Money is the root of all evil, the saying goes.
It seems to be no different in the repossession industry. I have been a recovery professional for almost ten years. Three years ago this month, I opened my own business because I was convinced that I could compete with a quality product in an industry where quality was hardly important any more.
This was the worst time in the history of our industry to open a shop. You will likely recall that loan volume was decreasing; banks were beginning to fail; 'forwarders' and franchisers had exploited the market and consolidated most of the existing providers.
BUT, I started anyway.
Without the risk of failure victory just isn't the same.
In developing a business plan, my major concern was to separate this company from the 'herd', offering a quality product with exceptional customer service. I believed I could achieve this through staff training and experience; associating with the best insurance providers; owning and offering the best, most modern equipment; and affiliating with the best and brightest associations and operators in the business. These things, I believed, would help me to rise to the top and ensure survival. I invested an extraordinary amount of time, research, analysis and money... convinced that this would differentiate our operation from the reality TV "repo rangers" and appeal to clients who understood the risks associated with employing sub-par agencies.
I couldn't have been more wrong...
It seems that, for most clients, the major concern when selecting a repossession professional is none of these things, it is my rate. Granted, it is a bit higher than the average recovery operator you might find in the 'phone' book. For some folks, this is a reason to shop on... Perhaps I can explain why this is a mistake.
As a business owner, I understand the need to protect the bottom line. I have made many efforts to reduce my costs. We run a very lean and efficient crew; we operate hybrid spotter cars to save fuel; we operate a paperless office, track marketing expenses, and constantly follow up with clients to learn how we can improve service. We also have a PhD economist on staff who works for free. But, we have not cut costs where we would expose ourselves or our clients to any of the risks involved in a recovery operation.
Remarkably, the small banks, credit unions, and BHPH dealers that we serve recognize the value of using a professional and appreciate our investment. Contracting with a professional is not a preference, it is a necessity. These folks cannot afford the risk associated with working with someone who is not fully insured and experienced in asset recovery. Defending a lawsuit would bankrupt them.
Risk mitigation is what we do.
Our clients understand that our quoted rate is much different from the ultimate cost of a repossession gone wrong.
Many large lenders have moved their collection operations to national forwarding companies. While consolidation makes sense at many levels, it rarely makes sense when lives are at risk.
But it seems "risk" does not concern some of the larger lenders. When there is news coverage, the story is almost always about a guy with a truck and a gun who tried to take a car. Professional association members rarely appear on the news explaining why they had to block a car in and draw firearms to effect the repossession. It just does not happen!
Incidents like these that show up in the press almost always the tell a story of the actions of individuals that have no place in the recovery industry. They are adrenalin junkies that have watched one too many TV shows. These are the agents that national forwarders and major lenders are hiring... sometimes to save money or out of ignorance.
How does this make sense? Why would a major lender choose to use an agent like this? There is only one answer, money.
My company and others like us have spared no expense to protect ourselves and our clientele. We have A+ insurance, a state of the art storage facility, the finest equipment, membership in one of the finest associations in the industry, TFA, which screens all applicants. We also have a $5,000,00.00 bond, protecting our clients and us. These are expenses that have a direct impact on the cost of doing business and the fees that we charge.
How can other operators afford insurance through a carrier that could sustain a wrongful repossession claim? Do they have a bond to protect clients against you employee theft or bad acts? In reality, they can't. These amateurs are able continue to operate and make a profit at these rates because they have chosen to omit a piece of the 'puzzle'. Without all of the pieces, someone suffers. So, where is the advantage in conducting business as a professional?
Honestly, I am having a hard time answering that question these days. Why should I have the best insurance? Why do I employ trained professionals? Why should I invest in a secure storage facility?
Sometimes I wonder if these are attributes have value any more.
Savings that large banks and forwarders realize come at the cost of the general public. The short-term benefit to their "pocketbook" implies a long-term cost to safety and well being. Many of these entities are the same banks that received Federal bail-out money; your money; and they are using sub-par recovery agents to generate even more revenue.
Try some simple math. Assume a lender contracts for 30,000 vehicle repossessions a year. If we charge $395.00 a repossession, but the lender can find a less qualified agent who will work for $275.00, the $120.00 difference over 30,000 repossessions works out to 3.6 million dollars. $3.6 million... I wonder what the other $120.00 would pay for. Are those few dollars worth the expense over the long run: personal injury, lawsuits for wrongful repossession, property damage, reputation damage, loss of life?
I cannot tell you how many times the first two questions I hear from a potential client are, "How much do you charge" and "How many days free storage do I get?"
These should be the last questions you ask.
I believe you should be asking:
1. Do you have wrongful repossession coverage? 2. Do you have a secure vehicle storage facility? 3. Do you employ felons? 4. Do you have bond coverage if I choose to remarket my vehicle at your location? 5. Can you produce a loss run report from your insurance carrier? 6. Are you a member of a trade association?
These are just a few of the many questions that can save your money AND reputation in the long run. A few extra dollars invested now can save millions later.