Entirely Different Industries: Towing, Recovering
DAYTONA BEACH, Fla. — Many individuals in the towing industry cross over into the world of the recovery, which in our world means repossessions.
In many cases, it would seem like a likely connection. We both utilize tow trucks, have to maintain vehicle storage facilities and train our drivers. In many cases, it is a natural connection, but there are very important operational distinctions to keep in mind before blurring the lines too much between the towing professional and the recovery professional.
One would be the laws.
When dealing with consumers and their private or non-public information — data about an individual obtained from a source that is privately owned and is not available to the general public — there are several federal laws governing how this information is handled. The cornerstone federal law governing this is the Gramm-Leach-Bliley Act, and it's a law that every repossession agent needs to be aware of.
When a creditor gives you a customer's name, a previous address, a maiden name, or any other information not readily found, you, your office staff and your driver are handling non-public information protected by federal law.
If your driver were to lose his clipboard with repossession assignments and it's found by someone ready to mishandle that information — this is an actual situation that went before the federal courts — or the driver discusses nonpublic information with the customer's friends or neighbors, there's a real chance you'll be charged in federal court.
With all the news about people's private information being stolen off laptops or through scams, there's a super-heightened concern for control of non-public information. And the government is taking this very, very seriously.
Another thorny issue is the handling of personal property found in the vehicle.
We're allowed to take the vehicle, but the government wants to hold our feet to the fire about how the property is handled. It needs to be carefully inventoried, and be made available to the customer for an extended period of time. Florida, for example, demands the property be stored for 45 days after the customer is notified of its whereabouts and costs to retrieve.
Just like with the towing business, allegations about missing property rank about No. 1 in the area of consumer complaints.
There's another less obvious difference in our worlds between the towing and the recovery industries. That is how the disputes are handled.
Unless the tower is violating a state or municipal law, it's pretty much just the tower and the customer facing off if there is an allegation. In the world of the recovery agent, there's a third party looking over our shoulder on virtually every case — the lienholder.
If the customer reinstates the loan, it will be the lienholder that puts the pressure on you if there's an issue regarding a damage claim or the alleged loss of the fabled $50,000 cash in the glovebox. Instead of just dealing with the customer, you'll be answering to the creditor too.
At times it can be frustrating to see the creditor's perception of the debtor quickly morph from them being a "serious collection problem" to becoming a "valued bank customer" when they reinstate the loan.
Besides the laws that govern the two different industries, there are a number of other different expectations and requirements to keep in mind.
—Good Fleet Management: Unlike a tow that you're getting called out on, working a repossession account might take two, four, even 15 trips to an address before the vehicle shows up — if it shows up at all. Also the creditor might provide you with several possible home and work addresses with many of those being old or incorrect.
—Skiptracing: This item ties into the previous one. Often the creditor does not have a current address on the customer, so your access to local or state data sources is invaluable. You need to have ability to come up with a current address and that is called skiptracing. Many agencies access database sources like Accurint, Masterfiles and others. Once you find the most current address, some creditors allow you to charge for your efforts, but some do not.
—Safety: Sure, we're both towing vehicles in our businesses, and the towing industry has a great track record of being concerned for safety. But literally being on a customer's property in the rough part of town at 3 a.m. and trying to get out with the car in under 60 seconds, brings about a whole new mindset regarding how the vehicle can be safely extracted so quickly without damaging anything or anybody. The drivers have to work like a pit crew at the Daytona 500, and still maintain incredibly high safety standards.
—Storage: Many finance institutions want the repossession industry to provide free storage. In other words, cars that you are currently charging a per-diem rate of $20, $30, or more, your bank clients will want you to store for free (at least for 10, 15 or 20 days). In addition, the Garage Legal Liability insurance you have now will be considered inadequate. Many creditors want you to carry direct primary insurance on their cars. In other words, our costs and liability to store repossessed cars is higher than normal tows.
The repossession business can be very interesting and can be potentially lucrative. There are some significant operational differences. But when overcome, repossessing vehicles can be a natural sideline to anyone already in the towing business.
Patrick Altes is the owner of Falcon International, one of the nation's oldest and largest independently owned repossession agencies.