'Predatory' tows' big-dollar impact in trucking at roadside, or at blunt end of the parking shortage

Todd Dills: I was at the conference of the National Association of Small Trucking Companies in Nashville, Tennessee in November, in conversation with a small fleet owner there for the event when his phone rang. He glanced down at it and tried to ignore it as we talked on. Then it rang again. "I got to take this," he said after glancing down and wandered off to the side. Turns out one of his drivers pulling a big liquid tanker non-hazmat had been in an accident. Luckily, all parties were okay, but their equipment not so much. In the aftermath, the owner was presented with a huge tow bill for the non-consensual police ordered tow occurring in Indiana. Just so happens, the state of Indiana ranked number one for the intensity of reported "Predatory towing" events motor carriers shared with the American Transportation Research Institute as they worked on researching the extent of outsized bills and other predatory practices and the impact on trucking around the nation.

Their new, about as comprehensive as you can get report on predatory towing you may have seen if you're a regular Overdrive reader. Find a link to Overdrive News Editor Matt Cole's reporting on ATRI's work in the show notes wherever you're listening, or in the post that houses this podcast for Thursday, December 21st, 2023 at overdriveonline.com/overdrive-radio.

I'm Todd Dills. Today on the podcast, we're going to sit in on Matt Cole's attended conversation with ATRI Research Associate, Alex Leslie. He brought a variety of additional insights to the questions of just what owner operators and small fleet owners can do to combat so-called predatory behavior when they feel like they're seeing it. Here's Leslie explaining just why non-consensual tows, whether police ordered after a crash or from one of the many parking enforcer towing companies out there. Here he is explaining why those types of tows are ripe for outsize rates.

Alex Leslie: They have essentially a captive consumer, so market pressures aren't able to self-regulate those rates, and so that just creates an opportunity for towing companies to either charge higher rates than what is fair or to charge for a bunch of extra line items that either weren't used in the actual recovery towing process, or maybe they're overhead items that are being charged as redundant or charging for gloves and radios that have already been paid off. That kind of practice.

Todd Dills: As you'll hear throughout the podcast, this was certainly the case for the small fleet owner I spoke to at the NASTC conference. It can be difficult too to know just how to approach unfair practices, given towing rules and regulations or a patchwork of local laws by and large, but not covered by statewide rules that often only apply on state highways and when State Highway Patrol is involved.

Alex Leslie: There's no one solution. There's no single issue. All of those parties have to work together if we're going to get stamped out on this issue for ultimately everyone's benefit, right? Because towing companies that are doing the right thing, they dislike predatory towing companies, as much as anyone in the trucking industry.

Todd Dills: So was the small fleet owner's tow I mentioned, "Predatory?" It depends on how you want to define the term. Yet, on the other side of a break, you'll find that there were elements of the tow that definitely fit some definitions. We'll drop in with Alex Leslie and Overdrive's on Matt Cole just right after this word from Overdrive Radio's sponsor.

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Todd Dills: That's H-O-W-E-S. Howesproducts.com. Okay, here's Alex Leslie setting up just why the American Transportation Research Institute decided to pursue the predatory towing subject in the first place.

Alex Leslie: It's an issue that we've heard complaints about for years, that motor carriers are concerned about, that a lot of the state trucking associations are very concerned about, and they've often asked us about too. Really, part of that big push was that there really just has not been research on this topic at all. Sometimes ATRI is diving into something where there has been a lot of research and maybe there's a certain angle or a certain perspective that needs to be added. But in the case of predatory towing, there's just so little data because it's such a case-by-case kind of issue that they really felt it was a need to be able to get a better view of the land and some actual data. You don't have a reliable supply chain or trucking industry without towing professionals. The towing and recovery industry is a vital part.

And so, I want to stay up front, but of course we know that there are a lot of great towing recovery companies out there that the majority of them are behaving well. So they do face a number of challenges. Of course, they have to be able to respond to accidents at a time, in weather. That can be a huge issue. And again, case-by-case basis, whenever there's a crash. And on top of that, the equipment that they use is expensive. Heavy duty rotators and wreckers are expensive, top of the line pieces of equipment. And in a lot of parts of the country, they just aren't being necessarily used a ton. So what we found is that something like 45% of companies, towing and recovery companies operate in a county where there are fewer than 12 annual truck trailer tow weight crashes per company. So if you have a rotator and you're one of those companies, you may only be using it 11 times a year. So that is a challenge to obviously recuperate value on those assets.

