Westlake Clawing Back Paid Milage Fees – Agents Furious

Westlake Claiming as Much as $60K Owed to Them by Numerous Agencies

Imagine running and recovering a distant account for a subprime lender in good faith being told that they will pay for the mileage on out of the area assignments. Now, imagine them coming back to you a year later claiming that you overbilled them for that mileage and they want you to pay them back anywhere from $10K to $60K. Well, that’s just what is happening to agents that work for Westlake Financial. As you can imagine, it’s not going over very well.

Back on September 24^th, an anonymous agency owner posted to a private Facebook group that they had a client demanding that they refund them over $35K in previously approved mileage fees from over a year old assignment. According to the agency owner, they had requested the non-contingent mileage fees before even working the account, which was then approved.

Adding insult to injury, they reportedly are now only going to pay $1 per mile over 35 miles. Very quickly, others chimed in and identified the lender as Westlake Financial Services.

Needless to say, the post generated a lot of opposition to refunding them anything owed. Many readers of the post advised the agencies to simply disregard the demand.

Westlake has a reported direct assignment agency list of over 200. How many received these is unknown, but this is not an isolated event.

The Demands

Soon after I read this, I had another agency owner contact me about the same exact issue from the same lender. This owner advised me that one of the state association leaders had received numerous calls on this matter and had heard of refund demands of over $60K.

I have even heard rumor of one large agency receiving a demand of over $125K!

Below is part of the email communication from Westlake demanding payment:

Attached you will find:

A spreadsheet showing the RDN Case Numbers reviewed, the mileage we calculated, the amounts paid, the reasonable fee amount, and the refund request total.
An audit form that you may complete if you wish to dispute any of our findings.

Next Steps:

We are requesting reimbursement for the overcharges outlined in the attached report.
If you dispute any amounts, please complete the audit form and return it to us so we can verify and adjust accordingly.
Refunds can be remitted in two payments if needed.

Wow, $60K in two payments. How kind of them.

The Root Error

To respond to Westlake in a clear and professional manner, the agency owner had spent days pouring over the Westlake provided data. In the process, Westlake’s error was quickly identified. The addresses being used by Westlake were the original addresses assigned through RDN, not the actual assigned out of area addresses that the mileage was preapproved to run.

The agency has brought this to Westlake’s attention, but to date, has received no response. In addition, they confirmed the revised $1 a mile over 35 miles from office fee.

Throwing more gasoline on the fire, the agency owner has had several recent repossession fees paid but none of the associated mileage fees. Since Westlake requests fees added to the actual repossession fee be billed separately, it has left that person to wonder if this is a silent denial of payment.

I am sure there are many others who have walked this similar path and discovered the same by now. Regardless, I’ve heard of no one being told by Westlake to disregard these demands. This begs the question; are they seriously standing behind this?

What is Going on at Westlake?

By now, I’m sure everyone has heard of the woes of the hundreds of agencies left screwed over in the subprime lender Tricolor’s bankruptcy. Likewise, you’ve probably read my many articles demonstrating just how bad the delinquencies and charge off losses have been for subprime lenders over the past year. Are these demands another dead canary in a coal mine?

This is all very frustrating for many agency owners, especially those who have had long and solid relationships with them. Westlake is not one of those lenders that agencies complain about much, in fact, they’re actually very well liked by many.

Unfortunately, Westlake is a subprime lender. It’s a business, not a social club. And it’s a field of business that is showing signs of financial stress like all subprime lenders.

How bad is it really for Westlake? I really don’t care to speculate. But what I do desire is to remind everyone of those hundreds of agencies affected by the Tricolor bankruptcy. It is extremely unlikely that any of them will receive one thin dime of the probably millions owed them aggregately. I’m sure many of those agencies had great relationships with Tricolor too.

I’m sure the folks at Westlake are, for the most, some great people. But remember, as I said before, It’s a business, not a social club.

What to Do?

As I always advise, I am not an attorney. My advice is not being offered as legal advice. I suggest anyone looking for legal advice contacts an attorney.

Am I advocating a boycott? No. Am I advocating that everyone demand a retainer be paid by them to assure that their fees are paid? No, that’s a business decision that each agency owner must make for themselves.

What I do advocate is that every agency effected by these demands do exactly what the owner who contacted me did. Dig into the data, find the inaccuracies, and point them out.

Honestly, I suspect that some auditor whose usual scope of work is not in the repossession department requested data not knowing what they were even looking at and hoping to be a hero didn’t question their own results before sending the demands.

Let’s hope that Westlake sees the errors in their demands and rescinds them with a genuine apology. The sooner the better.

Regardless, considering the record levels of delinquency in subprime auto loans, it might be a good idea to keep a close eye on all subprime lender clients and how much they owe you. If they reach for the bankruptcy rip cord, you certainly don’t want to be stuck holding a small fortune in worthless unpaid invoices.

Be safe,

Kevin Armstrong

Publisher