Repo man is getting a makeover.
The stereotype is of a tattooed tow-truck driver in greasy jeans hounding deadbeats in the wee hours, or the unscrupulous oddballs of the '80s cult film Repo Man.
"Them days are over," says Kenny Barnes, owner of a repossession agency in Mesquite. "We are licensed. We are insured. We are trained."Repo man is getting a makeover.
Ronnie Rea, who says he is certified as a collateral and asset recovery specialist, concurs. At Predator Recovery, his wife, Kim, works the phones to track down debtors, while he performs the repossessions.
"We are not gun-carrying, law-breaking thugs," Mr. Rea says. "I have a wife and a child. I attend PTA meetings and softball games."
Even as business picks up amid the tough economy, the repossession industry is undergoing a massive overhaul, driven by the liability concerns of lenders and insurance companies. The people who pick up delinquent borrowers' cars now attend safety seminars, take classes in ethics and professional conduct, study federal and state laws, and get private investigator's licenses.
Lenders, who can be held responsible for anything that goes wrong during a repossession they've ordered, are demanding higher standards of those they contract with. Companies that sell insurance policies to repossessors also are concerned – about everything from scraped-up driveways to unsavory confrontations with debtors.
Lenders and debtors would rather avoid repossession process
"Financial institutions realize that they need professional recovery agents with the proper insurance, proper training and proper license if they do not want to be the target of lawsuits," says Bogdan Rentea, founder of Texas Professional Recovery Agents Inc., a trade group. "Everybody that's in this business should have insurance to cover their activities and protect themselves and the banks and credit unions."
However, the nearly 600 repossession agencies in Texas – comprising 3,000 or so repossessors, whose business is almost entirely auto recovery – are not regulated. A bill that required licensing for agencies and criminal background checks for agents passed in the Senate but never made it out of the House in the just-ended legislative session.
Currently, anyone with a tow-truck license can become a repo agent. Industry experts say that they can earn anywhere from $40,000 to $100,000 a year, depending on experience.
Only Florida and California require certification for repossesors or managers, according to Matrix Educational Systems Inc., which provides a national training and certification program for repossessors.
'Not joiners'
But market forces are acting as a check. The lenders – banks, credit unions and finance companies – and insurers are laying down the law. "We do background checks" on repossessors, says Scott France, executive vice president of AmeriCredit Corp., an auto finance company in Fort Worth that repossesses thousands of vehicles each year. "We require references."
Financial executives get specific about what they want.
"The number one thing I look for is appearance," Mr. France says. "I don't want a person with a beard down to his belly button."
He also wants the agents to have training and continuing education on new laws and technology. Many are striving to offer better credentials to the bank executives who hire them. For instance, Florida-based Matrix has developed a full-fledged certification program and works with three industry trade groups to offer training.
But stereotypes die hard. Mention "repo men" and you're likely to spark a discussion of the 1984 Alex Cox movie starring Emilio Estevez and Harry Dean Stanton. Several repossessors cited the film as a cause of their perception problems.
However, at least part of the stereotype stems from the sheer nature of the job.
"It is a rugged individual that wants to take a truck and bounce up and down in the night to take cars," says Jim Hall, who runs Hall Recovery Specialists in Dallas. "Repo men are not joiners by nature. ... These guys are not interested in joining an association and listening to people lecture them on how to better run their business."
But they have to toe the line.
"If we were whipping and popping guns, the lenders would be in court all the time," he says. "It would close us down."
Safety is a key
Insurance companies provide another tempering influence. Prime Inc., an insurer catering to the repo industry, requires agents to attend safety seminars at least every other year. At the Embassy Suites hotel in Grapevine last month, men and women who seemed as if they'd be more at home behind the wheel of a tow truck instead were behind desks, taking in a PowerPoint presentation on new electronic tools for finding debtors. A three-day seminar walked repossessors through insurance provisions, the privacy implications of the Gramm-Leach-Bliley Act, certification processes and more.
"What is important in today's world is the training of repossessors," says Ray Crocker, founder of Prime Inc. "You've got to know the laws."
