INDIANAPOLIS — The industry is seeing a dramatic increase in recovery agents being harmed — or worse, killed — while securing the collateral of their clients. Unfortunately, lenders unknowingly exacerbate this environment with contingency demands.

Contingency pricing attempts to cut costs by holding payment until the vehicle is recovered. Contingency demands put the burden on the recovery specialist and can create a dangerous "whatever it takes" mentality.

As a result, the industry is seeing professional recovery agents passing on these kinds of assignments and leaving them for newer agents who are desperate to succeed in the industry. Sadly, this desperation, coupled with their inexperience, can sometimes lead to taking unnecessary risks — putting themselves and/or others in harm's way.

In most cases, contingency accounts come from forwarding companies hired by financial institutions to source and manage all their recovery assignments. Forwarding companies quote one price to the financial institution and then try to get the collateral secured as cheaply as possible in order to make a larger profit.

In many cases, they can avoid the professionals with the proper training and accreditation, opting instead for a cheap, fly-by-night, renegade recovery agent. Unfortunately in doing so, these forwarding companies are creating mountains of liability for the financial institutions.

Lenders cannot only avoid this liability, but they can also help make collateral recovery safer for the individual agent by following these simple steps.

—Do not hire a recovery specialist based on contingency.

—Make sure your agent has a minimum of $1 million bond.

—Make sure your agent has a minimum of $1 million insurance premium with at least a $3 million umbrella. Also make sure your agent's insurance policy says it covers wrongful repossessions. This will ensure you are not liable.

—Make sure your agent is affiliated with a credible trade association such as American Recovery Association. ARA members must meet strict criteria in order to join the association

—Make sure your agent is licensed in the state they are operating.

At the end of the day, it comes down to the old adage of "you get what you pay for."

You don't want your 2008 Mercedes repossessed by a recovery specialist who hasn't had the proper training or who knows nothing about the Fair Debt Collections Practices Act or the Gramm-Leach-Bliley Act. You want an agent who follows the state's laws and acts in a safe and responsible manner.

You want an agent who won't put your financial institution at risk of litigation.

Art Blanchette is owner of General Adjusting Service in Indianapolis and immediate past president of the American Recovery Association.