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Wednesday, November 16, 2011

Don't shoot the Messenger

OK, first off, don't shoot the messenger. In the early 90s, Forwarding wasn't even a word in our industry. Art’s points, and the logic behind starting Relliance are both spot on, in my opinion, but first, let me digress… Manheim Auctions had tried to manage the repossession process in about 1990-91 and after 1-2 years of "getting our lunch handed to us" as an Executive later told me, they had exited the process of trying to manage the repossession process to drive more cars to their auction. To my knowledge, no one else was doing this “Forwarding” practice at the time. A few sharp repo guys may have been doing one off deals with clients who trusted them, but it certainly wasn’t an industry on anyone's radar as is the case today. To understand how it got to where it is today, lets back peddle a minute. In 1988 we had started one of, if not the first skip tracing companies in our industry; Skipbusters. In doing so, we first repo'd our own cars in LA through a repo company I also co-owned called Crown. As we got locates out of our area, we subbed out the work to companies I had known through my prior experience as a Collection Manager at Chrysler Credit. After Skipbusters grew, one of our clients, VW Credit, asked if we could help them manage the nationwide repossession process they were struggling with. Between the time we started Skipbusters and when VW came on, we learned a few valuable lessons. First, you have to find qualified agents and not just the cheapest one’s. They had to be able to understand, sign and stick to the terms of a contract, and they had to be held accountable. You also needed a back up in case something went wrong. You also had to give them a healthy volume of work, they had to be able to make money, and it was a two-way relationship. VW of America in the 70's and 80's didn't have any employees as they hired Chrysler to make and collect loans for them, same as American Motors and Jeep did. Kind of like how Mitsubishi Acceptance (who I worked for later, not sure the exact name of their finance company now) does with a servicer they hire to represent them these days. Anyway, VW decided to start their own finance company after they switched from Chrysler to Deutsch Bank (wonder why they picked a German Bank?) and then realized they were no better with Deutsche than they had been with Chrysler, so then in the early 90s they hired their own employees and created VW credit, their own captive finance company. Through all this transition, Skipbusters was VW's sole skip vendor, and when they kept calling us to ask what repo agency to use in XXX city. We then worked with their Sr management (RIP George, miss ya!) and we created American Recovery Service to manage the repo process for them for a flat $75 per assignment. Before starting ARS, I called Manheim as I knew they had exited the repossession management business, and the guy gave me one word of advise..."RUN". We started ARS in late 1993 and soon after this the sub prime auto finance industry took off, and so did ARS, and Skipbusters. We sold and exited the industry in 1999, just as the word "Forwarding" was becoming a common term in repossession management. The auctions, including Manheim, had jumped back in, as did many other private companies. By the time my non compete expired and I took another look at our industry in 2004, it had changed dramatically. When we started Skipbusters in 1988, not one of the top 20 lenders utilized an outside firm to skip trace their accounts, except for their trusted repo agency whom they were willing to pay a $75 skip fee to. When we built the "Forwarding" model around VW's needs, other lenders who now use forwarders laughed at us, "You want to manage our repossession assignments? That's what we do, and we'd never outsource that responsibility to anyone!!". As lenders consolidated to large call centers, and the national management of repossession vendors and the work they did became more complex than they envisioned, Forwarding took off, as did skip tracing. Now it's almost 2012 and a great deal of large lenders now use Forwarders, and all large lenders use skip companies, so I guess we had a couple good ideas in one sense, but in another, I agree that it has been treated as a commodity and somehow the value of the service has become greatly overlooked, as pointed out in Relliance’s press release. The logic behind the formation of a Forwarding company by Repossession Agencies is a good idea in my opinion, but ONLY if they measure themselves in an agnostic manner against other companies in their service areas. I'm not saying every repo agency deserves a shot at being in Relliance, but if Relliance truly wants to be the best Forwarding company and improve the industry, I believe they, as well as any solid forwarding model, must accept applications from companies who wish to do work for them at a fair price, and the companies who do the best work should earn the lions share of the work from the lenders who hire them. If not, it would just be another association, which does not solve the problems our industry is seeing, from a repo agency and a lenders perspective. For the past five years we have been building a software called masterQueue. Some of you use a limited version of it, some have heard of it, some haven't. This is a collection, skip tracing and repossession assignment management software for Lenders, Forwarders, Skip Companies, Repo companies through interfaces with their Repossession Agency platform, and a variety of other companies associated with our industry. It's a common ground, and one of the most important things it does is show the lenders and Forwarders/Skip Companies who is doing a good job, who is driving ROI to the lenders bottom line, and who isn't, and who is in compliance with the lenders growing list of requirements and who is putting them at risk. It's not a model that's built around charging repo agencies to receive assignments, and we are open to interface with any software, as we have already done with iRepo/RePros and several other platforms, and are starting to do with lenders software platforms. What made us successful at Skipbusters and ARS back when I owned those companies is we were able to leverage technology to improve our client’s business needs. With this in mind, we created masterQueue. I believe the technology in our industry, with a few exceptions, but for the most part, is years behind the times. masterQueue helps bring it up to speed, and it provides lenders a way to see the dollar value that the repo companies who service their accounts can earn them, or cost them when they aren’t doing the job. It also gives them a way to stay compliant to help insure they keep their customers safe, and their names out of the paper, which as we all know is their foremost concern. The reason I bring up masterQueue is without a common software platform, one that really solves all of the needs for Lenders to identify actual performance and compliance, our industry will continue to struggle in my opinion, especially as it relates to working the difficult accounts. masterQueue gives everyone a fair shot at earning business because they are the best at what they do, not because they took someone to the Super Bowl or have a hot looking sales rep. A lender shouldnt care about PRICE, they should worry about COST, which is measured in Full balance skip charge offs, missed opportunities, poor performance and things no software I've seen to date does, except masterQueue.Sorry to sound like a commercial, but you don't see us doing press releases, or even attending many trade shows, but you will see us in forums like this, and hopefully you're hearing about us by word of mouth, from people who understand our industry and whose word you trust. With a little bit of luck and some good code, I think we can help bring Forwarding back to where we envisioned it could be when we first started doing it in the early 90s. Everyone be safe out there, and value your repo agents, the job they do should never be underestimated or treated as anything less than a skilled art, unless you're dealing with some company who doesnt deserve that respect, and if so, your software should be telling you that's an issue before it becomes a problem!