Todd Dills: That recent truck trailer tow bill I mentioned up top, after the accident in Northern Indiana, saw charges for use of the tow company's rotator billed for a four hour minimum at a whopping $1,500 an hour, for instance.

Alex Leslie: Another challenge I'll mention quickly too is the prioritization of quick clearance. In a lot of states, you have laws explicitly about this, in different jurisdictions, at local levels too. Lots of priority put on getting those roadways clear as quickly as possible. And when that happens, sometimes the negative side effect of that good objective, of course, is that you have over-deployment of towing resources, which then might be reflected in a higher bill than what was strictly necessary.

Todd Dills: Again, the aforementioned tow bill in question, though for the owner, whose insurance company was presented with said bill, questioned the need for charges for not one, but two service trucks on the scene, both charged at 350 an hour for that minimum four hours and for a grand total of $1,400 each. If you're doing the math, yeah, we're up to almost 9,000 with those and the rotator charges alone.

Alex Leslie: Yeah, we really wanted to get a sense for what does the big picture look like. Again, with that total absence of data on predatory towing, even on just the most basic questions of what even is predatory towing and what are the regulations out there and how often does it even happen? So for answering those three questions, we really had to sort of split up and tackle some separate issues. So we had my coworker, Alexa, was digging through all the regulations out there at the state level to build one big compendium of what that looks like, which is part of the report. In addition, then we carried out a large motor carrier survey where we tried to get that broader picture. What are the issues that you're encountering out there with towing especially, but not exclusively, after a crash? That is the most common case where towing can become predatory, but there are other forms too, like impound, private property towing, for example.

Todd Dills: Those not so affectionately dubbed, parking pirates out there we've heard so much about this year, in particular.

Alex Leslie: And then the third big component was this study of towing invoices and focusing on predatory billing specifically, which was the most common kind of predatory practice that we found. And we were able to focus on invoices to then really getting on that specific issue. But throughout the whole process, on top of that, we were interviewing towing companies that are doing a really conscientious job and insurers who work with this issue as well as legal experts. So it really is a comprehensive report that touches on a bit of everything.

Matt Cole: What are the different types of predatory towing that you found are most common?

Todd Dills: Overdrive news editor, Matt Cole, there.

Matt Cole: And how common are they? How often are fleets experiencing these problems?

Alex Leslie: We looked at, first of all, just the broad level of how many fleets have encountered certain issues? And the most common we found was excessive hourly or per pound rates. And that could be on equipment, that could be on labor. And we saw 82.7% of carriers had encountered that at some point in 2021. So again, that's a majority of carriers. And of course if you're operating large fleet, you've got more crashes. So it's not a carrier level there, but that's a very high number.

The second most common was unwarranted additional equipment or labor charges. So things like over-deployment or being charged for miscellaneous fees that were redundant or overhead costs that shouldn't have been billed that way. That was about 81, 82% of motor carriers experienced that. But we also saw a majority of motor carriers experience excessive storage rates, vehicle release delays or access issues. Cargo release delays is a really big one as well. That impacts, of course, not just the fleet's bottom line with that truck, but also the relationship with the shippers, with business partners, which can be really detrimental.

Todd Dills: Again, that small fleet crash example I mentioned earlier represents a trifecta on all those counts, with the exception of storage rates. Not charged given just a single night's worth of storage, I suppose. Nonetheless, attempts to transfer the liquid load to another trailer were met with resistance and demands of overnighted payment to release the load and access to the yard with a tractor trailer and load both set was denied after 5:00 PM the day of the crash itself. The tow operator claimed that since it was a police impound, lot rules in the locale prohibited outside access after hours. The owner though remains unsure just whether the tow company may have simply made that one up or not. In his view, they simply, "Held the load captive until the check was overnighted to them."

Alex Leslie: We saw damage due to the use of improper towing equipment, was also experienced by about 59% of carriers. Vehicle seizure without cause, about 56% of carriers. And then misreported tows, non-consensual tows reported as consensual was another that we saw more than half of carriers encounter.

