Let Your Freight Bills Deceive
Other Parties' Terms Can Lead You into False and Misleading Billing
Henry E. Seaton
Reprinted from etrucker.com
You might not know
it, but your invoices may form the basis for transactions in which you
aren't a contracting party. The shipper or consignor may be passing
your freight charges through to the consignee on a "prepay and
add" basis. Or, the consignee may be arranging the freight but
taking from the consignor a freight allowance equal to your invoiced
price. A transportation intermediary may be paying your invoices while
billing the shipper a fixed cost for processing the invoice.
Under any of the three scenarios described above, invoices that fail
to show rebates or concessions may be used -- without your knowledge
-- to conceal the actual amounts ultimately paid for the freight. The
party you bill may be passing your invoice on to the actual shipper
and may not be disclosing the off-bill discount it is keeping. As an
ethical business owner, you should be wary when any party asks for a
discount or concession that isn't to be reflected on your rated freight
But there's more than just good and ethical business practices at stake.
Even though the "filed rate doctrine" is gone and some of
the language about rebates has been stripped from the statute, the law
still requires full disclosure and prohibits false and misleading information.
A provision in the Interstate Commerce Commission Termination Act of
1995 addresses situations in which consignees took secret unloading
allowances and volume discounts from carriers in return for letterhead
routings on prepaid shipments. That measure has even broader applications,
however. It should serve as a warning to all parties against off-bill
discounts and concessions.
Subsection A of that legislation (Section 13708) requires a motor carrier
to disclose in its invoice the actual rates, charges and allowances,
as well as whether and to whom any allowance or reduction in charges
The statute clearly applies whether you bill the actual shipper or the
shipper's agent. There may be nothing wrong with paying a shipper's
disclosed agent a commission or giving a shipper's customer an unloading
allowance -- provided that you ensure the arrangement is disclosed and
reflected when you submit your invoice.
It's also illegal under the statute for someone to cause you to present
false or misleading information on a document about the actual rate,
charges or allowance to any party to a transaction. Because you aren't
always privy to the seller's and buyer's shipping terms and conditions,
the best policy is to include full disclosure about charges or allowances
on the actual invoice for freight charges.
The statute even covers the use of volume allowances and other concessions
over a stated period, which can't be outlined on a single bill. The
statute requires carriers to indicate on each document presented for
payment that a reduction allowance or other adjustment may apply.
The rules governing discounts, allowances, concessions and similar terms
are quite clear. Even if a reduction in the base rate is otherwise lawful,
you should note the rate concession and show your net freight charges
and any third-party concessions that aren't otherwise fully disclosed
to the payer of the charges. Do not unwittingly convey false or misleading
information by failing to fully and accurately identify the true cost
of your services on your invoice.
Only by presenting complete and truthful billing information on your
invoices can you comply with the law and avoid becoming unwittingly
involved in possibly fraudulent schemes to misrepresent the actual shipper's
transportation cost. Carriers have been named as conspirators in schemes
to defraud shippers. Avoid this potential problem by correct invoicing
and full disclosure.
Copyright© 2006 Law Office of Seaton & Husk, LP. All rights