Sunday, September 18, 2011

Is it just me?

Has the Auto Finance Skip Tracing business gone the way of the Auto Repo business?

It's brutal out there.

We always relied on Lenders making bad loans and then not doing a very good job on finding their skips, but that's changed. The gravy is gone.

Skip Companies- If you are not working in an environment where you can measure and manage your business every minute of every day, you can fail. If you fail, your clients fail, but I guess that doesn't really matter to you cause you failed.

Are Lenders looking as closely as they can at what Skip companies they hire; I doubt it. Can their Skip Companies go toes up, damn straight they can, and trust me, they will.

Attn Lenders: Please start lending money, and please start taking some risk, and please take a closer look at who you do business with. If your Skip Company has lost four of its five biggest clients in the past few months, there is a problem. If you google your skip companies name followed by the word "LAWSUIT" and there is more than one page of results, you are a sitting duck.

C'mon, there are people out there who need loans and you are all overstaffed and you can handle it. You may need masterQueue to help organize your collection department, but you know your people's Queue sizes are way down, and you have the people to handle the deals, so dont wait for the paper buyers to tell you its coming, force the issue, tell them you can handle it.

Of course, come of those skips will fall through the cracks, but you will make so much off the deals that pay you know that it wont matter, and our industry needs some bread crumbs.

EVERYONE will win.

Sunday, June 12, 2011

Social Networking and the workplace, i.e. friendships at work, one year later....

A year ago I posted a blog about Facebook and making friends at work. Here is a follow up a year later....

Technology has affected the relationships our employees form with each other, and this is especially true as it relates to Social Networking.

While social networks have existed since the beginning of man, it is something that has grown by significant proportions with the evolution of technology. It started with computers, then email, then cell phones, then My Space, and in the past few years, it has exploded due in large part to the ability to easily communicate with more people through texting, Twitter, and the most popular social networking site to date; Facebook.

