Transparency

In October, we posted an article titled “Forwarders skimming Santander/Chrysler pay increases.“ Within the editorial, we brought to light allegations that some forwarders were not being transparent about their sharing of Santander/Chrysler Capital incentives to agents. This prompted phone calls from ARS and Location Services who wished to accept our desire for open and honest communications on the matter. Location Services has taken the lead.

Last week I had a great conversation with Jerry Kroshus, CEO of Location Services and Jose Delgado, their Chief Client and Operations Officer. Both are long time forwarding industry veterans well respected across the recovery spectrum. I can’t say that I was too surprised to hear from them in light of the October article on the Santander incentive fees, but I can say that I am pleased that they offered public clarity on the matter.

Communication

Rather than duplicate the communication, they provided me the exact communication that they shared with their agent network the very same day as our article. Below is a synopsis of its contents.

In their own defense, they note that their average involuntary repossession payable fee is $325 versus the industry average of $285.
Location Services takes pride in paying their agent network promptly, with a goal of paying invoices between 7-15 days and not to exceed 30 days. Also, Location Services does not require a discount by the agents in order to pay them promptly.

As far as the actual disbursement of Santander/Chrysler incentives, they shared the following;

In regard to the Santander/Chrysler Capital fee increase to their forwarding network for approximately $100 per repo effective 10/1/2022, they explained with 100% transparency that they had chosen to split the fee 50/50.
And while Santander had eliminated the $20 fuel surcharge, Location Services has elected to pay it across the board. Whether or not the lender agrees to pay it.
Location Services further adjusted the incremental split of the $100 to 75/25 while still maintaining the $20 fuel surcharge.
The affect of this is a $325 recovery fee + $75 Santander Incentive + $20 Fuel surcharge, for the sum of $420 for every Santander involuntary repossession.
In addition, they will pay a $150 passthrough fee on all flatbed and dolly fees.

A little background

For anyone unfamiliar with them, Jerry left PAR in 2017 and co-founded Auto Approve, an auto refinance company, based in Maple Grove, MN. Auto Approve was then acquired by Location Services and its parent company Delaware Street Capital in late 2018 at the about the same time as several large regional recovery companies.

Jerry then joined Location Services as their Chief Client Officer until later asked to take over as CEO of Location Services in February 2020. That was just one month ahead of the COVID lockdowns and all of the hardship experienced by the entire industry in its aftermath. Location Services was not spared and had to close down their own branded agencies as well.

Soon after Jerry’s assumption to CEO, Jose came on board. Both had previously worked together at HSBC and PAR. Since then, they have led Location Services’ successful transition from the hybrid model (direct and forwarding) to 100% forwarding.

Complain if you’d like, but this is transparency. Honesty isn’t always easy, but they are a business just like everyone else and just like everyone else, their cost of operations has increased as well.

I applaud this frank and honest level of communications from Jerry and Jose. I sincerely hope that this is just the first of many communications from Location Services as well as other forwarders pertaining to their fee structures and payable invoice matters.

This level of direct “adult” level communication helps eliminate a lot of the rumor, suspicion and mystery that persists in its absence. That’s what transparency looks like.

While many will scoff at the notion that they should receive any of the incentives, Location Services is openly sharing this conversation. This is, so far, better than any other forwarder to date and I encourage others to follow their lead.

Kevin