GUEST EDITORIAL
The American Recovery Association (ARA) is offering information and guidance to our members and the industry. This is for informational and educational purposes only; we are not attorneys and you should check with your legal counsel on the policies you develop for your company.
The latest Consumer Financial Protection Bureau (CFPB) Consent Order stipulated and consented to by Nissan Motor Acceptance Corporation has brought the issue of charging a fee to consumers for the process of handling and being responsible for their personal belongings contained in repossessed vehicles into the spotlight once again.
Many states have recognized that a fee associated with handling personal property is a legitimate expense and a reasonable fee can be charged to the consumer.
On page 11, the recent consent order states; “ The practice of withholding consumers’ personal property unless consumers paid an upfront fee to recover it caused or was likely to cause substantial injury that is not reasonably avoidable or outweighed by the countervailing benefits to consumers or competition.”
Let us be clear on several points:
- Nothing in this order changes what a collateral recovery agency is permitted to charge. The latest ARA White Paper on personal property demonstrates the validity for this fee and establishes the handling of personal property as a SEPARATE AND DISTINCT SERVICE NOT INCLUDED IN A REPOSSESSION FEE.
- It states Lenders must prohibit their Repossessors from charging personal property fees directly to consumers and demanding fees as a condition of returning personal property. Nothing in the consent order prohibits the Repossessor from collecting those fees by way of contractual agreement directly with the Lender.
- The CFPB, in several points in their Supervisory Highlights Oct 2016, suggest that the fees associated with personal property handling can be billed to the creditor.
The legitimacy and permissibility of this fee has been established for 30 years.
The handling of personal property is very time consuming, occasionally it is also unsafe. With our recently published White Paper, ARA has taken a deep dive into the true cost and potential risk surrounding Personal Property Fees , you can find it HERE .
We know this information brings up many more questions and concerns. The ARA is working with an attorney to put on a webinar for the industry within the next two weeks to provide a forum for these questions. This is the most up to date information we can provide you, at this time.
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