Many people spend as many or more hours with co-workers than they do with their families, and many people spend more hours in a week with co-workers than they spend in a month or more with their trusted friends. Due to this, we have seen friendships in business turning into friendships in people’s personal lives. In recent years, I’ve witnessed this happening more frequently, and with more negative effects than I have seen in prior years, or pre-technology, if you will.

I’ve participated in, managed, or encountered many types of relationships with co-workers I’ve worked alongside, or people I’ve managed, or employed, during my 35+ years of working. In all this time, and through all these relationships, I’d like to think I’ve learned a little bit about the dynamics of employee/employee, employee/employer and even client/vendor relationships.

One of the first rules I was taught, but it took me a few mistakes to understand why it’s a common saying you have all heard is……… “you don’t mix business with pleasure”.

I’ve partied with co-workers and then realized that wasn’t the best idea, especially when something happened when we partied, and now I knew more about that person than I cared to know, or needed to know, and it changed our relationship.

I’ve made decisions regarding employees that were affected by my personal relationship with them, and they’ve almost always ended up being bad decisions.

A person I thought was a good friend turned out to not be such a good friend.

The negativity of a person I got too close to started to cause me to become negative myself, and I like to think of myself as a positive person.

“Don’t they ever have anything good to say” or “Why do they work here if they always complain”?

I’ve gone out with co-workers and later figured out they weren’t someone I’d normally associate with, but when they asked me to go out I felt it would have been rude to say “no”, but then the relationship became uncomfortable at work when up until then my professional relationship at work with that person had been great. I should have just said I had a prior commitment.

Does any of this sound familiar? We’ve all been there.

Technology has given the average worker new challenges through their constant availability with their cell phones, texting, twitter, and through social networking sites like Facebook.

In doing some research, I found an appropriate comment about Facebook on a person’s blog:

“For every long-lost chum who reaches out to me on Facebook, there's a guy who beat me up on a weekly basis through the whole seventh grade but now wants to be my buddy; or the crazy person who was fun in college but is now kind of sad; or the creepy ex-co-worker who I'd cross the street to avoid but who now wants to know, "Am I your friend?" yes or no, this instant, please.”

I think the co-worker example above may seem exaggerated to many people who have co-worker friends on their Facebook page, but from my experience, it’s just another step in the direction of mixing business relationships with personal relationships at a stage that is way too early in a "friendship", and that's where the problems that can result are not worth the risk.

On the client/vendor front, I know companies have witnessed a conflict of interest when an employee of theirs and an employee at the client/vendor are friends with each other, and it can or does affect their business relationship. We see some clients who can not even accept a box of chocolate from a trusted vendor at Christmas, which may be a bit over the top, and we see some who recognize that when the sales rep or owner of the vendor takes the vendor manager or decision maker to the Super Bowl, that may influence their decision to give that company work, and rightfully so, they put the kibosh on those types of activities. For this reason we do not allow our employees to be friends with our clients outside work, even on social network sites. It's a conflict of interest for our company, and likely for the client in most cases.

As technology evolves, I now see a new twist happening through social networking sites. A few years ago, clients and vendors interacted on social network sites, but now that has moved to professional sites like Linked In, where conversations are kept to a professional level. Most vendors want people to use their services because they do a good job, not because they like how they look in their profile photo, or because their people socialize with that client’s employees outside work, and are friends who converse regularly on Facebook or Twitter.

I have a Facebook page, and at first I felt awkward when a person at work “friended me”, asking if I’d join their social network on Facebook. I kind of looked at it like when a seventh grade friend of my son sent me a friend request on my personal Facebook page. I like the kid, and didn’t want to seem rude, but I think it best if my relationship with this kid remains as my son’s father, and not as a friend of mine on my personal Facebook page.

I saw the person at work the following day and told them I appreciated their asking me to be their friend on Facebook, but I preferred to keep my Facebook page separate from work. They said ok, and I think they understood.

When I go back and read the “friend” definition on Webster’s, I realize I have personal friends, business friends, family friends, etc. Sometimes my family or personal friends cross over into people I place in my social network, and I have them on my Facebook page, but when it comes to work, I prefer to keep my work relationships at work, or on Linked In or other work sites that contain some social elements, and to me, those are almost always relationships with “business associates”, otherwise the mix of business and personal becomes to consuming. It’s already become more difficult to separate work and personal with the availability of email on cell phones, etc. and adding Facebook and otehr web sites makes it even more challenging.

