Guest Editorial

Santander Consumer USA sent an Open Letter to everyone in the Repossession and Recovery Industry yesterday on March 26^th.

Read Here!

While the basis of the letter seemed to be more of a justification of recent changes made by Santander and the negative responses it had received by the Repossession and Recovery Industry, Santander went in to great detail of its relationship and commitment to be compliant with Federal regulations and the CFPB (Consumer Finance Protection Bureau).

Santander did acknowledge that as a financial institution it is ultimately held responsible for the actions of both its aggregators (forwarders) and the recovery agents in the field.  Santander further acknowledged that the costs associated with becoming complaint with the new federal regulations were staggeringly high for both them and the recovery agents.

Santander announced starting April 01, 2013, they would increase their commission/fees to the recovery agent in specific selected services.  While no mention was made by Santander to the amount of increase or to the definition of “specific selected services”; Primeritus Financial Services (who recently came under scrutiny over its new service agreement) announced a $15.00 increase per assignment for Santander accounts to their network of recovery agents. By no means is Primeritus stating this reflects the entire amount being offered by Santander, but simply what they are willing to pass along to the recovery agent.

One of the most contended changes made by Santander in recent months was its capping of consumer redemption fees nationwide to a maximum of $150.00 including vehicle storage, personal property, and administrations fees by recovery agents.

Santander addresses this issue in its open letter citing the Dodd-Frank legislation as its justification and the need in becoming complaint with it.  While the Dodd-Frank Act does mention many of the items cited in the Santander Open Letter, one omitted item from the Dodd-Frank Act is fees for personal property.

While it is true that both the Dodd-Frank Act and the CFPB want standardized fees for redemption’s, Private Property fees are not included.  Actually, the CFPB, siding with recent case law, wants creditors (lien holders) to stay out of the Private Property issue all together. It would seem by getting involved in any manner (including fees or copies of inventory lists, etc.) would not only fall under the Fair Debt Collection Practices Act, it would also constitute a 3^rd party disclosure violation, this time with the creditor/lien holder being the 3^rd party. Personal Property is outside the scope of the security agreement between the creditor and consumer. Both the courts and CFPB have kept that the Personal Property has come in to the possession of the repossessor, not as that of a “Bailee” as some might assume, but by default of the process.  Many States have enacted laws governing Personal Property that holds the Repossessor as the responsible prevailing party.

Disclosing Private Property inventory to the creditor, or its aggregators, may open a liability risk beyond measure. What consumer wants their financial institution to have knowledge of their unmentionables left in their car?  What if those unmentionables are not that of the consumers, but the consumers’ friend, relative, or spouse?

Additionally, by dictating Personal Property fees, regardless of amount, creditors and their aggregators will once again step outside of the security agreement, which in turn could constitute a 3rd party debit collection and be in direct violation of the Fair Debit Collection Practices Act.  Unless the repossessor is billing the Personal Property fees directly to the creditor or its aggregate, it would seem much wiser, and less liable,  to stay out such process and allow the court drawn relationship between consumer and recovery agent to continue un-interfered with.

Santander ends its Open Letter acknowledging prior communication barriers with their recovery agents in receiving critical information from Santander.  Recognizing that direct communication between creditor and agent as vital, Santander will be working to streamline its information channels.

While the Santander Open Letter may be criticized by some, at minimum it represents a willingness to communicate with those that serve them and an acknowledgement by a major lender of the importance in strengthening its relationship with the Repossession and Recovery industry.