An Agency Letter to Capital One – Golf? We’re just trying to survive!

“While you are hosting golf tournaments, we are trying to manage keeping ourselves in business with 63% less income.”

GUEST EDITORIAL

Golf tournaments for charity have long been a tradition in the banking community. And while no one doubts the sincerity of Capital One’s invitation to one of their repossession vendors, it does illuminate a blatant misunderstanding or disregard to the state of the repossession industry. In response, one agency owner has chosen to share with them, as well as us all, just how dire conditions have become over the past decade.

Dear Terris,

As JoAnn already informed you, we will not be participating in your golf tournament fundraiser this year or, quite frankly, in any other future events hosted by Capital One that would seek our monetary support. Although we appreciate the invitation, in light of the many changes that have occurred over the years in this industry, and particularly between our businesses, participation in such events for us has become improbable. This is one of the reasons I wanted to follow-up with you and share what we are experiencing from our perspective in the hope that you may gain a more clear understanding of our position as it relates to our business relationship.

To provide you an example of what has taken place over the years, we reviewed our records and history with Capital One from 10 years ago (2012-2013) and compared it to our records for 2021-2022. What we discovered is indicative of what this industry is facing across the country and, specifically, it is a clear picture of how our relationship with Capital One has regressed.

First, we want to share with you that, in 2012, we could rely on the information received by your agents and your accounts came with better quality data that led to a more successful rate of return to Capital One. Today, your agents consistently provide outdated and repetitive information that is not useful in successfully running accounts. Whereas your employees used to take the time to ensure accurate information when assigning jobs, they now provide little to no information, and often incorrect details, which leads to loss of time and resources for everyone. This has led to frustration in our industry and a reduction of collateral recovery for your business.

Second, aside from the irresponsible data received by your agents, we feel it is important to point out that we used to be compensated on a more fair and equitable platform for the work and quality of service we provide to you. As an example of this;

During 2012-2013, our records show we were assigned 1,588 accounts by Capital One.
In comparison, for the year 2021-2022, we received 1,695 assignments from you.

Assuming an increase in work volume would correlate with an increase in business transactions and equitable compensation is a misnomer.

Comparing our records to 10 years ago has uncovered that, although you sent us 107 more assignments, we have received 63% (sixty-three percent) less in compensation for running those accounts.
To help you better understand the magnitude of what this means to our business, this translates to our running 1,588 accounts in 2012 at an average bill rate of $141.33/per account and earning $224,430 for that year.
Compared to running 1,695 (107 more) accounts in 2021 at an average bill rate of $52.26/per account and earning $88,595.

This is a monetary loss to our business of $135,835 for that one comparison year alone. Over the 10-year span, we suspect our records would demonstrate a loss to our business of more than $1,000,000.

Finally, we want to clarify that our level of service and liability has not declined. However, to add insult to injury, our cost of doing business has increased by more than 22% over the past 10 years, while Capital One has reduced our ability to set our own price points to cover our costs of doing business. These costs have increased through insurance premiums, minimum wage standards, and other aspects outside of our control, while Capital One put into place working agreements that stifle our negotiating capability. These contracts have reduced our ability to keep up with the inflation of costs in an environment that is increasingly demanding and unfriendly to the repossession agency.

Ten years ago, we had a good relationship and we made the effort to support your events. It was a reciprocal relationship that reflected mutual appreciation and respect for each other’s business and objectives. However, as I’ve outlined above, today we are receiving significantly less compensation for the same services as a result of the changes imposed on us by your company, and we are forced to try and complete assignments with subpar data from your agents which impacts your success as well. Furthermore, the structure of your current contracts and business protocol has not only significantly reduced the ability for companies like ours to conduct a reasonably profitable operation, it has eliminated the ability and desire to support you.

All of this is in addition to the increased demands on our industry to provide a higher rate of insurance and liability while we have less control and data from which to operate.

You may feel as though this is not an ideal time to receive this information – as a response to an invitation to your fundraising golf tournament – but we would disagree. We believe this is a timely opportunity to understand that if you want to truly partner with us, or any vendor you rely on to recover your assets, it is important to partner with us in a manner that isprofessionally beneficial and equitable to both parties. The integrity and future of this industry rests on the culpability of companies such as Capital One to recognize how changes imposed by you are having a deteriorating effect on all areas of business across this industry nation-wide.

To you, this is only a fundraising golf tournament you hope your vendors will support. To us, it is another inconsiderate act that would require a significant monetary commitment from us with no return on our investment. While you are hosting golf tournaments, we are trying to manage keeping ourselves in business with 63% less income. Again, as I’ve provided the math for you, I’m not quite sure how you expect companies such as ours to be able to justify that type of expense or participation.

To date, we have appreciated our relationship with Capital One and we hope we can continue our relationship in the future. We request that you utilize this information and take this opportunity to re-evaluate how today’s climate could very well eliminate the industry as we know it if no changes are initiated. This negative impact is being experienced across our industry with all of our colleagues. This is not only impacting WIRB.

We wish you the best of luck with your event.

Respectfully,

Curtis Nelson

Spokane Office, WIRB, Inc