In my career, I’ve learned there is a time and a place for business, and the same goes for pleasure. I enjoy working, so I get pleasure at work or while working, but I dont do it by doing non work or non business activities. When I go to work I work, period. When I'm done, I spend time with my friends and family and I dont work, period.

While I think there is a time and a place for mixing business and pleasure, based on my personal experience, I’d try and limit my outside of work relationships with my co-workers to company events that are not work related, i.e. company picnics, holiday parties, etc. As the owner, or as a manager or a person of responsibility over others within a company, it is a different landscape than with a co-worker-to-co-worker relationship. While we realize people will become friendly and over time will develop friendships at work, and those may carry over to outside work, the best advise I can give is to take your time, and really get to know the person and make sure that your relationship with them outside the job is based on their being a “trusted friend”, and to me anyway, it takes a significant amount of time, usually a year or more, before I place a friend in that "trusted friend" category.

For this reason, I personally do not consider it a good idea to mix your friendships at work with your friendships in your personal life until a significant amount of time has gone by. I can give you a hundred examples where things went wrong, and in almost every case, it was when a person rushed into a relationship with another person without really knowing them. They placed the person into a position of trust, and many times they got burned. I’d have to think really hard to come up with examples where a business relationship turned into a personal friendship within a few months of the people knowing each other and it benefited both parties, and the company.

On the other hand, I can think of a small amount of examples where a relationship built over a significant amount of time, mutual respect, and trust, evolved between two co-workers and it carried over from work into their personal lives and both employees, and the company, benefited. It’s rare, but when it happens, it really adds value to his or her jobs, and to the company.

This is a difficult rule to keep. I enjoy working with everyone at my company, and I’m sure I’d enjoy skiing with many of them, or going out for dinner, playing a sport or just going to lunch and chatting, however, if I do that, then in my situation, others may feel as if I am playing favorites. Also, what if we become close friends and I have to discipline the person, or promote someone over the person I have become close with and that move upsets them?

From a co-worker standpoint, you have the same issues. “Why does she go to lunch with him every day?” What if you see someone you become friends with doing something you know is not right, will that influence your decision to say something that would be in the best interests of the company? If a joke goes to far at work and it carries over to Facebook and now the whole world can potentially see the joke, is that a good idea?

Oh, that will never happen, I have my privacy settings so only "my friends" can see what I do on facebook. If you check your privacy settings every day, you're half way there, but Facebook makes changes daily and some of those changes have affected people's privacy settings, or lack of privacy settings, and then its wide open. Googling "Facebook privacy" gets you hundreds of pages about Facebooks privacy issues.

What if a "friend" copies and pastes the post you thought was private, or their privacy is open and people can see it, then its not private any longer is it? It happens, believe me, we see it as that's what we do when we're developing tools to gather info off the web on people using their open source web based info, which in many cases they thought was private. The best rule to follow is that if you post something you think someone would have a problem with, then you better not post it cause once you do, its permanent and it can and many times will come back to bite you.

There are other problems with social interaction in the workplace that have been around for ever, but are magnified with on line social networks. If the time comes for a promotion, will your boss feel as if you have developed too many personal relationships with people you’d be supervising and then you get passed over? Will someone spread rumors about you because they are jealous of your relationships with co-workers, or they misunderstand your intentions, even if they are completely trustworthy and honest? Those are just a few examples of the risks involved with developing relationships that move from business associate to friendship at work. When they happen in a matter of weeks or even months, the risk of a problem is elevated. When they happen as people really get to know each other, and as each person cements their position within the company, the risk becomes reduced.

Another reason I feel the mixing of your personal and work life should be approached with extreme caution is the simple fact that you need to charge your batteries when you’re away from work, and the best way to do that is to leave work at the office and come in fresh the next day. If you spent an hour on the phone at home after work speaking with a current or an ex-coworker and work was discussed, yours or theirs, that’s not usually a healthy phone call for your psyche. Are you talking about good things? “Oh, I love my job” and if it’s an ex-employee you’re speaking with, what do they think of that if they are no longer there? Are you complaining to each other about something that bothers you, and how does that negativity affect you? Or what if you’re happy and your new personal friend from the office isn’t, will they call and tell you how they love their job or will they call to bitch, or worse yet, post it on Facebook?

