By on March 18, 2010

Private companies that repossess automobiles without the involvement of law enforcement are creating potentially deadly situations, a report released Thursday by the National Consumer Law Center (NCLC) warned. The Boston, Massachusetts-based non-profit legal advocacy group examined the consequences of turning car seizures over to private firms, particularly during the recent economic downturn.

“In just the past three years, the publicly reported toll from self-help repossessions is shocking,” John W. Van Alst and Rick Jurgens wrote in the NCLC report. “Six deaths. Dozens of injuries and arrests. Pistols, rifles, shotguns, knives, fists and automobiles wielded as weapons. And, in at least three cases, repo agents towed away automobiles with children under the age of nine inside.”

An estimated 1.9 million repossessions take place each year. In 33 states, no license or background check is required for the companies that repossess cars on behalf of lenders and car dealers. This means convicted felons can, and do, operate repo businesses.

The NCLC report takes issue with the practice of allowing a lender to unilaterally seize a car from its owner for missing a payment without first having a neutral third-party judge or administrative officer verify the claim.

“With the ability to repossess on a whim, dealers and lenders can use repossessions not simply as a means of retaking collateral when a debtor defaults,” the report stated. “Lenders can also use the threat of repossession to intimidate consumers. For example, the prospect of having a car seized can be used to keep a consumer from asserting the right to withhold payment for a warranty violation or other breach of contract in the sale of the car or the right to revoke acceptance of a car with substantial defects.”

The report cited court documents that showed one major repo company forced its agents to work up to 90 hours a week without overtime pay. “Each of you have the ability to do WHATEVER it takes to pick up more cars,” an email sent to employees urged. Those who failed to meet a minimum weekly quota of twenty cars were forced to work longer hours. The pressure to take extreme actions in several cases has resulted in violence both against vehicle owners and the repo men themselves.

NCLC recommended that states adopt laws that require lenders to provide notice and provide car owners with a set period to remedy missed payments. It also recommended that lenders obtain a court order prior to seizing a vehicle. This, the group says, would allow motorists to have the opportunity to have a chance to challenge an improper seizure in a neutral setting. The report also urged that repo companies be licensed to prohibit the hiring of individuals with violent criminal histories.

A copy of the report is available in a 1.4mb PDF file at the source link below.

Source: PDF File Repo Madness (National Consumer Law Center, 3/11/2010)

[courtesy: thenewspaper.com]

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21 Comments on “Report Warns Of Private Car Repo Dangers...”


  • avatar
    porschespeed

    My father did repo for some quick money almost 60 years ago. There is nothing going on now that didn’t go on then. Zip. Zilch.

    Threats of violence, guns, knives, rocks – part of the gig. If you’re smart, and good at your job, you talk your way past 99% of these issues. Some times you walk away, sometimes you run.

    I’m looking forward to the NCLC report on what that big bright thing is that comes up in the east and sets in the west. I’m just dying to learn if it will come up tomorrow.

  • avatar
    Steven Lang

    “The NCLC report takes issue with the practice of allowing a lender to unilaterally seize a car from its owner for missing a payment without first having a neutral third-party judge or administrative officer verify the claim.”

    Are they out of their unenlightened little minds?

    When the owner picks up their vehicle via repo, they have this ancient artifact called a title.

    That title will show who the current lienholder is on the vehicle. That is all law enforcement needs to verify and by the way… this information is already electronically recorded in their system by the DMV.

    • 0 avatar
      porschespeed

      If you have 15 minutes to waste, read through that groundbreaking report.

      The author’s ‘work’ is pretty much high-school level dreck. Observing the commonly known is hardly impressive, or informative.

      The only angle I can derive is that author is one of those who want to legislate pulling a permit and requiring a union master plumber to replace your water heater.

  • avatar
    twotone

    Do a line, get a drink and pick up a couple of cars. Life does not get any better than this.

    Twotone

  • avatar
    Dynamic88

    Otto. Otto parts?

  • avatar
    late_apex

    This is one of those jobs I simply would not attempt to perform. A necessary evil it seems. My vehicles are wholly owned by me and any attempt to drive one without my permission would result in me using my first and second amendment rights (in rapid order might I add).

    I’m guessing many TTACers are of the same mentality.

    • 0 avatar
      mpresley

      I’m of the same mentality, but legally (disclaimer: I don’t play a lawyer on TV) I’m not sure you can shoot someone stealing your property unless your life is threatened. Not that you shouldn’t be able to; it’s just that you might not be able to in the eyes of the law.

    • 0 avatar
      ClutchCarGo

      It is the case that one cannot use deadly force against someone unless a life is in imminent danger, either yours or someone else on the scene. Theft of property does not place life in danger.

    • 0 avatar
      Zammy

      The above two replies about it being illegal to use deadly force to protect property are wrong. While that may be the case in the states the posters are from, it is not the general case throughout the United States.

      In Colorado, where I live now, lethal force can be used to protect property under certain circumstances.

      Nevada, where I lived previously, is yet another state that allows lethal force in the defense of property.

      Heck, in Texas for example, even mere *vandalism* can be sufficient to warrant deadly force.

      I personally can’t imagine living somewhere that you couldn’t use force to protect yourself and your property.

  • avatar
    thecavanaughs

    I appreciate Steven’s point about the owner’s having a title and thus the right to repossess- although I need to point out that the bank has a clear and easily verified claim on my house, yet they must go through the courts in order to take it from me should I fall behind on the payments. So- let me play devil’s advocate for a moment- in many states the car is a legal extension of one’s primary residence- for example with regard to search and seizure, second amendment rights, etc. Following that logic, why would there be no third party involvement in repossessing something so fundamental to our daily lives that it is, on many levels, equated to our residence? To be fair… I’m not sure I accept that logic myself, more just pointing it out.

