A Chance to Roll Back the Clock

Guest Editorial

There seems to be a change in the opinion of many recovery agents in regard to the value of associations in general. You are the owner of your own company and certainly have the right to your beliefs as to where and how clients find and assign business to your company.

To that end I will state that those of you that work for large contract banks and their forwarding agents (which now number in the dozens) may have thoughts that you no longer need advertising or that you can now afford to reduce your advertising space based on high volume. You find your office very busy and cash flow (as opposed to profits) seems very exciting and to that end you have modeled a new business plan.

I certainly understand the new age recovery plan ; it entails obeying and giving up all legal rights to the large volume clients as well as working for a fixed low profit contract number of $275 to $350 . Those agreements and contracts are inclusive of unlimited free storage as well as free skip tracing based on a report card system that is tied to volume. In most contracts you sign away a radius of 100 plus miles for free and in many contracts you give up the right to charge for personal property.

Yes, I understand how one justifies the above business plan and how those that sign onto these agreements offset the losses. In simple terms, you make it up by trying to overcharge the debtor on the backside of the recovery. One CPA firm study showed that the cost of recovery was $390- $430 and that other services would be needed to obtain any type of profit. The end result is your need for debtor redemption and the possible legal abuse of the American Consumer Debtor.

If one recovers a car for “Too big to fail clients” for $275 to $350 then one is hoping for the offset of loss based on storage , personal property , and redemption fees that may total $400 to $800 charged to the debtor upon redemption. (And that is what the CFPB is sworn to protect by the Dodd Frank Law) This is the accepted view and the way many recovery agents operate and it seems to be working well for the time being. This new model should never be blamed on the recovery agents. In fact the predatory lien holder clients have outsourced the legal risk and the beat down of price fixing to outside sources (forwarding companies).

Their plan (in regard to using forwarding companies) lies in the ability to point lawyers and the CFPB auditors toward someone besides their own “Too Big to Fail Institutions”. Their plan (on contracts) is also calculated in the golden rule, “He who holds the gold makes the rules” In fact the bail out of 2008 empowered the mega clients to abuse and price fix the small business third party providers. Many recovery companies have and will go out of business and others will take drastic measures that will abuse the American Consumer in order to stay in business and keep jobs for their employees. These contracts and unholy alliances are designed to make the bankers even more money in bonuses and profits. The profits for the remaining small independent banks are at a new low and the profits for the 50 largest banks are up 600% since 2008.

In the last few weeks you have read some published articles of Auto Remarketing experts regarding the future crash of big banks based on subprime auto loans being made during the past few years. The facts stated are that many millions of loans are being made involving an average of 72 months ( and more) and 630 beacon scores (and lower). Auctions across the country are already loaded down with high mileage cars that are not selling. When they are finally sold, the large losses are acceptable for the predatory profit making banks but are beyond credit recovery for the American Debtor Consumer. Mind you, this is the same Consumer that is supposed to be protected by the CFPB.

These same auctions are buying land and pouring concrete in anticipation of possibly a 200 % increase in repossessions over the next 16 months and forward. They will certainly need the room and the fact is, those of you that work on the high volume business plan will also need more space. One has to figure: How much more land you will need to purchase in order to store longer for the same wonderful price of free? Also one must anticipate and question what the redemption percentage on those 600 beacon score loans will be reduced to? These decisions must be thought out by repossession business owners but not forwarding companies as they have no investments of land and the inclusive expenses connected to the land or any other aspects of the physical repossession business.

The 22,000 credit unions in this country have always looked at Recovery Association Members as the leaders of the recovery profession. The hard back directories published by the associations are what many utilize to select recovery agents nationwide and one is even referred to as “The Official Guide”. These directories enable the lenders to find a real professional that is backed by a bond and grievance system. Independent regional banks also trust and respect the “book” as the rule and normal.

My point is that you may think you no longer need the professional credentials and reputation that has supported you from the beginning and has been provided by your membership in a recovery association, but is that the real truth? Is it really time to reduce your advertising? During the next few years there may be an opportunity to get back what many of you have lost. Fair retail billing for all services is what you are capable of recovering. Everyone knows that your property (whether owned or rented), your taxes on that property, your insurance on the stored belongings, the security costs on that property , etc. cannot be given away and in fact controls the profit of your recovery business. That money has been taken away by fear and false promises. That profit line has caused the American Consumer, which you are one, to be abused by clients that were bailed out when they robbed the American Consumers of trillions of dollars in savings and retirement.

I have always fought for what is best for the recovery industry. My desires and efforts have always been driven toward a better life and a fair wage for the hard work each of you perform each day. The risk of your life as well as the risk of legal actions that have become so expensive have worried me for decades but never more so than today.

I urge you to weigh where you came from and how your membership in a National Recovery Association placed you and your reputation in the retail market. Never forget that once you needed membership not just to obtain business but to make a statement of fact that one or more of the recognized industry associations in the United States credentialed you as honest, trustworthy, and of great experience.

You invested in an association and that association took the risk in you. Membership in an association will always get your business and in addition that membership will state to clients what really matters……. That as an association member you are to be trusted with the hardest and most litigious services that are performed in the auto lending process.

Make advertising and association membership decisions very carefully as based on the recent projections…..YOU MAY FINALLY HAVE A CHANCE TO ROLL BACK THE CLOCK.