Here are some interesting questions to ask yourself when making friends at work :

• If your friend left the company, would you still be in touch with her in a year?
• If you had a personal emergency, would you consider asking your friend for help?
• Do you hang out with your friend outside the office? (Weekday lunch, happy hour, and business trips don’t count.)
• Have you met your friend’s significant other? What about her friends outside the office?
• If your friend received the promotion you were banking on, would you be genuinely happy for her?
• If you ran into your friend in the grocery store, would you be able to talk to her for 10 minutes without mentioning work?
• Have you seen where your friend lives?
• Do you and your friend have anything in common besides your age and your job?

Thanks, and I hope my experience and thoughts on this challenging topic help you in your quest to become the best you can be at work!

Sunday, May 22, 2011

masterQueue and Find John Doe

On May 10th, we launched our proprietary, web 3.0 software masterQueue at a conference we were selected to participate in for new Financial Services Software in SF called Finovate.

We started Find John Doe in January of 2007 with the purpose of building a software product that could address the needs of the Auto Finance industry as it relates to the process of gathering, organizing and tracking the massive amounts of public records data a company needs to process to run more efficiently.

Once we started gathering Public Records more efficiently, we then realized we needed to analyze this process to determine what data and what data providers got us the most right party contacts, helped us find the most people, and ultimately provided us with the best ROI.

When we started getting into ROI on data, we realized that employee and vendor performance metrics also needed to be factored into the equation to see the impact of this data on our goal of locating people who did not want to be found.

Once we gathered and factored in this information, we then realized the importance of the outside vendors, from data providers to repossession agents to the software we were using to manage the assignment and recovery process. With this in mind we built a full repossession assignment platform, and instead of also building a repossession agency management platform, we approached the two largest software providers who already had repossession agency management software built, and one liked what we were doing so we identified the need to build a strategic relationship with RePros to interface masterQueue with Repros to help the repossession agencies work more efficiently using public records data, and through our metrics platform that measures the entire repossession process, soup to nuts.

It still amazes me how lenders, and the parties they outsource the repossession assignment process to, do not fully grasp the importance of using the most qualified repo agencies. Many lenders just give all their deals to a forwarder or a skip company and they don't care, or they don't have the tools, to make sure their assignments are being forwarded to a qualified, properly insured, experienced professional. If lenders could see who some of the unlicensed, unprofessional clowns who represent their companies in the field actually are doing, I guarantee they, and their shareholders, would cringe. Actually, for an idea of what likely may be happening on their assignments, they can turn in to Tru TV and watch a Repo Reality TV show.

With this in mind, we built the vendor management piece of masterQueue, so now lenders can easily see when a forwarder or a skip company, or their own internal staff when assigning direct, do not use a qualified, licensed and insured professional. For those using forwarders or skip companies to manage your assignment process, do you have a system in place to know when their vendors insurance doesnt meet your requirements, or is canceled, or they're using an agent prior to having a contract and insurance with them in place? Are they using licensed agents in states requiring licenses? Is their proof of this in the software you use to monitor them, or is it too difficult because you use five software platforms to monitor ten companies? Are the licensed agencies licensing all their repossessors, or are they having cars picked up by repossessors working off expired or questionable temporary licenses, as was the case in a recent death involving a woman whose car was repossessed a month or so ago. The civil suit on that situation will likely cost the lender a great deal of money, if the atty representing the woman digs deep enough into the practices of the lender and the repo agency and possibly into the state that allows this to happen without more stringent monitoring, and that precedence will likely open the door for more costly suits to follow.

We had also started realizing in 2008-09 that open source, web based public data that customers were providing on the internet on themselves was important in the skip process, so we began building ways to capture and analyze this data, which ranged from blogs people were posting, to the bar they were visiting that night as posted in public view on a social networking website.

Building algorithms around this data was the next step, and to make sure we had the best algorithms possible, we sought out an algorithm expert. In January of 2011 we brought on a strategic investment partner who was the creator of algorithms built around public records for a two billion dollar, ten thousand person company that successfully identified risk in the mortgage industry just before the bubble burst, something he accurately predicted well in advance of the dam bursting. Unfortunately, the wheels were already in motion and few listened to his predictions, but every top lender bought his data and had access to the information before the crash.

