Peter Conrad CARS, ATP, CFI, CFII, MEI, Comm SEL-SES, PI is an automotive expert, member of ExpertPages since 2007. To contact this member, click here for his profile page.
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So you’re a collection agent, or maybe a bank officer, and you have some repossessions you need to get
done. Easy, right? Just open the phone book and call
up the repo company with the biggest advertisement. Anyone can do a repo,
right? Well, that can be part of the problem; in many states, anyone can do repossession, without any
special licensing or bonding requirements. It is true that a
of repossessions are simple: find the car, tow it away (or even just
drive it away if you’ve obtained a key). However, there are plenty of legal
pitfalls involved in making sure each and every recovery is done lawfully. The
repossession company’s job is to make sure they are legal at all times, but the
reality is that you can get yourself into trouble if the company you hire does
something wrong when acting on your behalf.
The good news is that there a few simple steps you can take
to screen repossession companies and select a reputable operator who will do
the job right. You want to find out information in three important areas:
Policies, Insurance, and Ownership.
Policies
When interviewing a prospective repo agency, ask them about
their safety and hiring policies. You want to find out as much as you can about
what the rules are, but don’t forget also to ask how they enforce the rules. A company that can show you written policies is always a promising prospect, but you’ll at
least want to find out where the company stands in three key areas.
- Guns. I can’t say it any more simply or emphatically: do not hire a company that permits their
employees to carry firearms on a recovery action. Period. Guns equal trouble,
and they do not keep the employee safer. Harry Dean Stanton said it best in the
movie “Repo Man” – when someone asks his character why he doesn’t carry a gun –
“Only an idiot gets killed for a car.”
- Background Checks. Does your prospective repo company do background
checks on their employees? It’s important in this business that you’re not
sending someone with a criminal record out into the field to recover property.
This is especially true if the person in question has a history of theft or
violence. There is nothing worse than a repo agent who is likely to start a fight rather than avoid one.
- Driving record. Ask your prospective company what they know about the
driving records of their agents. An employee with a shaky driving record is not
necessarily as bad as one who carries a gun or has a criminal history, but you
would still run some risk of having property wrecked and people injured by a
poor driver.
Insurance
Find out who insures your prospective repossessor (it should
go without saying that if a company you’re looking doesn’t have insurance, run,
do not walk, in the opposite direction). Call the insurance company and ask for
the repo company’s loss run over the
last three year period. Obviously, the more insurance claims the company makes,
the less likely you are to want to do business with
them. This is an area where you might need to make a judgement call. Even the
best company will occasionally have a loss, and bigger companies will have more
losses because they do many more recoveries. A rule of thumb I recommend is to
avoid a company that has more than two or three claims in the past three years.
For larger, multi-state companies, make that two or three for each state where the company operates. If possible, also try to
find out the nature, or at least the dollar amount, of the losses. A company
that has several claims for the occasional ding or dent might be a better bet
than one that somehow manages to destroy an entire automobile once in a while
during the recovery process.
Owner
Find out who owns the repossession company, and how long that person has been in the repossession
business. This can be tricky if you don’t get all the details. You may be
dealing with a company that has been
in business for twenty years, but that company could have just been sold last
year to a new owner who has no experience in the business. The way I like to
figure things, this qualifies as being in business one year, not twenty. I
recommend hiring a company that has been in business at least three years, and
has a track record of success and safety that you can check. And, just as you
want to avoid a company that has employees with criminal records, make sure you
check into the owner of the company.
Avoid doing business with a company whose owner has had past trouble with the
law.
Checking policies, insurance, and ownership for a company
you’re considering hiring does not have to be complicated, and is mostly a
matter of common sense and doing your homework. However, there is still one
additional trap you can fall into if you’re not careful: Forwarders. Forwarders
are companies that advertise repossession services, often covering a large
geographical area, but then farm out the actual recovery work to individual
local repo companies. Forwarders can be reputable, but there is an extra layer
of management between you and the person actually doing the recovery, and that
can cause problems. You’ve checked the Forwarder and they have a comprehensive
policy to avoid lawsuits, but what do you know about the local company the
Forwarder will hire to do your recovery? Does that local company have the same
policy? Does the Forwarder enforce their policy on all the companies they hire,
and if so, how? Often times a Forwarder will make the recovery company they
hire aware of their policy, but do
nothing at all to ensure the recovery company is in compliance. This can be
almost as bad as not having the policy in the first place.
My advice is to be cautious in this area. First and
foremost, make sure you understand who is doing the actual repossession work.
Don’t let yourself in for an unpleasant surprise when you learn, literally by accident, that the company you hired
is nothing more than a re-marketing clearinghouse. And if you do want to use a
Forwarder, get them to tell you everything you need to know about the actual
company that will be physically picking up the car or other property you’re
trying to get back.
An ounce of due diligence can be worth its weight in gold.
Don’t be caught out in the cold when someone you’ve hired to do a potentially
tricky job gets it all wrong.
