Fines Associated With Running Charter Without a License

Starting a boat chartering business is a lucrative way to profit off your love of boating. However, navigating the requirements and regulations for legal operation can be complicated — not to mention the monetary investment.

Don’t be tempted to cut corners when setting up your business. The fines associated with running a charter without a license are significant. Here, we explore what you need to know to start chartering legally.

Legal Requirements for Operating a Charter Service

Not every type of charter service requires a captain’s license. Bareboat charters, for example, come without a captain. Families and friends charter the vessel and take on the responsibility of running the boat and caring for its passengers. It’s basically a boat rental.

Charterers must demonstrate boating competency at some companies. Still, this service doesn’t require a captain or crew and generally has a low regulatory burden.

In contrast, uninspected passenger vessel (UPV) charters must have a licensed captain onboard. In other words, if you’re taking paying passengers out on your boat, at the very least, you must have a valid OUPV/Six-Pack captain’s license.

This license permits you to carry no more than six paying passengers and one crew member. Many licensed charter captains get themselves in trouble by carrying too many passengers. If seven people show up at the dock, some captains say, “If the Coast Guard boards us, six of you will be passengers and one of you will be my crew member.” 

Unfortunately, your passengers probably won’t be enrolled in a random drug testing program, which the Coast Guard requires for captains and crew members. You won’t be able to pass off an additional passenger as a crew member, so it’s better not to try. 

Additional legal requirements for charter services include:

• Safety equipment: Chartered boats must have adequate safety gear, including fire extinguishers and personal flotation devices for each passenger.
• Environmental compliance: As a charter boat captain, you must ensure you meet environmental regulations, like those prohibiting garbage or sewage dumping.
• Adherence to laws: You must learn and comply with local regulations to charter your boat.

Common Misconceptions About Chartering Requirements

You risk violating laws unintentionally if you don’t fully understand chartering and licensing requirements. Everyone makes mistakes — but the USCG won’t accept that excuse. Let’s go over some of the most common mistakes around chartering so that you can avoid fines for running a charter without a license.

License Renewal

Captain’s licenses are valid for five years, but the USCG doesn’t issue renewal reminders. As a result, captains often forget that their licenses are up for renewal and unintentionally let them lapse. 

After five years and one day, your license is no longer valid, and the USCG makes no exceptions. You have a grace period to renew your license without penalty, but you can’t use it during that time.

Boat and Charter Types

Many captains assume that smaller or personal boats don’t have the same requirements as larger commercial vessels. This isn’t the case. Size doesn’t matter when it comes to licensing requirements for charter boats.

Other operators don’t fully grasp the difference between a bareboat rental and a charter. For instance, they may attempt to sell a bareboat charter to a group and then offer their services as captains separately.

The Coast Guard won’t approve — if you offer a bareboat charter and captain the boat yourself, it becomes a true charter. If a bareboat charter group wants a captain, they’ll have to find one on their own.

Consideration

It should be clear by now that taking out paying passengers requires a captain’s license, but did you know that passengers don’t have to pay with money? Let’s say you have a business associate who has a condo on the beach, and you want to take your family there. If your colleague trades a weekend at the beach for a day out on your boat, the USCG will see that as a paid trip. 

If you really want that condo vacation, you can still lend your boat to your colleague — just don’t go out on the water with them. This way, it becomes a bareboat charter, which doesn’t require a captain’s license.

Drug Testing

Licensed captains and crew members must be enrolled in random drug and alcohol testing programs to operate charters. Once again, not being aware of these regulations won’t be a good enough excuse for the Coast Guard.

Fines Associated With Running a Charter Without a License

Operating a charter service without a license leads to various financial penalties and legal repercussions. Here’s a breakdown of the costs and fines for running a charter without a license.

Financial Penalties

You’ll face substantial fines when you get caught running a charter without a license. The maximum fine is $5,000 for each day of illegal operation.

That means if a school teacher runs charters four days a week during the summer and gets caught at the end of the season, the Coast Guard will go back and reconstruct how many charters they ran. With 20 charters over two months, they could face a $100,000 fine.

Insurance Rates

Running charters without a license is a huge liability. When you get caught, your insurance rates will skyrocket — if your insurance company doesn’t drop you outright.

Legal Action

If you operate without a license, you can be sure you’re going to court. Legal proceedings can be lengthy and costly, and hiring an attorney only adds to the expense. 

Reputation Damage

Reputation damage can be the most difficult consequence to recover from. Chartering boats without a license erodes customer trust, meaning your business could incur heavy losses.

Additionally, many marinas have a tight network, and some don’t allow commercial services. If you try to operate under the radar, you could damage your reputation throughout the entire industry and even get kicked out of the marina.

Coast Guard Enforcement and Investigation

As discussed, the consequences and fines associated with running a charter without a license are significant — but just how likely is it that you’ll be caught? 

My advice: Don’t find out!

For the curious, here are some common triggers for a Coast Guard or marine police investigation:

• Patrols and routine document inspections: The Coast Guard and marine police frequently pull boaters over to ensure documentation is in order. Unlike police officers conducting traffic stops on the road, the Coast Guard doesn’t need a reason to pull you over on the water.
• Safety checks: Like with routine inspections, the Coast Guard can conduct safety checks at any time without a reason.
• On-water incidents or accidents: Incidents such as collisions, unsafe boat operations, and visibly overloading passengers beyond capacity can trigger an investigation. In the case of an accident, you’ll have to deal with fines and personal liability at the same time — especially if someone is hurt.

However, the most common triggers for a Coast Guard investigation are tips and complaints from other mariners. Fully licensed and compliant captains put a lot of work into earning their certifications and building their businesses.

They don’t appreciate it when their neighbors at the marina operate illegal commercial operations. Not only does this cut into their business, but it also affects their reputation as part of the industry.

Don’t Risk Long-Term Consequences: Get a License Today!

Beyond exorbitant fines, running a charter without a license carries long-term risks, from legal and financial penalties to reputation damage and even business loss. It’s not worth it! Getting your captain’s license not only eliminates these concerns, but it also carries additional benefits.

You can enhance your safety, increase your knowledge, and start profitable business ventures as a licensed captain. Ready to get started? Contact Mariners Learning System today!