Bay State tow yards are routinely and quietly racking up large storage fees on vehicles, including cars abandoned by troubled owners, leading to a call Tuesday from bankers and lenders for a notification law.
For many in Massachusetts, towed cars appear to fall into a “black hole,” according to Rep. Steven D’Amico (D-Seekonk), who heard about the problem from a fellow Lion’s Club member and is now pushing a bill requiring tow lot owners to notify lenders within 15 days of towing a vehicle.
Tow yards are currently keeping some vehicles for months and eventually hitting lien holders, often lenders stuck with loans that borrowers can’t afford, with thousands of dollars in “exorbitant” storage charges, according to James Kelly, vice president of Lee & Mason Financial Services.
“Our goal is merely notification,” said Kelly, who told members of the Legislature’s Consumer Protection and Professional Licensure Committee that New York and Rhode Island have strict notification laws.
“It’s costing consumers and lenders money needlessly,” said D’Amico.
The Seekonk Democrat said that in the current economy, it’s likely that more car owners are having trouble paying loans. He said “we’ve all heard stories” about individuals parking their vehicles in a “bad neighborhood” and then reporting the vehicles stolen. “It stays lost for a long time,” he said.
One tow company in Lunenburg charged Clinton Savings Bank $2,051 to recover a vehicle, a sum that included a $1,740 charge for storage of the vehicle at a rate of $20 a day for 87 days. If the bank had been notified earlier, as the bill requires, it would have saved $1,300 in storage fees, according to Joy Mills, president of the New England Adjustment Managers Association and a bank collections officer.
The fees add to the costs of actions against consumers after vehicles are liquidated at auction and passage of the bill could help financial companies and insurers with the rates they charge consumers, Mills said. Tow companies, she said, could also collect fees more quickly.
The Massachusetts Credit Union League also supports the bill (H 234. Mary Ann Clancy, the group’s general counsel, called it a “fair and balanced approach to this issue” and said credit union members are collectively bearing unnecessary costs.
Committee co-chair Rep. Theodore Speliotis (D-Danvers) said towing statutes, including the notification bill heard Tuesday and others raising maximum tow charges, have been “under the radar screen probably a little bit too long.”
Saying consumers have “love affairs” with their automobiles, Speliotis told the notification bill proponents, “I think we can reach a consensus.” He told bill advocates that the committee would report “something” out “fairly soon.”
After the hearing, Speliotis said constituents had filled his ear with tales of towing woes and called the hours after an individual’s car is towed a “vulnerable time for consumers.”
“They’re at the mercy of the towing companies in many ways,” he said. “I’ve heard some horror stories in the past about towing.”
The lenders and bankers who testified for a notification bill “deserve to be protected,” Speliotis said, adding: “If the consumers had a similar group, they would be here in masse.”
Wednesday, June 3, 2009
Proposed MA Law Would Give Notice Of 'Absurd' Towing Fees
Here's the story from the Somerville Journal:
Posted by Cyndi Kight, Associate Editor of Towing & Recovery Footnotes at 12:34 PM