The Impact of LPR Exclusivity on the Repossession Industry Part II

Industry White Paper – Part II – American Recovery Association (ARA) LPR Committee

March 20, 2025 – As a continuation of the White Paper released by ARA last month, our ongoing examination of License Plate Recognition (LPR) exclusivity and its effects on the repossession industry has led the ARA LPR Committee to conduct structured interviews with key stakeholders, including forwarders, agents, and lenders. This article summarizes those discussions, capturing diverse perspectives on LPR exclusivity and its wide-reaching implications. This article reflects the answers to questions posed to stakeholders and their perspectives, offering a comprehensive look at the challenges and concerns shaping the industry’s future. The insights presented here serve as a prelude to an industry-wide survey ARA will distribute in the coming weeks to further measure industry sentiment and advocate for meaningful reforms.

Read Part I Here!

LPR Exclusive Agreements: Industry Impact & Solutions

LPR exclusivity is negatively impacting the repossession industry, leading to reduced recoveries, increased costs, and extended recovery times. Jason Clark, Managing Partner at Resolution Management Group, states, “Exclusivity made sense 10-15 years ago. Today, it no longer does.”

Negative Impacts:

A decline in plate-scanning agents and forwarders investigating leads results in lower recovery rates.
Data silos prevent interoperability, leaving many vehicles undetected.
Delays increase repossession costs, asset depreciation, and consumer debt.
LPR providers prioritize market control over efficiency, harming agents, lenders, and consumers.

Proposed Solutions:

Open-Access Data Sharing – Interoperable LPR databases can improve recovery rates.
Industry Regulations – Prevent monopolistic control and ensure fair competition.
Stakeholder Education – Transparency drives industry-wide change.
Ethical Business Practices – Encourage fairer policies through collective industry pressure.
Alternative Tracking Solutions – “Create a cell phone app already – everyone has a camera!” suggests Clark.
Fair Contracts – Push back against restrictive agreements that limit operational flexibility.

Collaboration for Change

Forwarders and agencies must demand non-exclusive LPR access.
Educate lienholders on the financial impact of exclusivity.
Utilize public awareness campaigns and legal action to challenge anti-competitive practices.
Standardize LPR usage to ensure ethical and transparent data access.

Key Questions:

Who owns scanned data – agents or LPR providers?
Should LPR hits be exclusive to scanners for a set period?
How can third parties be prevented from selling scans to lower-cost providers?
Should LPR providers dictate terms when lienholders own the paper?
If agents pay for cameras, should they own the scanned data?

Clark sums it up, “Either the cameras should be free, or the data should belong to the agent.”

The Harm of LPR Exclusivity: An Industry Betrayal

“Exclusivity has set our industry back five years. It’s a betrayal of the repossession businesses that built LPR in the first place.” – Anonymous Forwarder

ARA’s White Paper outlines how exclusivity is eroding the LPR industry. Previously, LPR companies operated independently, selling camera systems and monetizing data while forwarders managed repossession assignments. However, that balance has collapsed.

Today, LPR providers have become forwarders, competing against their own vendors and selling data directly to lenders, bypassing the repossession companies that originally gathered it. “Instead of rewarding those who made LPR viable, they cut them out entirely.”

This shift favors opportunistic startups over professional, compliant businesses, weakening the repossession network. “Lenders don’t realize they’re building a house on sand. When experienced agencies disappear, they’ll be left with an unmanageable, fragmented workforce.”

Breaking the Cycle: Who Leads?

Trade Associations Must Act – Organizations like ARA must push back through advocacy and industry-wide action.
Lenders Must See the Bigger Picture – While exclusivity might boost short-term gains, it risks dismantling a once-reliable repossession network, leading to compliance failures and increased consumer complaints.
Forwarders & Repossession Agencies Must Align – “Assignments must honor their source—forwarder or lender. Repossession companies shouldn’t chase LPR’s passive claims.”

Operational Inefficiencies & Agent Safety Risks

LPR technology has transformed vehicle location but at a cost to direct assignment agents. “We spend hours skip tracing, conducting surveillance, and securing assets—only to have an LPR agent recover the vehicle last-minute,” says Brad Webb President of Premier Adjusters. “It’s a complete waste of resources and manpower.”

Challenges with Staged and Dual-Assigned Recoveries:

Heightened Volatility – “If an LPR agent attempts recovery and backs off, the customer is immediately on guard,” Webb explains. “When a direct agent arrives later, they’re walking into an unpredictable, sometimes hostile, situation.”
Increased Confrontations – Adjusting schedules to counteract LPR interference has led to more customer confrontations.
Resource Waste – Agents invest in skip tracing, surveillance, and fuel—only to have recoveries disrupted by last-minute LPR hits.

Escalating Safety Incidents:

Customers driving units off tow trucks, endangering agents and bystanders.
More prepared resistance from customers, alerted by prior LPR attempts or client notifications.
Increasing cases of customers waiting inside their vehicles, creating dangerous face-to-face confrontations.

Key Concerns with LPR Providers:

Recovery companies generate LPR data, yet it’s often used against them.
LPR focus has shifted from direct partnerships to growing the forwarding model, reducing agent revenue.
LPR remains a valuable tool, but without transparency and fair policies, it threatens the stability of traditional recovery companies.

Lender Perspective: The Impact of LPR on Portfolio Performance

LPR enhances lender recovery rates, particularly for hard-to-locate vehicles. When properly managed, it benefits both lenders and agents. “LPR is a powerful tool, but its effectiveness depends on how it’s integrated into the repossession strategy,” says an anonymous lender.

Are Lenders Aware of Artificial Performance Boosts?

Experienced lenders recognize inflated performance metrics. “We don’t base market share on inflated numbers—recovery rates should reflect real results, not a mix of live hits and direct assignments,” notes a lender.

Ensuring Fair and Transparent LPR Assignments:

5-Day Rule – Allow direct agents or forwarders exclusive repossession rights for five days before staging with LPR on day six.
Separate LPR Staging – Assign directly to LPR-only companies rather than allowing forwarders to stage and assign to agents.

This approach improves data accuracy and enhances agent safety by preventing multiple companies from targeting the same vehicle, reducing conflicts and unnecessary confrontations.

“If we don’t address these issues now, we’re putting agents at unnecessary risk every single day,” Webb concludes.

Call to Action: The Industry Must Act

ARA extends its deepest gratitude to all participants who contributed their insights and experiences to this discussion. Their willingness to engage in open and constructive dialogue is crucial in advancing this sector and ensuring a more transparent, fair, and effective repossession ecosystem.

As we move forward, we encourage all industry stakeholders to stay engaged and participate in the upcoming industry-wide survey. Your input will be instrumental in shaping future policies and advocating for necessary changes. Together, we can drive meaningful reform and strengthen the foundation of our industry for years to come.

the American Recovery Association (ARA) LPR Committee

ABOUT AMERICAN RECOVERY ASSOCIATION

Originally chartered on July 22, 1965, and located in Dallas, Texas, American Recovery Association (ARA) is a membership organization made up of more than 260 repossession business owners providing service from more than 500 locations to more than 27,000 national and international cities. As the world’s largest association of recovery professionals, ARA strives to be a leader and advocate for the recovery industry by providing member support, education, and certifications; fostering relationships between the lending community and repossession agents; and hosting the annual three-day North American Repossessors Summit (NARS) – the largest repossession conference in the industry. For more information, go to repo.org or call (972) 755-4755.

The Impact of LPR Exclusivity on the Repossession Industry – Part I

ARA Letter to the Industry – Lender Overreach