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Tracking the trends KNOW what you’re PAYING for Predatory towing fees are a growing issue of concern among motor carriers By Kris Rutherford Predatory towing. It’s a term with which all too many motor carriers and drivers are uncomfortably familiar. It’s possible your company has been a victim of the practice, which goes far beyond fees for towing a disabled vehicle from the side of the road. For example, let’s imagine one of your tractor-trailers is involved in a single-vehicle accident, such as a rollover. Law enforcement at the scene request a tow service, usually selecting the next towing company on a list used to spread the business among competitors. The company dispatches the equipment, spends about an hour and a half cleaning up the scene, and then disappears with both your equipment and cargo. In short order, you receive a bill for towing services that requests payment of tens or even hundreds of thousands of dollars for the release of your equipment. Predatory towing is an increasing problem in the trucking industry and has been brought to the attention of the Federal Trade Commission (FTC), which is studying deceptive business practices nationwide. Already, several state’s legislatures have passed or are considering bills to limit predatory fees. “When a truck driver’s vehicle is towed, they can’t earn a living until they get it back — leaving them vulnerable to predatory junk fees from towing companies,” said U.S. Transportation Secretary Pete Buttigieg. “We support FTC’s efforts to stand up for truckers by acting to ban junk fees and prevent predatory towing fees that can cause significant financial harm.” The Federal Motor Carrier Safety Administration (FMCSA) expressed sentiments about the issue in a letter to the FTC. “The proposed regulation may significantly benefit FMCSA’s regulated community, specifically as it relates to the predatory towing practices that have a substantial financial impact on CMV owners and operators,” wrote Sue Lawless, the agency’s acting deputy administrator. She went on to highlight the nature of predatory towing fees, the various ways a tow company calculates excessive fees, and the hidden charges many tow companies place on an invoice. In a Truckload Carriers Association (TCA) webinar on the issue, Gene Funk, general counsel for Cowan Systems, a Maryland-based trucking firm, said, “The towing companies send out these bills just hoping someone is not looking at them.” Funk, along with Renee Bowen, an attorney with the firm Franklin and Prokopik, provided several examples of invoices with excessive charges, one in which the towing company sought $202,000. 22 Truckload Authority | www.Truckload.org TCA MAY/JUNE 2024
“They’re a creative bunch,” Bowen said, referring to predatory towing companies. “(These fees are) made up. They’re fictitious. You have to challenge these charges,” said Funk in reference to some of the charges that show up on towing invoices. As an example, Funk pointed to a certain fuel surcharge. The line item had no relationship to the amount of fuel the tow company used in performing the work; instead, it was charged as a percentage of the total tow bill. In essence, a $100,000 invoice could have a $6,000 surcharge for fuel attached. Another major issue with predatory towing is “per-pound” billing. In this case, a tow company sets its fee based on the total weight of the vehicle, trailer, and cargo being hauled. Often, Funk said, companies will charge a minimum fee based on an 80,000-pound tractor-trailer — even when the vehicle involved only weighs 20,000 pounds. One example compared a per-pound billing invoice to an invoice for the same service charged at nonpredatory rates. When recalculated, the predatory $140,000 per-pound invoice dropped to $24,000. There are several problems with existing towing fee regulations, which vary from state to state. First, the tow companies hold all the power. They capitalize on a motor carrier’s need to retrieve its equipment and cargo. Despite statutes in place that require tow companies to release cargo, Funk and Bowen cited instances in which tow company managers simply ignored the requirement and essentially held equipment and cargo hostage. There is also a lack of enforcement of existing regulations. Often, law enforcement agencies are the ones who call a tow company — but they are unwilling to get involved in cases of excessive charges. In addition, there are cases in which a tow company sends the same invoice to various stakeholders (carriers, insurance companies, drivers, brokers, etc.). On occasion, multiple parties pay the same bill — and the towing companies simply reap the profits. To help trucking companies guard against predatory billing, Funk and Bowen offered some warning signs to look for before writing a check. • One red flag is per-pound billing, a practice that is actually outlawed in some states. • Excessive hourly rates and the number of hours personnel and equipment are on site should also be inspected. For example, a tow company may charge an hourly rate but have a minimum charge policy of four hours, even if less time is spent at the site. • Some tow companies charge additional fees for equipment sent to the site, even if that equipment was neither requested nor necessary for the towing job. • Finally, hidden surcharges are common tactics of predatory tow companies. Charges for weather conditions (temperatures over 80 degrees, for example), photos, and followup communications are common. One example of an invoice presented by Funk and Bowen even charged for “snacks.” And the snacks were charged at 2% of the total bill, resulting in a cost of $200 per employee. As far as solutions to the problem of predatory towing are concerned, Funk is not optimistic: “There are no good answers to solve the problem,” he said. However, Bowen did offer a few suggestions for truckers and carriers to follow when involved in a towing situation. • First, no driver should sign any document presented by a towing company on site. Many times, the driver could be signing away rates and waivers. • Drivers should take lots of photos of the site, towing operation, equipment, and personnel. “Photographs are incredibly important,” Bowen said. • It is also recommended that carriers form relationships with towing companies in the areas in which they operate, have legal counsel available, and train staff in what to do in the case of a towing situation. • Finally, Bowen says, carriers should join and support state trucking associations. These groups can be excellent resources when it comes to getting references for reputable towing companies nationwide. Ultimately, carriers must be aware that their drivers operate in different states — and there is no consistency in the regulations states place on the two companies in relation to towing fees. The FMCSA suggests the FTC provide guidance on how deceptive business practices related to towing would impact state and local laws that govern towing practices. Perhaps when federal guidance is available, tow companies will be willing to come to the bargaining table to establish fair and consistent rates. “The industry wants fair service for a fair price,” Funk concluded. TCA MAY/JUNE 2024 www.Truckload.org | Truckload Authority 23
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