Todd Dills: Matt Cole here invoked the fairly recent news about suspensions in both Arkansas and Memphis of the booting and towing licenses [inaudible 00:13:00] the Memphis Tow Company of the parking enforcer-type, regular readers will be well aware of. Reporting on very aggressive tactics employed by their tow operators, booting vehicles when operators were still in cab, for instance, by armed personnel, saw error throughout this year at Overdrive. Search predatory towing to find several examples. Cole asked, "Was this sort of company reflected in these statistics around improper vehicle seizure as well as improper reporting of non-consensual toes that Alex Leslie mentioned?"

Alex Leslie: It can get a little bit tricky sometimes to distinguish some of these cases. So the practices they were doing could fall under seizure without cause or misreported. It does sometimes thread that line a little bit in terms of, was their proper notification? The laws vary from place-to-place. In some jurisdictions you have to notify the property owner before making an impound tow. We recommend that practice as one way to curb predatory towing, but in other places that regulation doesn't exist. So yeah, there are a number of different issues there, which again, there are ways to skirt around regulations as a towing company, so sometimes it requires some careful investigation.

Matt Cole: Not to get too far off track here, but have you seen anything else like what happened in Memphis as far as a city or a state government stepping in and coming down on a towing company for particularly egregious practices? Or is that kind of a first?

Alex Leslie: Yeah, you do see it. I know Chicago has had some issues recently with that kind of, again, private property towing, or towing from areas where the tower did not have authorization to be removing vehicles from. Or another one you see is where towers are soliciting business on the roadside areas where regulations say they're not allowed to do so. So you do see authorities at the local or state level stepping in on those cases. There are efforts to address these issues, but they vary so much from location to location, and that's one of the really challenging things for motor carriers to know, "Okay, if I have this issue in Chicago, what jurisdiction does that fall under, versus if I'm in Peoria, who is responsible, what regulations are applicable, which ones are not?" And then depending on what jurisdiction you're in, who do I go to make the claim, to lodge that complaint?

Does it go to the police? Does it go to a government agency? Does it have to go through an attorney general? It very quickly can become very complicated, especially for a small fleet or an owner operator. And while there are authorities out there working on it, while there are towing companies that are trying to stamp these processes down, again, there's just so much open space that can be problematic. Again, there are some causes that I've already gone through that are genuinely not the towing company's fault. Either there's ... Maybe information has been poorly relayed by the police officer or whatever other law enforcement or safety personnel might be on the ground. So there are some issues there. It could be miscommunication. There's something like a quarter of all invoices are not itemized, and so there's a huge gap there in terms of, you've got a bill but you don't know exactly what it was for.

But then of course you've got towing companies that are just trying to skim off the top. They have essentially a captive consumer, and so market pressures aren't able to regulate, aren't able to self-regulate those rates. And so, that just creates an opportunity for towing companies to either charge higher rates than what is fair or to charge for a bunch of extra line items that either weren't used in the actual recovery towing process or maybe there are overhead items that are being charged as redundant or charging for gloves and radios that have already been paid off. That kind of practice.

Todd Dills: Again, the small fleet tow bill example invites a little raised eyebrow treatment with a $150 per hour charge billed at that four hour minimum for a grand total of 600 for use of, "Arrow board and cones," to divert traffic presumably. Granted, a big board with flashing arrow lights could be an expensive proposition. Yet, I'd expect those cones are paid for pretty quickly.

Matt Cole: As you mentioned before, the biggest issues that you guys identified all had to do with rates and billing. I think the top five or six issues were all related to those things. And you guys dig into that a lot, the research into billing practices. So can you talk about what you guys found related to billing practices and why that's such a big issue?

Alex Leslie: We found that 29.8% of invoices had some form of excessive billing, predatory practice on them, which is pretty high. We found that percentage actually goes up as the bills get more expensive too. So the way we approached this was we transcribed all those invoices. We were working with about 500 and we looked at, okay, when do rates become over 50% more than the median rate? So that middle rate. And that was the threshold we used generally for determining whether an invoice was charging a predatory rate. There were a couple line items were used twice as high, rather than 50% higher, just to help represent the fact that, again, towing companies do have their own costs. Storage costs, for example, vary a lot depending on what part of the country and what your real estate prices are. So then we looked at each individual piece of equipment or labor or storage, admin fees and miscellaneous costs and tried to identify how many were in fact predatory.

