Bad Apples in the Repossession Industry

Who Will be the Gatekeepers of the Repossession Industry?

EDITORIAL

Every couple of weeks I receive a phone call from one of my industry friends complaining about illegal or extremely unprofessional practices or incidents involving a repossession company. While I may not write about them, they are too numerous to ignore and reveal a glaring hole in the repossession industry’s compliance and vetting processes. So, can the industry police itself or will it wait for someone else to do it for them?

We all know it. The repossession industry has always attracted some shady people and the barriers to enter the repossession industry are inadequate to keep them completely out. This creates gaping holes in vetting and diligence processes that allow some bad apples to operate in it with little consequence.

Perhaps it is time to consider a different approach.

An Old Problem

Ever since the birth of the repossession industry there have been some bad apples in it. Strong-arm tactics, kidnappings and armed assaults were so bad that they spurred the state of California to pass the nation’s first repossession specific laws in 1960.

But in the early days, there were only the repossession associations, individual agencies and lenders. There was no way, other than a reference, for lenders to vet an agency for work.

Especially for out of state assignments, word of mouth was the only way for lenders to use for due diligence of prospective agents and a lot of agencies exploited this. Charging outrageous after recovery costs and storage costs against these one-time clients, lenders were frequently taken advantage of and these bad apples flourished.

In an industry that was fragmented between members of the national repossession associations and everyone else, it has always been a very fragmented industry of professionals and outliers. And it seems that every time repossession volume spikes, these outliers keep popping back up.

Fortunately, today, technology is everywhere. Cameras, smartphones, internet and social media have connected the repossession world like never before. And while these have improved the flow of information, they alone are not keeping the bad apples away.

The Tennessee Fold

One recent story I’d heard was of an association member company out of Tennessee who had very abruptly gone out of business due to alleged health issues. So sudden was their closure that lenders were unable to even contact them for several weeks about their vehicles stored on their lot.

After several weeks, a reputable agency owner assisted the lenders with picking up their cars from the lot. All except one.

Cameras are everywhere and as it turns out, an LPR camera picked the plates of the missing unit up at… wait for it…. The former owners home. When the vehicle was repossessed from the house, they found it littered with items belonging to the owner’s family.

The problem is this wasn’t the first time this agency had gone out of business. Another problem is, there is no barrier to them returning to the industry under the name of a spouse or family member.

The “N” Word

A little over a year ago, a video circulated that originated from a Midwest repo agencies own security camera that also picked up the audio. In the video, an owner or employee of the repossession company can be seen and heard calling a borrower the “N” word multiple times. Illegal, probably not, unprofessional, absolutely. Someone any reputable lender would not want to be doing business in their name, of course not.

This company was previously owned by a reputable agency owner who had to come out publicly disassociating themselves from the owners of the company. This toxic behavior was noticed and the agency soon after folded.

Fast forward a year and a new company owner on title and they’re back in action. Most recently, criminal charges were allegedly filed against the previous company owner’s son. According to sources, he and another employee were paid by the father to vandalize another employee’s home and car.

On par with previous actions, the duo allegedly spray painted the “N” word on the victims vehicle, slashed its tires and caused thousands in damage. Criminal charges for these actions are reportedly currently proceeding again the them.

But once again, how long until they pop back into the industry under the cover of another paper agency owner?

I could share more stories from all over the country, but I think by now, you get it.

A Disconnected Network

Rinse, wash, repeat. Like a revolving door, companies and people like this just keep finding their way back into the industry. New company, new owner on paper, one lender or forwarder after another will keep hiring these same bad apples without knowing their history or what happened to the last lender or forwarder that they worked for.

As if the industry didn’t have enough of a public image problem as it is, like cockroaches scurrying under a door, these bad apples always seem to have no problem slipping back into the industry whenever they want.

The problem is, there is no common national reporting mechanism inside the repossession industry to gatekeep people like this out of it. Likewise, there is no reporting mechanisms to help lenders and forwarders avoid these people and companies.

Perhaps

Perhaps it is time that the repossession industry police itself? Perhaps it is time for the establishment of a committee of reliable industry leaders be assembled to investigate the bad apples out there as well as vet the professionals?

Perhaps a committee of delegates from the two national associations and the Eagles as well as a delegate(s) from any state associations could serve as the judges of companies coming into or operating in the repossession industry. Perhaps even some lenders or forwarders should participate?

Perhaps the industry leaders could then propose to all of the lenders and forwarders that they prohibit the onboarding of companies and or persons who can not pass the committees approval process.

Perhaps it is time the repossession industry police itself before someone less understanding of the industry chooses to do it themselves?

Political Targets

For as long as there has been a repossession industry there have been politicians seeking to crush or curtail it. Recently, Senator Warren, a Senate Banking Committee member and staunch opponent of self-help repossession and the repossession industry in general, sent a letter to several lenders as well as the American Recovery Association requesting information on wrongful repossessions. Fortunately, her party is currently the minority party and she holds no subpoena powers.

But what happens when the winds of political favor sway the other direction? Who will be next to try to crush or curtail self-help repossession? And when they come, what will the industry be able to say what they have done to keep away the bad apples.

Who will be the gatekeepers of the industry if the industry will not do it itself?

Easy answer; someone else.

Just my two cents,

Kevin Armstrong

Publisher