For instance, in Texas, repossessors are required to pick up cars without breaching the peace. So agents prefer to do it in the thick of the night or the early morning. The last thing they want to do is meet the debtor.
Although they have the right to enter a debtor's property, as per the auto loan contract, they have to leave if the debtor asks them to. And they are not allowed to take a car if the debtor has filed for Chapter 13 bankruptcy protection.
"We don't want any contact with them at all," says Millard Land, who has been in the repossession business for more than 30 years. "People aren't going to hand you the keys."
Tricks and deceit
Repossessors use skill and stealth. Sometimes the passive approach is best – following the debtor around to determine the best time and place to get the car, whether in the supermarket parking lot or at the workplace or the bowling alley. At a debtor's house, repossessors can face anything – a locked garage and barking dogs, or barbed wire and the barrel of a gun.
Any number of things can go wrong. Repossessors might damage the car they're hurrying to tow away, hit the debtor's mailbox, or be hit by someone else. One agency avoids repossessions on Friday nights, to avoid the possibility of encountering a drunken driver.
The job – and the liability – continues back at the lot. Agents have to photograph the vehicle, dents and all. They also inventory the car, from child safety seats to jumper cables.
Debtors typically come to the agency to claim their belongings. Sometimes disputes arise over whether there really was a Rolex watch in the glove compartment.
For protection from these risks, many repo outfits carry anywhere from $1 million to $20 million worth of insurance for the tow truck, the cars they repossess and their storage facilities, and for general liability.
But it's not just hard-pressed debtors who push the bounds of decency. Some repossessors will do anything to finish an assignment.
"There are always going to be people out there that will try to use tricks and deceit to find a car," Mr. Rentea says. "Sometimes the repossessors get frustrated and they will make mistakes. They use every imaginable trick in the world to get people to go someplace with the car."
He cited a ruse that's been used, but frowned upon: A repossessor calls the debtor saying a family member is injured or has won the lottery. When the debtor arrives at the meeting place, the car is picked up.
That kind of behavior feeds bankers' fears of being sued for fraud or misrepresentation.
Rogue repossessors have been known to take the car or money and run – turning from hunter to hunted. Lenders are protected from such extreme acts through bonds that the agencies post with insurance companies or trade groups.
Tools of the trade
The changes in the industry are also transforming the look of the repo offices. Take Mr. Barnes' business, Dallas County Adjusters Inc., tucked away in a side street in Mesquite. It looks like a fortress, with signs warning of the 7,000-volt electric fence and a guard dog. A placard promises a reward of $5,000 for any law enforcement officer who shoots an intruder. Twenty video cameras monitor the site.
"The insurance companies run this business," says Mr. Barnes, who rarely takes his eyes off the TV screen.
The prey has changed as well.
"When I started out in the business, all you needed was a screwdriver, a coat hanger, a piece of wire and a chain – you could start any car and drive off," Mr. Land says. "Fast-forward 30 years and you need half a million dollars of sophisticated equipment. Cars have gotten more complicated."
The tow trucks themselves are worth anywhere from $50,000 to $75,000. Some are equipped with global-positioning equipment and video cameras.
The technology is there for liability reasons as much as for efficiency. For instance, one repo business owner instructs his crew to hit the record button on the truck's video camera if a debtor turns nasty. That way there's evidence in case of a lawsuit.
Despite the changes, many repossessors say the business is still ridden with fly-by-night operators. Bankers don't always use due diligence in checking on the agents they hire. Too often, towing service operators turn themselves into instant repo men to make some extra money on the side.
And every now and then, tales emerge of a repossessor using questionable tactics, getting shot or driving off in a car with kids in it. In an industry where there are more than a million repossessions a year, the law of probability plays out.
"You imagine a million chances every year for a problem," Mr. Rentea says. "The odds will catch up with you."
Professional recovery specialists say all they can do is to keep the cleanup going.
"The more we raise the bar with the bonds and the insurance and the certification and the licensing, the better it is," Mr. Hall says. "We are trying to change this business. But one fool messes up, and the rest of us have to spend another two or three years to overcome that."
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