Auto lending is in a different environment. Lending to anyone with even a hint of risk is all but non-existent, but we all know that wont last for long. In the past few months I have visited a sampling of the largest and smallest lending institutions in the country. EVERY one of these companies has a need for a new software platform to help them better manage risk. Some of the more forward thinking one's realize this, and they are moving to masterQueue. Others are still hesitant to get off their old legacy, Dos-based systems, even though it will never be easier than now as delinquency is at twenty year lows and once the need to lend more aggressively becomes apparent, making that switch will become more costly and more difficult.

Find John Doe provides lenders an opportunity to see masterQueue operating in a test environment, with our team of talented skip tracers using the most current tools to identify and manage risk by gathering, organizing and tracking results on loans once they become delinquent, from one day late through charge off. By working your accounts in masterQueue, apples to apples to what your current vendor or internal staff is doing, we provide a benchmark for you and a view into what your company will look like if you start using masterQueue internally.

For a demo of how the combination of Find John Doe and masterQueue can take your company from Web 1.0 or Web 2.0 to a Web 3.0 environment, with little or no IT support needed, please give me a call at 916 730 3335, or email me at and I'll set up a demo for you.

We can help you remove the fear of lending, and all you need is access to the web through a browser.

Saturday, April 30, 2011


FJD site down until Sunday night due to maintenance and changes...

Tuesday, March 15, 2011

How about a positive spin on things for a change...

I privately met with several of the largest repossession companies last summer and we brought in a PR Person to discuss some of the strategies involved in mounting a positive PR campaign around our industry. This person had successfully raised public awareness for industries that faced similar challenges, not quite as difficult, but I feel she can do the job, and she has no connection to anyone, and being located in the capital of the largest regulated state in the country, she may be in the right place.

Her ideas included:

Integrated marketing plans
Key Messages/Logo/Business System and Brand Developments
Media outreach
Media and presentation skills training
Advertising and media buys
Community outreach and public involvement
Email/ VIP outreach list
Email blasts, special programs, etc

I’m running a skip company; Find John Doe, and getting ready to launch a software to hopefully help improve our industry, masterQueue by Intellaegis, so my time is limited at best, but I would participate on a board level if we could form an interest list and then a board and then select a leader to oversee this process.

Forget about the associations running this, if they wanted to do something they would have acted years ago and getting them to work together seems to be a challenge in itself. You need an independent board of entrepreneurs who can represent the industry, and I’d say the qualifications would be:

10 years exp in the repo industry

Verifiable personal experience repossessing cars themselves in the field, and I’m not talking about a ride along

Running a business in this industry that currently generates at least $1m in annual revenue

I’d also include 1-2 client members and I’d invite Kevin as a media rep

1 rep from each association responsible for being the liaison for their association and responsible for collecting dues to fund this program and sharing info to/from their members- and non assoc members would have a liaison for the companies not in associations

A paid independent admin to handle the day to day and budget

email me privately if you are interested in participating:

John Lewis

Monday, February 28, 2011

The State of the Repossession Industry -2011 -

The State of the Repossession industry: 2011

A friend asked me, “Can you explain the repossession industry?”
“Funny you should ask”, I commented, “because after reading blog after blog, and comment after comment about all the in-fighting and grandstanding that’s been going on in the repo industry lately, my knee jerk reaction was “Wow, that’s a loaded question”.

“Why is that? she asked.

“Well, for starters, repossession in general has always been a highly fragmented, mom and pop kind of industry, but it appears to quickly becoming more corporate, and those who don’t take the steps to keep up may find themselves left in the dust. We seem to be on the verge of a great deal of consolidation activity as larger players have emerged and they need market share to survive,” I said.

“In the past couple of decades, and especially in the past ten years, many of these mom and pop operations have grown, some due to a passing of the torch to a younger generation within the same family, and some due to new blood coming into our industry, and many of these “newbies” are not afraid to take the risk required to rapidly grow their organizations, ” I explained.

“Ok, so why the fighting?” She asked.

