooper or DOT agent.
The FTC is charged with protecting consumers by stopping unfair, deceptive or fraudulent practices in the marketplace. They conduct investigations, sue companies and people that violate the law, develop rules to ensure a vibrant marketplace, and educate consumers and businesses about their rights and responsibilities. But sometimes, they get it wrong and target the wrong folks as in this case…
What are the dangers of over reach?
This case should scare folks. Can the Federal Government just “allege” activity without real proof?
Are we following a new model of GUILTY until proven INNOCENT?
We note this was a complaint filed by a federal government agency, the FTC, not a class action by individuals as some others in trucking media have suggested.
The FTC states on their website: “NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.”
Question: But should ‘reason to believe’ be transformed into a government right to destroy a business and the lives of the business owners before the accused even steps foot into court and has a chance to defend themselves?
We note this is not a criminal case, but rather a civil case, although it could be argued that criminal conduct has been alluded to in their press release.
According to James’ lawyers’ statement, the companies being accused operate several permit related businesses that all help interstate commercial carriers remain compliant and navigate through the complex and ever changing state and federal regulations. Case in point: the new “Unified Registration System” that allows FMCSA to now deactivate carriers’ USDOT Numbers if they fail to file biennial reports…
James has attempted to get that message out to carriers and has offered to help them comply. His company prepares and files these reports for carriers (much like a taxpayer has an accountant prepare his or her taxes) or enables carriers to do it themselves through an automated service at a lesser cost.
The FTC has apparently taken overzealous issue with this service as well, suggesting carriers should not be asked to pay for something they can do themselves.
REALLY? How dare you hire a painter when you can paint your house yourself!
Perhaps the FTC needs to read the First Amendment as we are free to talk with, associate with, and contract with anyone we wish in America. Big Brother does not always know best.
These permit company owners post on their websites obvious disclaimers, stating they are a 3rd party consulting firm and are not affiliated with any government authority.
Despite admitting to having seen these disclaimers, the FTC still filed charges alleging the owners were engaging in deceptive online advertising practices by misleading consumers into believing that their permit companies were affiliated with a governmental entity. It just doesn’t make sense. Either the disclaimers were there, or they were not there. And they clearly were there.
In fact, you can visit these websites yourself and see the disclaimers boldly written. There are no fraudulent Federal logos on the websites to confuse or mislead people. I myself have been on the websites and never thought they were government websites, but rather what they obviously are, 3rd party filing companies. There are many small companies who are willing to pay 3rd party consultants to file all their paperwork just as some small businesses have accountants and bookkeeping partners handle their paperwork..
The part of this that really scares me, though, is that all the FTC needed is to have their “reason to believe”…. even though the disclaimers are obviously stated on the permit company owners’ websites.
I have no doubt the permit companies will win this civil case in the Federal Courts and justice will ultimately prevail. The sad part, however, is that in a case like this, the mere allegation of wrongdoing and the issuance of press releases before trial is often enough to destroy the reputations of the businesses and force them to close even before the trial.
So, if this makes you angry and fear the overreaching abuse of Federal authority more than ever, well, then you are right to be afraid. You have a right to be angry and afraid.
Comment on the this article and share your voice!!
Read more MONDAY Oct 24th Press Release “Diluted Preliminary Injunction Order Repels Aggressive Tactics Used by FTC Against Online Advertiser”
© 2016, Allen Smith. All rights reserved.