    • 0 avatar
      mpresley

      in many states the car is a legal extension of one’s primary residence…

      Does this stem from the “I can live in my car but I can’t drive my house” theory of jurisprudence? I suspect that if you are “in” your car you have certain rights. However, given the prevalence of repos it can’t exactly be equivalent to a late mortgage payment.

      http://www.ftc.gov/bcp/edu/pubs/consumer/autos/aut14.shtm

    • 0 avatar
      thecavanaughs

      I think maybe it is more than just me being in my car and extending my rights to it- I think the car is treated as an extension of the house in several aspects of the law, even when I am not in it. I could be wrong- it is complicated and I am not a lawyer- and even more importantly, it is time for me to leave work and go have a beer.

    • 0 avatar
      ClutchCarGo

      Second amendment rights extend to your car because you, as a citizen, have a reasonable expectation of privacy wherever you are (unless you waive those rights by going onto someone else’s private property, e.g. your employer’s). Repo-ing the car does not violate that right, and I expect that if the police searched the car without a warrant or reasonable cause after the repo, anything found would be inadmissable. I believe that a home (or apartment) gets extra protection from seizure by the lien-holder/landlord because it is a domicile.

    • 0 avatar
      Steven Lang

      “Second amendment rights extend to your car because you, as a citizen, have a reasonable expectation of privacy wherever you are (unless you waive those rights by going onto someone else’s private property, e.g. your employer’s). Repo-ing the car does not violate that right, and I expect that if the police searched the car without a warrant or reasonable cause after the repo, anything found would be inadmissable. I believe that a home (or apartment) gets extra protection from seizure by the lien-holder/landlord because it is a domicile.”

      Here’s how it goes…

      They can’t repo the car if you are in it.

      They can’t repo the car if it’s on your property and you tell them to leave. Some will just drag it out anyhow.

      You can’t repo the car if there is a court order (bankruptcy in most cases) that allows the debtor to keep it for a certain period of time.

      All other times you can. You ARE allowed to go on the private property of another business to repossess a vehicle. But if they are an impound company you have to pay for the tow and storage fees. Actually, the same is true if a repair company has a court order or lien on the vehicle related to storage and repairs. You have to pay them to get legal access to the vehicle.

      And now for the final kicker…

      If you lease the vehicle to someone, you can get the vehicle back immediately and the police are obligated by law to help you. This is why so many buy here – pay here’s are migrating to the lease and rent to own models.

      You can also repo the vehicles in these cases if the debtor drops full coverage insurance IF it stipulates in the contract that this is required. In that case what you have to do is pay for that weekly/monthly premium and when they fail to give you the funds for it, they are officially delinquent on the note.

      90++% of BHPH dealerships will work with the debtor. They don’t want the car back. The worst ones tend to have a corporate model, and they literally have lawyers hired full-time to pursue judgements and garnishments as well as an investigator to track down all jobs and sources of income.

      The interesting thing to me is that an auto finance company usually has far more rights under the law than a landlord. But if your property is, owner occupied, then the landlord pretty much has all the rights that a finance company would.

    • 0 avatar
      mpresley

      What if your house had been foreclosed and you’d moved into your car out of necessity. However, at the same time you were behind on payments and the repo man showed up. Could you shoot him? (Just kidding, folks…)

  • avatar
    Steven Lang

    Cavanaugh, one is real property and the other is personal property.

    Two completely different sets of rights under the rule of law.

  • avatar
    Patrickj

    I question the whole idea of the Government accepting and recording vehicle liens. A vehicle loan, when all is said and done, is a signature loan based only on the the trustworthiness of the borrower.

    Not saying I haven’t taken car loans, but securing a loan with a readily concealable, rapidly depreciating asset is foolish at best and deadly at worst. The lien serves only as a tit-for-tat means to impose inconvenience on the borrower, not as a means for the lender to cover losses.

    • 0 avatar
      Steven Lang

      No it doesn’t.

      You can legally collect on the unpaid balance through a variety of ways.

      1) Judgment

      2) Garnishment

      3) Lien on Property (Real and Personal)

      The recording of the lien on the public record protects the lender through all stages of ownership… except bankruptcy. At that point it is up to a judge as to whether the debt should be discharged.

  • avatar
    Robert Schwartz

    I have dealt with NCLC professionally before. They publish a very nice series of books on consumer credit law. But, they can get a bit overwrought about legal issues. This is one of them.

    First, I don’t really think that there is big problem of violence in repos. The law is very solicitous of debtors and claims of breach of the peace. No creditor wants to be subject to a breach of the peace claim, because they can be very expensive. I remember the case of the repo man who towed away a car with kids in it. The consensus on my commercial law mailing list was that they were in a whole world of legal hurt. Not to mention possible criminal liability for kidnapping, even if the kids were awake.

    Second, every time you add a procedural requirement, like going to court before repossession, you are adding a cost. The additional cost will make credit more expensive and harder to get. That is not a good thing for the industry or consumers. I would think that no legislative proposal to do something like that will go very far in the current environment.

  • avatar
    skor

    I’ve never had a car repo-ed, since I paid cash for most of my cars. From my observation, it seems that repo men fall into two broad categories: The desperate. Thugs.

    On a bright note, only a tiny percentage of cars get repossessed. The last thing a finance company wants to do is repo a car, since the average loss on a repo ride is $8K to the finance company.


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