Repo Companies Defend Regulation

Michigan legislators are considering two bills that would cut regulations to middle men in the collections industry. But repo companies are saying the changes will hurt consumers and professional repossession officers. They are calling on legislators to enforce the law regulating collections companies, not get rid of it.


Professional repossession companies are required to be registered collection agencies. That means they have to follow consumer protection laws designed to make sure creditors don't take advantage of people who fall behind on their debts.

But over the past decade there has been a shift in the Michigan repo business. Lenders have begun using a middle man, called a “forwarding company” to consolidate all of their property collections efforts. These forwarding companies then subcontract the repo-men who used to do the job directly.
Under current Michigan law, these forwarding companies are required to be registered as collections agencies, and follow all the consumer protection laws the repossession companies do. That's because the current law defines a collection agency as:

“A person directly or indirectly engaged in collecting or attempting to collect a claim owed or due or asserted to be owed or due another, or repossessing or attempting to repossess a thing of value owed or due or asserted to be owed or due another arising out of an express or implied agreement.”

Even though they were supposed to, many forwarding companies never registered. Then in 2014, the Michigan Supreme Court decided in Badeen v Par Inc, that forwarding companies fell within the definition of a collection agency.

But State Senator Rick Jones, a Republican from Grand Ledge, wants to getting rid of that regulation. He has proposed Senate Bills 656 and 657. They eliminate the “or indirectly” language holding forwarding companies accountable.

In the meantime, the repo-men are speaking out. George Badeen, a 40 year veteran of the industry, says these forwarding companies have cut into his business, paid less for the same work, and have hurt consumers in the process. He told Michigan Radio's All Things Considered:

“But at the same time consumers, people that we know, friends of ours that through no reason at all lost their jobs when factories closed, they got their cars taken illegally,” Badeen said. “(Forwarding companies) have sought people out to repossess cars for them, some licensed, some not licensed, just regular tow truck companies just picking up people’s cars with no skills or training or under any kind of compliance,” Badeen said.

Less training means these people are more likely to steal from or damage the cars they repossess. That in turn can cost consumers money, as their vehicles are sold for less due to the damage. That means more money in the forwarding company's pocket, and less in the consumers'.

Dani K. Liblang is a consumer protection attorney at The Liblang Law Firm, P.C. If you believe your car was repossessed illegally, contact The Liblang Law Firm, P.C., today for a free consultation.