Short answer: a dispatcher who works for a carrier, under a written agreement, paid by that carrier, booking through brokers and without deciding which carrier gets a load, is acting as the carrier's agent and does not need broker authority. A dispatcher who negotiates directly with shippers, decides which of several carriers gets a load, or takes money from the broker or factoring side is likely acting as a broker and needs FMCSA broker authority and a $75,000 bond.
This guide explains the rules. It is not legal advice for your situation.
What the law calls a broker
Federal law defines a broker as a person, other than a motor carrier or an employee or agent of a motor carrier, that sells, offers, negotiates for or holds itself out as selling, providing or arranging truck transportation for compensation (49 U.S.C. 13102). FMCSA's regulations for brokers are in 49 CFR Part 371.
Notice the exception built into the definition: an employee or agent of a motor carrier is not a broker. That is the space a dispatcher works in.
The bona fide agent exception
The regulations describe bona fide agents as people who are part of a motor carrier's normal organization and perform duties under the carrier's direction, under a preexisting agreement that provides for a continuing relationship, and without discretion to allocate traffic between that carrier and others (49 CFR 371.2).
FMCSA's 2023 guidance turns that definition into concrete factors, below.
FMCSA's 2023 guidance on dispatch services
In June 2023 FMCSA published final guidance on the definitions of broker and bona fide agent, written with dispatch services in mind (Federal Register, 16 June 2023). Its starting point: dispatch services can be either bona fide agents or brokers, depending on what they actually do. It is a fact-by-fact test, and the more control the carrier has over the dispatcher, the less likely the dispatcher needs broker authority.
The guidance also says it directly: a dispatch service that arranges transportation for multiple motor carriers and allocates traffic between them is not a bona fide agent and must get broker authority.
Signs of a bona fide agent (no broker authority needed)
FMCSA lists factors like these (paraphrased; not every one must be met):
- A written contract in which the carrier appoints the dispatch service as its agent, usually long-term, covering insurance and liability.
- The dispatcher goes through brokers to find loads for the carrier and does not solicit shippers for freight.
- The dispatcher is paid by the carrier under that contract, not by the broker, third-party logistics company or factoring company.
- The dispatcher is not in the money flow between broker and carrier.
- The dispatcher is a 1099 contractor or W-2 employee of the carrier.
- The dispatcher discloses that they dispatch for a specific carrier, and the load is arranged for that carrier only.
- The dispatcher never reassigns the load to another carrier.
Signs that broker authority is required
- Dealing or negotiating directly with the shipper (or the shipper's representative).
- Taking compensation from the broker or factoring company, or handling any part of the payment between them.
- Arranging loads for a carrier without a written contract that meets the factors above.
- Accepting a load without a truck, then looking for one.
- Allocating traffic: taking a load that more than one of your carriers could haul and choosing which one gets it.
- Being a named party on the shipping contract.
- Offering the load to the open market of carriers.
FMCSA acknowledges that some dispatch services may have to represent fewer carriers or apply for broker authority to stay compliant.
Side by side
| Dispatcher (carrier's agent) | Freight broker | |
|---|---|---|
| Works for | The carrier | Itself, between shipper and carrier |
| Paid by | The carrier | The shipper; keeps the margin |
| FMCSA registration | None required as the carrier's agent | Broker authority (MC number), BOC-3, UCR |
| Financial security | None required | $75,000 (BMC-84 bond or BMC-85 trust), 49 CFR 387.307 |
| Signs the rate confirmation as | Agent on behalf of the carrier | The broker |
What this means day to day
- Sign a written dispatch agreement with every carrier before you book anything.
- Invoice the carrier for your fee; never take your fee out of the broker's payment.
- When you call a broker, say who you dispatch for, and book that truck.
- If the carrier wants direct shipper freight, the carrier negotiates and contracts it, not you.
- If you run several carriers, book loads for a specific truck you are already looking for, rather than taking a load and deciding later who gets it.
Why it matters
Brokering without authority is a federal violation. Under the law, a person who knowingly authorizes, consents to or permits unauthorized brokerage is liable for a civil penalty of up to $10,000 per violation and to the injured party for all valid claims (49 U.S.C. 14916). Unauthorized brokering also overlaps with fraud schemes such as double brokering, which FMCSA describes on its fraud and identity theft page.
If you want to become a broker
That is a legitimate path, with its own registration: broker operating authority through FMCSA registration, a BOC-3 process agent filing, the $75,000 financial security and annual Unified Carrier Registration. Our Freight Brokerage course covers the full setup and the fraud controls a broker needs.
Sources
- 49 U.S.C. 13102, definitions (broker)
- 49 U.S.C. 14916, unlawful brokerage activities
- 49 CFR Part 371, brokers of property
- 49 CFR Part 387, financial responsibility
- FMCSA, Definitions of Broker and Bona Fide Agents (2023 guidance)