Contingency in the news – The Huffington Post Article
EDITORIAL
With soaring fuel prices and back breaking inflation coupled with flat repossession fees, everyone seems to have forgotten the last battle over fees. That was contingency and that was just over ten years ago. it was something so blatant and obviously bad that even The Huffington Post wrote about it. So why has everyone given up on fighting this problem?
Way back when I managed a repossession company in the 90’s, my boss, industry veteran “Bud” Krohn refused to accept contingent assignments. “It’s for suckers” he used to say. And that’s the sentiment that the vast majority of the industry held for decades until the forwarders gathered such a huge swath of the assignment market.
But now, here we are, and almost no one speaks a word of it. “Surcharges” is all anyone really talks about anymore while they struggle to climb above the paltry flat rate fee structures and ignore all of the ancillary fees that have been lost over the past decade.
For some perspective, I thought I would share with you what we were talking about in the Huffington Post just ten years ago. Contingency was at the time, the biggest issues the repossession industry faced. Please read this and understand just how much has changed and how little things have improved.
DIRTY LAUNDRY – THE HUFFINGTON POST ARTICLE
The repossession industry had been railing against the dangers of contingent assignments, forwarders and low repossession fees for years before it caught the attention of the mainstream press. On March 22, 2012, the Huffington Post published an article written by Dave Jamieson titled “Repos Gone Bad: Are Big lenders to Blame for Driveway Violence.” In his rather lengthy article, he spelled out a great number of the grievances of the time, grievances that, for the most, remain unchanged. Sharing the tales of Jimmy Tanks death in 2008 and of course the Michael Faron Brown killing of Bill Jacobs in 2009, he set the stage for the industry to share its dirty laundry.
Read the Original Article in the Huffington Post Here!
Dave Jamieson did his homework. He worked briefly for a repossession company, read my articles in CUCollector and reached out to some of the industries vocal opponents of contingent repossession assignments. Quoted in the article was Mary Jane Hogan, President of the American Recovery Association, Joe Taylor, founder of the CARS compliance program for RISC, Debra Durham, owner of Midwest Adjusters, Ed Marcum of RSIG, Patrick Altes of the Time Finance Adjusters and myself, who he reached out to after reading my numerous articles on CUCollector.com. By then, I had already been very vocal on my concerns of the state of the industry and had ruffled a lot of feathers in the forwarding world.
Representing the forwarding side of the industry was Renovo CEO and founder, Kevin Flynn. With Jamieson highlighting the Clements and Tanks deaths, in hindsight, I kind of feel now that Kevin Flynn was set up. Regardless, he really didn’t help himself in the quotes that he made. Whether or not these were all in context with the questions actually asked is unknown.
When the reporter inquired about the Jacobs killing, Kevin Flynn stated that there was nothing that Renovo could have done to prevent the tragedy. He added that all of Renovo’s agents were trained professionals, and that contingency payment systems had nothing to do with Jacob’s death. Kevin also stated that it was a one in a million incident and when you do two million, you’re bound to get two deaths and that if it were the pizza delivery business the danger would be greater still.
As a leading insurance carrier in the repossession industry, Ed Marcum stated that he had seen the numbers of violent incidents rise from 2 or 3 ten years earlier up to 5 or six a month at that time. Ed directly attributed the injuries to the additional risks’ agents were taking to get the cars adding that when there are agents in the field getting paid nothing if they don’t pick up a car, they’re going to take more risks. With the larger lenders all adopting the forwarding contingent model, Ed stated that the agency owners hate working for the forwarders and the low contingent fees but do so anyhow because they have to have some form of income.
Patrick Altes stated that the business model endangered consumers adding that when agents don’t get paid when they don’t pick up a car, it alleviates the lenders from providing accurate location information. Being all free for their failure to provide good information, he accused lenders and forwarders of simply pulling up credit reports and assigning accounts to half a dozen different agents.
Mary Jane Hogan of the ARA had stated that the lender’s cost cutting push to the contingent forwarding model was lowering industry standards. She lamented on the change in how lenders were now treating agencies and that all they seemed to care about anymore was getting the lowest flat rate they could.
Reiterating, to some degree, Ed Marcum’s statement, Joe Taylor of RISC summed the situation up pretty good in stating that the activity of repossessing is dangerous enough, but with the field agent knowing that if they don’t pick up the car, they don’t feed their family. As such, contingent assignments make repossession agents take greater risks than an intelligent person would otherwise take. Debra Durham of Midwest Adjusters simply stated that contingent repossession assignments make good people do bad things.
Me? I didn’t get quoted much but stated that a repossession is when a recession and the finance world come into the front yard. My website, CUCollector was quoted and linked to a page I used to maintain of all the known repossession deaths. I soon after deleted the list after complaints that it was morose and that I was an “ambulance chaser.” A complaint that I am likely to hear again after publishing this book.
Kevin Flynn further deflected allegations that Renovo was at fault for driving down repossession fees and abetting the spread of contingency. Flynn claimed that Renovo had simply created a standardized and professionalized national brand that lenders were looking for. He also said that Renovo itself was struggling with lenders who had come to expect more for less. Kevin claimed that eight of his ten biggest clients (lenders) had reduced the fees they would pay over the past two years and that it was the lenders who were at fault.
Kevin further added that the other new forwarding companies were adding to this problem in creating additional competition in the market space. Looking back, I have come to agree with Kevin on at least his last points. Kevin may have pioneered the roll-up agency and forwarding model, but the forwarding market was getting thick with KAR Global’s PAR in the market as well as many others. While forwarding had been around since the dawn of the industry, the industry failed to capitalize on it and had come to pay the price and the price was now contingent and paid with thin profit margins and many lost lives.
This previous section is an excerpt from my book “Repo Blood – A Century of Auto Repossession History.”
Ten years have passed. Kevin Flynn is gone, but most all of the rest of us are still here. Nothing has changed. Why, because the repossession industry failed to put their feet down and say no to it. And since no one did so, they stripped it of storage fees, property fees and left you all with the same contingent fees everyone was complaining about ten years ago.
At least then it was marginally survivable. Not so now. The industry is at a breaking point that no surcharge will fix.
Talk is cheap, action is priceless.
Just Say “No!”
Kevin
Contingency – The forgotten battle – Repo Blood – Fight for Fair Fees
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