And what we found was the most common form of predatory billing was miscellaneous costs. We saw those in about 8% of all the invoices that we analyzed. And we defined that as miscellaneous cost is any line item, any charge that's basically for something smaller than a skid steer. And then we added those all together for each invoice and figured out what percent of the final bill they were [inaudible 00:20:30]. Any invoice that had more than 25% of the total cost in those miscellaneous charges we considered as excessive. So that can include anything from oil cleanup, to drive shaft removal, to charges for gloves and lights and radios. So again, some of those costs, some of miscellaneous costs are going to be inevitable in a lot of crashes. [inaudible 00:20:59], that's got to happen. What becomes excessive is when it's over 25% of that bill and that excludes all hazmat crashes, becomes predatory in that case. So that was the biggest one, but it was followed pretty closely by equipment rates. Those were at 6.3%. And then administrative fees were excessive in 6.5% of the invoices that we saw.

Matt Cole: When it comes to insurance, I know you guys talked about how it impacts the insurance industry, how much insurance covers what they don't cover.

Alex Leslie: Insurance of course, is a highly involved party in these bills because insurance does end up paying a large share of towing bills for most carriers. Now, that varies based on several factors, but they have skin in the game too. And so, they end up usually taking point when it comes to contesting a predatory invoice.

Todd Dills: Not in the case of the small fleet owners example mentioned throughout this podcast. The owner questioned some of the charges mentioned, yet his insurance company simply paid the bill as presented.

Alex Leslie: And we found that, again, they're out contesting a lot of invoices, a little over 50%. And as a result, they are often able to negotiate that level down, but that takes time and it costs of course money as well. So another factor involved in the insurance question is the fact that if motor carriers don't have all of their coverage, that can be a huge issue. So towing fees are often involved. That they can fall under cargo insurance, they can fall under auto liability and they can fall under property damage. And so, if a motor carrier doesn't have all three of those coverages, then they're going to be on the hook. They're going to have probably slow billing processes.

That means you're going to have delays in terms of getting your truck back, getting your cargo released potentially. Another factor too is if a motor carrier has different insurers for all of those different coverage types, you've just got more people in the room who all have to be communicating on those invoices. And that process can also lead to much longer delays. And again, that's an area where towing companies aren't necessarily at fault there, but it's something that the trucking industry can actually do to try to prevent these cases from happening in the first place.

Matt Cole: How does where you're located come into play for your chances of being a victim of predatory towing, the state or city that you're in when you have a breakdown or a crash or anything like that?

Alex Leslie: It can make quite a big difference. And we did a state level analysis in this report and we found that some of those top states were Indiana, New Jersey, Mississippi, California. But I will say that state level regulations usually only apply to state troopers or state highways, certain types of roads, certain areas. And then local levels actually are the ones in charge of regulation for cities, sometimes counties. I mentioned that earlier, that's one of the reasons why it can be so tricky as trucking companies to navigate those regulations. But that is to say, to regulate in terms of to navigate what regulations apply, whether something is predatory or not, what rights they have. So that's one area where it varies a lot at these very local levels. And so, it's important to try to establish regulations that work for both industries at these different levels and when possible to consolidate those regulations. It may be at the state level.

Matt Cole: And you mentioned earlier that there's some states that are actively trying to address predatory towing through laws or certain regulations. I know Maryland is a big one. Can you kind of talk about what they've been doing and whether or not that could stretch beyond the three or four states that are currently making those efforts?

Alex Leslie: Maryland did a big push just last year for regulation of police initiated post-crash towing. They restricted per pound billing, which is often a source of predatory rates, and they made guidelines for the release of cargo and then created a committee that would review rates and handle disputes. And those are several initiatives that we recommend in the report as ways to potentially stamp down on predatory towing. What we find is that there are a lot of areas that are not regulated, and then even when there are areas that are regulated, the language of the regulation can often make those regulations under effective. So for example, there's some states that require that receipts be itemized, but not invoices be itemized. But if the invoice is itemized, you're not going to be able to identify whether there's been a predatory bill on, until it's been paid. So that is potentially not a very useful regulation.