“Well, that’s the tricky part. Let’s start by looking at the players:

Lenders- this is where it starts- these companies loan money and they range from small finance companies in your local shopping center to credit unions to small, medium and large banks as well as companies built to finance a certain manufacturers car, and these companies are called “Captive’s”. General Motors Acceptance Corporation (GMAC) was a captive that always used to finance only GM products, or sometimes other models if they were sold used off the GM dealer lot, but like many companies they got in trouble. Our Government helped them out last summer by making them an offer they couldn’t refuse; “Become a bank and be open to financing anyone, and help out Chrysler btw, and if you do that we’ll give you TARP funds and you will succeed if you follow the plan”. They followed it better than anyone expected, probably because unlike most start up banks they had the deck stacked with GMAC veterans, and their catchy marketing plan and 24 hour internet based business model came on the scene at just the right time and now they’re either on pace to pay all the money back or they’ve already paid it back, and they’re positioned to do an IPO later this year.

Repo Companies- There’s somewhere between 2500 and 5000 companies in the US that perform this service, most are reputable, a handful are not. The larger they are the better chance they’re reputable, but even the big one’s can take part in questionable business practices at times. A few states license and regulate this industry, most don’t. Most of these companies are small, one-location mom and pop operations doing less than $500K in annual revenue. The larger one’s do in excess of fifty million in revenue, some may even double that. The larger ones cover large areas of a state, all of the state, multiple states, or in a couple cases they cover most of the country. From my experience, running a repossession company has to be one of the more difficult businesses to manage. Finding good people to work in the field is extremely difficult, and training and managing them is even tougher. Your customers who give you work: lenders and companies they use as “middle men” can be demanding, and they’re not usually very loyal, although good repo companies build “brand name loyalty” by providing above-average levels of service. The lenders clients, and people whose cars are being repossessed are rarely happy, and you’re better off avoiding the debtors at all costs, when it’s practical to do so. If you are going to own a repo company you should not have high blood pressure, you shouldn’t be afraid of working 24/7/365 and you need a good lawyer, and a mentor who knows the industry if you’re just starting out, or if you’re struggling. You also better have kick ass software these days or you’ll get left in the dust by those who do. Many people think LPR- License Plate Recognition (see below) technology will change the face of the industry. I’ve seen the industry change with forwarding and skip tracing, and LPR seems to have the same potential impact as these innovations, but as is the case in many businesses and in our lives, (think Facebook and Google) Software as a Service is what will define the future of the repossession industry and without the best software available, repo companies who don’t have it will struggle to compete with those who do, and its as simple as that.

Repossessors- The un-sung hero’s. Most are male, most drive tow trucks, and most are pretty resourceful. These guys are performing a job that ranks right behind the repo company owner in terms of degree of difficulty. Like the company they work for, they’re paid for results, and unfortunately only certain results count, which usually means no car, no commission. There are a handful of legendary, great one’s, many good one’s and many who are mediocre or just flat not good and in many cases a liability to the company they work for, and to themselves and the general public for that matter. This is a job that requires risk, but when those risks are not calculated, things can go wrong in a hurry, and that can be deadly.

Forwarders- These are companies who receive all or a portion of a lenders repossession assignments and their job is to manage the repossession process. This includes picking a repo company they contract with and assigning the account to them for repo. They’re supposed to assign accounts only to companies that are licensed (if applicable), insured, and reputable, with the key word being “supposed to” as for some reason many lenders don’t do a very good job of insuring their Forwarding companies are using only reputable repossession companies. After the Forwarder assigns the account to the repo company, they follow for the progress through a series of written updates and phone calls between the forwarder and the repo company. Once the account is repossessed, or after the account closes due to the customer paying, or something else happening including the car not being located, the forwarder bills the lender for their services when that result is positive (repo or paid) or if the unit is not located there is usually not a bill generated; this is called contingency, one of a handful of “four letter words” in the repo industry. In addition to the repossession fee from the company they hire, Forwarders also charge a handling fee on the assignments they successfully conclude. This sub-industry within the repo industry has gone from barely a blip on the radar when we started American Recovery Service in 1994 to a major force in the industry where as many as 40-50% of all repossession assignments now are assigned to forwarding companies. The model has also changed, for the worse in my opinion, and many forwarders don’t use reputable companies to send work to, and for some reason many clients don’t seem to care who the forwarder uses to represent their company, which I think is crazy. The most dangerous job a bank is responsible for is likely repossession, so one would think they would want to insure the person doing the job and representing the bank is a professional, licensed, insured, reputable, trained repossessor. That’s not the case too many times, and if you Google “repo death” you’ll find examples of what happens when it goes south, and in many of these cases there is a Forwarding company involved.

