The Slow Death Of the Repossession Industry
I learned an intelligent phrase years ago -”If it ain’t broke, don’t fix it”, and I am quite sure that everyone reading this has also heard it before. This article is a call to the auto finance industry to release the stranglehold it has on the auto repossession businesses they have contracts with, to recover their past-due collateral.
Let’s take a look at a couple of decades ago to see where the repo industry was and where it is today. Back in the 80’s and 90’s, auto repossession companies pretty much kept recovery rates somewhere in the 80% range. I know for a fact that collection managers would have put the axe to our necks and found a different adjuster if our rates were not in that range. There was less violence in the auto repossession industry back then, and also much fewer debtors suing clients and repossession company owners. Email was just emerging and proprietary systems were unheard of, yet communication flowed pretty well, despite the absence of those ways of communication.
Fast forward to the present. Today, recovery rates are reported to me in the 50% to 60% range, and sometimes as low as 40%. Almost daily, there are multiple news articles about repossession agents being shot, stabbed, beaten, run over and subjected to other forms of violence. Debtors are being arrested and agents are getting locked up, as well. Lawsuits resulting from repossessions being executed are at an all-time high. Despite today’s technology of mobile phones, laptops, email, text messaging, instant messaging, and a slew of auto repossession portals to flow repo orders through, communication between clients and adjusters is in a sad state.
The repossession companies and the auto finance companies, forwarders, banks and credit unions need to examine how and why the industry has changed so drastically for the worst, in the past 3 decades.
We can blame it on Operation Repo all we want. We can claim that debtors are more seasoned at being on the run. We can blame the repossession agents and accuse them of being unprofessional. We can point all sorts of fingers, but I say it all boils down to greed. It is the sheer fact that clients want a professional, honest, hard-working repossession company that has a nice office, staff that always answer the phone, secure storage lots, and brand new equipment – but they are too greedy to pay for it. Clients want a 9-course, southern, provincial French meal, but want to pay for a four-cheeseburger White Castle meal with a small fry and a small drink.
Back in the late 80’s and early 90’s, involuntary repossession fees were over $325, plus key, bag and tag, delivery to auction fees and, oftentimes, mileage and investigative fees. Clients generally paid a close fee as well, and many times paid the full repo fee when the repo agent’s efforts resulted in the account being brought current. There were no programmable keys back then, insurance was a whole lot cheaper, gas was dirt cheap, and wreckers (if used at all) were not that expensive. Repossession companies were paid a fair fee for what they did, and this enabled them to focus on doing the job well. They did not have to cut corners to save money. They did not work for free, and they had awesome pick-up rates. There was less violence and fewer lawsuits because they did not have to take chances to get the car just so they could get paid.
In today’s repossession industry, everyone seems to want to pay only if the collateral gets picked up. This causes repo agents to do things they would not ordinarily do just to survive financially. I find it funny how silent it gets when I ask a collector if they would work only if they were paid on the accounts that were brought current by their efforts. I see them grimace when I follow up with the fact that they are an employee and not a business owner, and yet their income is guaranteed, minus the expenses that come with owning a business. They get paid just to show up to work and put in 8 hours, while repossession company owners are working 24/7 and getting paid pittance fees that guarantee them a trip to bankruptcy court. Paying less and less obviously does not get you better service or results, yet clients continue to trim down what they pay.
What would result in paying adjustors a fair fee for a professional service? Let’s ask ourselves some questions.
- Wouldn’t it make them better vendors?
- Wouldn’t it cause them to work hard and be loyal to their clients?
- Wouldn’t it raise the bar of professionalism in the recovery industry?
- Wouldn’t it lessen violence and lawsuits?
- Wouldn’t it cause pick-up rates to be better?
- Wouldn’t it make these company owners better citizens to America and contributors to it’s economy?
- Wouldn’t it make for better business for America and it’s economy?
The industry was never broke. So why on earth did you set out to fix it? Your actions have just about destroyed this industry and the professionalism it once had. Each day, I speak to one or more veterans of the repossession industry that are calling it quits. The reason is always because it is not profitable for them anymore.
This article and petition are a call to the auto finance industry to get back to compensating their adjusters fairly. if you continue down this path, the only adjusters left won’t even qualify to make the cut to be on Operation Repo. Then we can say – R.I.P to the repossession industry.
Repossession company owners – please feel free to put your company name and owner’s name in the comments below. There is nothing wrong with asking to be fairly compensated for a professional service.