Guest Editorial
In my 30 plus years in the repossession business I have seen so many changes that has affected the way we do business. Auto auctions have set up companies to solicit the handling of repossessions for the major banks and captive finance companies. Their purpose is to increase their sales of recovered collateral. They charge a fee to handle the assigned repossession and then broker it to Repossession companies across the nation. They depend on the recovery company they hire to find and recover the collateral for a flat fee.
These company’s forward repossession assignments to certain repossession companies who agree to work for far less than they charged at one time. These forwarders have little regard for the safety of the recovery agent. They demand Contingency, Free Deliver to their auctions and in some cases demand free locksmith work for keys to the recovered vehicle. They will refuse to pay for any investigation the assigned recovery company has provided to assist them in recovering the collateral.
Since the forwarders started operating, some major banks and captive finance companies have learned from these forwarders and now dictate how much they will pay for the recovery and even demand cheaper close fees. All of which will reduce their recovery expense and increase their company’s bottom line as well as increasing the risks for the recovery agents working the assignment. Because of the cheap fees, some lenders are willing to suffer a lower percent of recoveries.
The most dangerous of their demands is the contingency requirement. NO CAR, NO MONEY! And, as previously mentioned, since they will only pay rock bottom prices for the recovery it places the recovery agent’s employees in harm’s way. Most Recovery companies pay their field employees a commission for each recovery. Because of the contingency demand, it puts pressure on field agents to take dangerous risks they normally would not take. In most situations the actual owners of the Recovery Company may not take the increased risks but because the field agent is on commission they are put in a situation to take more risks in order to get a pay check. The cheap fees have caused serious personal injuries (even death) for some consumers and for some recovery agents as well as huge awards in Wrongful Repossession litigation. In two instances a recovery agent has killed two individuals over a voluntary repossession.
On some occasions it is necessary to make contact with the debtor because the vehicle is in a garage or behind a locked fence. On such contacts the debtor will sometimes call the client and the client will take a promise from the debtor to pay which should earn the Recovery Agent an appropriate close fee. However, in many such situations the recovery company will be paid as little as $25.00 which does not begin to pay for the time and expense of working the assignment. Such low fees, in some instances have the potential to cause the field agent to become aggressive in attempting to secure the collateral, knowing they will not be paid a decent fee if the assignment is simply closed.
The recovery companies willing to work at reduced rates will only work the account on a limited basis. They may work the assignment the day they receive it if the location is local. If the account is located in an area that is remote they may wait until they have another assignment in the area before they work the account. They will give bogus updates just to appease the client and give them more time to work the account again whenever they may be in the area. In such situations clients seem not to consider the loss from depreciation. If they had used a professional, the extra money they would pay for the actual recovery would most likely be less than the one-month depreciation of the collateral.
Another method some of these clients use to cut their expenses is to have the recovery company sign unfair Hold harmless agreements. On many occasions this will require the recovering agent to hold them harmless even for the client’s mistakes. Unfortunately, some of these recovery companies are willing to sign any agreement just to get the business.
The management of these major banks and finance companies are more concerned for their monthly or yearly objective to keep repossession expenses down than the lives of the recovery agents they hire.
Ray Crocker
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