Skip Tracing Companies – When the finance company doesn’t know where to assign the account for repossession, they hire a skip tracing company like Find John Doe, or dozens of other companies like this who do the same thing; locate people who are trying not to be found. Back in 1988 when we started Skipbusters, I’d never heard of a skip tracing company and I’m not sure if there were any out there. I thought of the idea when I worked at Chrysler a few years earlier. I’d been sent to different branches to find people who had loans that those branches were trying to stop from charging off. The only option we had back then were finding these people ourselves or utilizing repossession companies and some were great at finding anyone, but for some reason we weren’t allowed to pay repo companies for skip tracing, or if we did it was limited to like $75. I’d heard the reason was the repo guy got caught with his hand in the cookie jar too many times and they didn’t trust them to bill for skip tracing as sometimes they’d charge for skip work and they really didn’t do anything that warranted a fee. Nowadays, skip tracing is a big industry, and a big part of the repossession process, and in many cases they also perform the same service as a forwarder when they coordinate the repo process for the lender.

Skip Tracers – aka Investigators, these are the people who are good at finding people. They utilize public records and information they gather from a lenders notes, from a credit application the debtor filled out when they bought the car, and they gather info through the Internet. Then they contact friends, relatives, neighbors, landlords, ex-places of employment and a variety of other sources, or leads, as they attempt to gain pieces of information on where the customer and/or collateral are located. They are also skilled negotiators, as many times they will make contact and convince the debtor to surrender their unit.

License Plate Recognition Technology Companies – This is a somewhat new concept, high speed cameras mounted on tow trucks and cars that scan thousands of plates a day. The scanned plate and its GPS location are downloaded into a computer and then the unit is either repossessed right there on the spot, or the lender is notified and asked to pay a fee for the location of the unit. I’m not sure how the second part bypasses laws like the one in California that says its illegal to do this:
(j) Soliciting from the legal owner the recovery of specific collateral registered under the Vehicle Code or under the motor vehicle licensing laws of other states after the collateral has been seen or located on a public street or on public or private property without divulging the location of the vehicle. The fine shall be one hundred dollars ($100) for the first violation and two hundred fifty dollars ($250) for each violation thereafter.

Transporters – These are the companies who pick up the vehicles from the repossession yard after they’re repossessed, but they’re just bit players in this story.

Auctions – After the unit is repossessed the debtor is sent a letter and they have a right to pay off the unit, and in some cases they can get it back by paying the past due payments. If they don’t reinstate the loan or pay it off, the unit is transported to a private auction and it’s sold.

Repossession and Collection Software Companies – In 1998, I wrote a business plan that detailed the development of a repossession software to allow clients and repossession companies an internet portal to send and receive assignments, to update accounts, to process repossessions, to coordinate the transportation of the unit to auction and to document the sale process. Prior to that, I’d been involved in some enhancements of a repossession software called eTracker, and I’d used one of the first repossession software’s called Pro’s, but as of 1998, we were just barely starting to email assignments and updates, so the internet was not on anyone’s radar as a way to manage the repossession process. We ended up selling our company in 1999 to a different company than the company I wrote the business plan for, but a few years later the idea I’d written about came to be in a software built by one of the principals and it became the dominant software in our industry; RDN. There have been others written since then, and some have gained market share, and now, thirteen years later, we’ve finished our own software called masterQueue, and we’re preparing to bring it to market in the Spring. We believe it has the potential to change the face of the lending, repossession, forwarding and skip tracing industries, and most of all, I hope it can help repossession agencies manage their businesses more efficiently, because if anyone deserves a break it’s the repo guys. We’ve also written over a dozen interfaces with other software companies and were hoping that other software companies in our industry will follow our lead in working with each other, as no one wins when we don’t all cooperate and work together, and hopefully RDN will also interface with us to make everyone’s job easier.