Recently we have heard an outpouring of concern from the professional recovery agents and the insurance community regarding the newly released contract from Chase Auto Finance. NFA shares your concerns. The board discussed this matter last week at our midwinter meeting and decided to have the contract reviewed by our general counsel on behalf of the members of NFA. We will also be reaching out directly to Chase responding on behalf of the NFA. This effort is being made in hopes of negotiating a more mutually beneficial agreement for Chase and the repossession community. Below is a summary of concerns conveyed by the repossession industry.
The first area that stood out is the set repossession fee agreement. This practice is eroding our industry and damaging the supply chain. As the president of NFA I am deeply troubled by this continued practice. The industry is receiving many contracts that include a set price for services, free storage, domestic keys, free mileage and unfortunately in many cases are also contingent. This does not allow any compensation for services rendered on accounts that are worked and updated to client’s requirements but not successfully recovered. These contracts are not adjusted for any cost of business increases over the last five years or so, nor do they account for the changes in business expenses from state to state.
Many insurance agents have expressed concerns regarding the repossessors responsibility to cover at their sole cost and expense damages that may exceed the fair market value of the vehicle and would require the agent to satisfy the account balance if that value is greater than the actual cost value of the vehicle in question. That means the recovery professionals are contractually obligated to pay the difference. This difference can be substantial and guarantees the payoff of the debtor’s deficiency. This puts the client and the debtor in better position than they would have ever been otherwise and leaves you with the bill. We believe this practice to be unfair, financially burdensome and would cause undue harm to your small businesses and the repossession community as a whole. I have growing concerns over the agent’s requirement to cover direct primary on any client’s vehicle when the agent is being required to store the vehicle without proper storage compensation. I believe the clients that require free or reduced storage should be expected to self insure their vehicles while at the agents lot. These types of contract requirements could put an agent out of business in the event of a natural disaster and should not be an acceptable industry standard.
Many agents have expressed further concerns; the lack of a mutual and equal indemnification, favored client clauses that demand the lowest price offered to a similar but undefined client, additional uncompensated compliance practices, set fees for repossessions using APLR technology that is purchased at the agents expense, higher insurance demands, low or no compensation for accounts that result in a payment by the customer and additional services that are expected by the client to be included in their set fees without being able to bill for the actual incurred cost of services.
We are very concerned by these client practices but are also committed to finding solutions and would like to work with these financial institutions to preserve the safety and professional future of the repossession industry. We encourage the banking community to consider the cost of doing business in this industry before formulating the contracts. We have heard from the community many times over the last several years regarding standardized and fixed price contracts. Many in the industry are afraid to try and negotiate due to the fact that they have been told if they do not sign the agreement they will not get the work. We hope in reaching out to these clients for a fair agreement that it will not be met with ultimatums or unfair retaliation as many of the small businesses have suffered. Our only desire is to reach fair agreements, with industry standards and best practices for the betterment of the overall industry.
NFA understands and shares all of your concerns. We hope our efforts in responding to Chase and other clients like them, to change the terms of the contracts in a fashion that is fair in compensation and protections to all parties. NFA wishes to engage in a dialogue with Chase regarding the most current contract to better serve the banking and repossession community for the future. Many of the businesses in this industry want to continue to work with Chase and appreciate their desire to work with the most experienced and qualified agents in the industry. The NFA members wish to retain that relationship and are committed to providing the most professional services to Chase.
As president of the NFA, I am devoted to doing everything possible to protect and preserve our industry for the future. I am happy to report that NFA, TFA, ARA and RSIG have all issued responses to this contract. It is situations like this where a single true and unified trade organization could help preserve and protect the rights of our small businesses. It is paramount that we stand unified and work together in matters such as these, otherwise, the industry will only continued to be plagued with contracts that diminish our industry and devalue the professional services of the many small businesses it consists of. I hope we can all arrange an extension before agreeing to this contract, in order to negotiate these terms with Chase. We will keep our members apprised of any developments going forward and hope to provide good news for better industry standards for the business community soon..