AIR Condemns Unethical and Illegal Repossession Practices by Lenders

The Alliance of Illinois Repossessors Condemns Lending Institutions for Directing Auto Auctions to Engage in Unethical and Illegal Repossession Practices Within the State of Illinois.

FOR IMMEDIATE RELEASE

Chicago, IL – May 1, 2025 – In response to the article published earlier today by CURepossession.com and the American Recovery Association (ARA), in which ARA President Vaughn Clemmons exposed a growing concern of lending institutions bypassing certified repossession companies in favor of Copart and similar unregulated alternatives, the Alliance of Illinois Repossessors (AIR) is compelled to extend the discussion and highlight similar violations occurring in Illinois.

AIR has documented numerous instances in which major auto auctions and their affiliated tow operators are providing impound and voluntary repossession services for lenders, despite lacking the licensing, training, insurance, and compliance measures required under the Illinois Collateral Recovery Act (ICRA) and Illinois Commerce Commission (ICC) regulations.

This troubling practice involves:

Unlicensed Tow Providers performing repossessions without possessing an ICC license and bypassing the strict guidelines of the Illinois Collateral Recovery Act (ICRA).
Repossession Vehicles Not Marked with ICC stickers as required by state law.
No Police Reporting, which is a direct violation of the ICRA and leaves both lienholders and consumers exposed to risk.
Non-use of Industry-Standard Software, such as Recovery Database Network (RDN) or equivalent, required for reporting and documentation under ICC standards.
Lack of Repossession Insurance, placing both the client and consumer at risk in the event of damage or breach of peace.

In some cases, lenders are directing these same auctions and third parties to shortchange certified recovery agencies by sending a “cheaper alternative” to recover vehicles that have already been skip-traced or physically located by the licensed professionals hired to locate and secure the collateral. This often occurs without compensating the original agency for skip-tracing, field work, locate/recovery fees or reimbursement for sunk expenses working the case such as labor, fuel, truck expense, despite clear documentation of their effort.

This is not only a violation of state law, but it represents a disturbing trend of double standards, wherein licensed, compliant recovery companies are held to the highest level of regulation, while unqualified and unlicensed entities are allowed to operate outside of the law without consequence.

AIR believes this disparate treatment may rise to the level of discriminatory business practices, as lenders require one tier of compliance for licensed repossession agencies, and another for auto auctions and the tow companies providing the same service, without equivalent oversight or legal adherence.

This is eerily similar to another long-standing issue: skip trace inequity, wherein lenders pay third-party vendors such as skip trace companies for “locating” vehicles but offer no such compensation to the direct repossession companies who often do the same or greater investigative work in the field without recognition or reimbursement.

AIR urges all lending institutions and forwarding companies operating in Illinois to immediately review their vendor partnerships and ensure that all repossessions (impound, voluntary or involuntary), are performed only by ICC-licensed recovery companies.

Furthermore, AIR supports ARA’s call for national clarity: If these practices are not to be considered repossessions, then licensed repossession companies should not be held to the burdensome compliance standards currently required under state and federal law. We cannot operate under one set of rules while others are allowed to cut corners under a different definition.

AIR stands firm in its commitment to compliance, transparency, and the protection of consumers and lienholders. Lenders that disregard these standards risk legal exposure, reputational damage, and the collapse of the very infrastructure that supports responsible auto lending and recovery.

We invite regulators, clients, and partners to stand with us in upholding the rule of law in the State of Illinois and across the nation.