Or another classic case is regulations might say that motor carriers are allowed to express their towing and recovery company of choice after an accident, but if the regulation doesn't actually require or highly emphasize that that choice should be given, unless the entire roadway is blocked or unless it ... If it's not explicitly defining those cases where choice should be given or should not be given, it can often just come down to the officer or the public safety official who gets to the crash, just their on the site judgment. They might just send it to a rotation list just based on first glance to ensure quick clearance, when in fact the preference should be given to the motor carrier. So there are a lot of these areas where there may in fact be an existing regulation, but it needs to be sharpened in order to actually become effective.

Matt Cole: What can fleets and owner operators do to, if they do find themselves, they believe to be a victim of predatory towing, what resources are out there? How can they fight those invoices and is there anything they can do to be proactive to avoid being a victim in the first place?

Alex Leslie: On the proactive side, the most important thing we can recommend is drivers should be taking pictures or video of the crash site, of the vehicles involved and of the recovery process. So not just focusing on the vehicle itself, but focusing on what does the roadway look like? Are multiple lanes blocked? Are no lanes blocked? And also, is there one wrecker on the site versus two or three, right? You sometimes see cases where two wreckers are billed when in fact only one was ever actually there. So photography, video is so important. And again, there are towing companies that do this too for the same reason, but getting the driver in the truck to do that as well is really crucial. And then drivers should not be signing any kind of release or waiver on the highway. They should not be signing anything like that.

That's not their responsibility. It's not their requirement. And that can get them into trouble later. So they should not sign. Now in terms of how to respond, there are again, several approaches too. We have published in this report our sort of thresholds for what we've considered potentially excessive rates. That can vary state-to-state, of course, but that is one guideline when you're reviewing an invoice. Another thing that carriers or their legal representatives can do when reviewing an invoice is check the bill mileage versus what the odometer actually says. Check maybe potentially based on what the GPS in the truck says. You can check versus what the towing company billed you, versus maybe what they billed in the past, or what other towing and recovery companies bill in the same area.

You can check police logs, again, for the time that the recovery process took. So there are a lot of those little recommendations that we make and put them in a lists that you don't have to hear me rattle them off in the full report that are ways that towing companies can, again, try to, excuse me, trucking companies can try to check those invoices to review them for any potentially excessive charges and to try to ideally meet with towing companies and nip that in the bud, rather than having to go down the full legal response route. Though that, again, may in fact be the case. It's a tricky issue because every crash is unique. Every crash has its own unique factors that can change the pricing, the number of assets that a towing company needs to get out there.

So there are a lot of factors involved, and that makes the work of towing and recovery complex. And they're true professionals in that industry. But it also opens the door for these potentially predatory practices. The same factors that make good towing companies so good at what they do, also open the door for those potential predatory practices. And so, that means that we really have to be diligent as the trucking industry, also in insurance, in the legal side of things, on the side of police dispatchers and responders too. So a lot of different involved groups to a complex issue. It means there's no one solution, there's no single issue. All of those parties have to work together if we're going to, again, stamp down on this issue for ultimately everyone's benefit, right? Because towing companies that are doing the right thing, they dislike predatory towing companies as much as anyone in the trucking industry. So it really is a group effort that hopefully this report gives some good groundwork to getting those efforts moving forward.

Todd Dills: Find a link to where you can download the full ATRI report and Matt Cole's coverage of it at overdriveonline.com, a couple of weeks back now. I'll post the link to it in the show notes, which you can find wherever you're listening. Overdrive Radio airs on YouTube and the Overdrive Magazine Facebook page, on Apple and Google Podcasts, Spotify, SoundCloud, Podcast Addict, and via Pocket Casts and many, many other apps and platforms. If you're getting plenty out of these episodes, leave us a rating and review wherever you're listing. Don't forget, you can always find the show at the world famous overdriveonline.com/overdrive-radio.

Stay tuned for more in-depth reporting on ways to tackle the towing issue practically. Coming up from my esteemed colleague, Alex Lockie, in the coming weeks.