Consumer movements such as Bank Transfer Day and Occupy Wall Street demonstrate the anti-big-bank, anti-corporate-greed sentiment of the American consumer, but the negative effect of “Too Big To Fail” banks extends beyond the teller line.
Over the last few years, for example, there has been a trickle-down effect in how the vendor supply chains of such institutions have interacted with large bank customers. When it comes to vehicle repossession, the disregard banks have shown their past-due consumers makes it obvious that consumer protection, or even fair dealing, during the repossession process is of little concern. An MSNBC article this month describes an example of some of the repossession abuses. What does this have to do with your credit union’s handling of their repossession accounts? Quite a bit.
Auto repossession is the most invasive collection practice allowed in the United States. OWS and BTD show that consumers are tired of the handling they’ve received at the banks, especially regarding their collection practices, including robo-signing to speed foreclosures. In a credit-union culture where “consumers” are “members”, it’s even more important to exhibit ethical and safe handling in an area like the potentially thorny repossession process.
The traditional banks and auto lenders have been getting a little out of hand in their repossession practices. This was highlighted in a white paper published in March 2010 by the National Consumer Law Center, “Repo Madness.” In it, repossession industry expert Joe Taylor speaks of bank auto loan collectors and how they “intimidate agents and force them to take more unnecessary risks or face losing assignments.” This document also focuses on their use of discount, third-party repo account “forwarders,” or companies that accept huge volumes of repossession accounts from the major auto lenders, and re-subcontract these accounts to agents of their choosing, often to the cheapest recovery agents they can find. To add fuel to the proverbial fire, these forwarding firms often assign their repo accounts on a contingent basis; these often untrained, under-qualified, budget car repossessors don't get paid if they don’t seize the car.
It incites a do-or-die mentality, and most of the deaths and injuries during auto repossessions in the past few years have occurred with contingent accounts assigned through forwarding firms. Earlier this month (December 2011) a large forwarding firm and its blue-chip client lost a $2.5 million suit where a consumer was needlessly killed during a contingent repossession.
ACA International educator and Sante Fe Credit Union director Ron Brown writes: "I have read many depositions where civil torts, violence, and even deaths have occurred during the act of repossession and almost without exception each case has its roots in requiring the recovery agent to work on a contingent basis. This demand on the part of the lender is the catalyst which creates these irreparable situations."
The most effective way to assure proper repossession risk management is for your collection department to assign repossession accounts directly to an agency found in one of the national trade associations.
These trade groups check the agency’s background and offer industry certification. Associations like Time Finance Adjusters (tfaguide.com) offer ongoing continuing education on the GLBA, FDCPA, Red Flag Rules, and the latest case law regarding Section 9 of the UCC. The agencies in these trade groups have the experience to avoid the landmines in self-help repossessions. TFA members, for example, received certification in SAT/CAT (situational awareness training/conflict avoidance techniques) in 2010. It's real law-enforcement-grade training on how to avoid the very types of conflicts so graphically portrayed in NCLC’s “Repo Madness” and on truTV’s “Operation Repo.”
Consumers are tired of the big bank’s corporate attitude and are voting with their passbooks for credit unions. And the best way for credit unions to distance themselves from the repossession-related abuses handed to the consumer by the big banks is to assign repossession accounts directly to the trained, experienced, and certified repossession professionals found in Time Finance Adjusters (visit www.tfaguide.com).
Call 800-874-0510 for a free hardbound Credit Union edition of the TFA “Official Guide” listing the best repossession agencies in the U.S.