Andrew Pace: A quick note before we start. I really enjoyed my conversation with Mike Peplinski, Vice President at Harding Brooks Insurance Agency in June. He shared a lot of valuable information about risk. Some of the commentary is critical of some lender behavior that does not apply to the commercial asset-based lender and lease finance companies ACS is proud to work with, but worth calling attention to because of the importance of proper documentation and rigorous diligence.

Thanks for joining us. Welcome back to ACS Portfolio Perspective. I’m your host, Andrew Pace, Chief Client Experience Officer at ACS, joined today by Mike Peplinski, Vice President at Harding Brooks Insurance Agency located in Syracuse, New York. With over 15 years in the insurance industry, Mike brings a unique and valuable perspective to risk management and asset-based lending. His career began in district sales management at HSBC and evolved through key account executive roles at a regional-based insurance agency. 

Since joining Harding Brooks Insurance Agency in 2014, Mike has served as vice president for more than 11 years. In 2016, under Mike’s leadership, Harding Brooks launched an exclusive insurance program tailored specifically for the asset recovery industry in partnership with leading associations. Mike’s deep experience in financial services and insurance gives him unparalleled insight into litigation trends, regulatory enforcement actions, and the evolving compliance landscape. His expertise in wrongful repossession claims contract enforcement and regulatory accountability makes him an invaluable resource for helping lenders protect themselves while maintaining effective and compliant recovery operations. 

Mike, welcome to the show. 

Mike Peplinski: Thank you. That was quite the intro. Appreciate that. 

Andrew Pace: My pleasure. Thanks for being on. Looking forward to this. So the legal landscape and asset recovery, let’s talk about that. 

To kick things off, what are you seeing in the field right now, there’s clearly been an uptick and legal pressure around recovery. What’s driving all of it? 

Mike Peplinski: So, you know, lawsuits are coming fast and furious. You know, just talking 2025, the first half of 2025 has already surpassed what all of 2024 brought in in terms of number of claims, in terms of number of lawsuits. The reason being is every billboard, you see it’s all attorneys, right? What really comes down to is a lot of contract or really litigation funding, which all that is is these, you know, hedge funds, finance companies are literally fueling all these attorneys and say, hey, we’ll pay you up front, you go, and you go find the business and we’ll pay you because we know you’re going to win. And that’s really where it’s coming from. So all these billboards, all these plaintiff attorneys are literally soliciting business. 

And what was hard to find maybe five, seven, eight, nine years ago in terms of where to even go or what I even think about, it’s when something happens, and you have five attorneys that you’re just you just know off the top of your head of all let me call them and they’re ready to go um so the the landscape right now is very very challenging very very difficult um the frequency is coming very very fast and uh you know it’s a tough thing to manage right 

Andrew Pace: Now yeah what would you what is the normal timeline for when you see these lawsuits materialize. 

Is that is it a few months after the incident? Could it be up to a year? 

Mike Peplinski: So every state’s a little a little bit different depending on their laws in the state. A couple years ago, typically lawsuits wrongful law lawsuits would come in, you know, 9, 12, you know, year and a half and 12 months through a year and a half later, now you’re seeing them much quicker come in because of the ability to have a law, you know, attorneys at your fingertips. They know where to call. There’s someone that is ready to jump. They’re getting solicited themselves. So now it’s actually, you know, typically under, you know, a few months, six months, we’re seeing them. 

Andrew Pace: Yeah. And are there forums, message boards, are there ways where attorneys, customers can look and see which companies settle or are getting sued and which ones settle to become more of a target?

Mike Peplinski: Yeah, you know, in every state’s a little different, but there’s different avenues that attorneys can pull and see, you know, when certain things were defaulted, who’s, you know, whose car was picked up for repossession, but every state is a little different, but there’s definitely places that people get targeted. We literally had a person two weeks ago receive two different lawsuits, exact same verbiage except, you know, name and date of one that actually transpired, but verbatim cookie cutter lawsuit, which just tells you that there’s certain people out there that are targeting areas that have an avenue to the information, and they’re just literally cold calling soliciting these people and saying, hey, come with me, I’ll get you some money. 

Andrew Pace: Sure. And they’re looking for a quick settlement. They’re not looking to obviously go to trial in those cases. They just want to try to get it quick. 

Mike Peplinski: No, What really is going on is the attorneys want to drag it out. The consumer is going to get a small little piece of money, but it’s all these, they call it fee shifting, really. What they do is just dragging on, and it’s a lot of attorney fees that they’re counting on. 

Andrew Pace: Gotcha. Gotcha. How is the growing focus on unfair business practices by regulators changing how lenders or recovery agents operate? 

Mike Peplinski: You know, it’s really challenging right now. It all comes back to contracts of how they can operate, how the repossessor can operate. And a lot of the large lenders, you know, not dropping any names, but the large finance companies or banks are getting larger, right? There’s less smaller operators out there. The large schemes, finance companies are getting big, and they’re kind of strong arming a lot of the vendors of theirs, such as repossessors, into, hey, you need to do, as I say, you need to do it the way I tell you to do it, the way, what timing I want to do it, all this kind of things of this is how you’re going to do it, and this is what we’re going to pay you. 

So it is, it’s tough from a repossessing standpoint to do things in the right way because they have all these codes, all these compliance pieces they have to do. But at the same time, they’re under their ruling of how much they get paid, how much they’re doing. So it’s a tough balancing act to find the right repossessor with the right compliance, right training that’s doing it the right way.

Andrew Pace: Right. And I think you just mentioned we’re getting into one sided contracts. And they’re being challenged more frequently, how are they factoring into enforcement actions and even the insurance claims right? 

Mike Peplinski: So the big thing on contracts, it’s um everyone anytime a contract comes its lets see the contract, lets see where you’re at with everything. So it all goes back to the contract. Now, all the contracts are written up by these banks, by these lenders, by the finance companies, and many of them try to do the right thing, but often too many of them still don’t. And what I mean by that is they are very one-sided. So the indemnification piece, which is the biggest issue going right now, basically says, hey, if the repossessor there’s anything wrong, and we get dragged in, well, they’re covering all the fees, they’re handling the lawsuit, they’re taking it on the chin, they’re doing it, and it’s their fault. Fine. 

On the flip side, if the bank does something wrong, such as an invalid order, meaning they put out an assignment that should never been put on, maybe their persons out on military leave, whatever the case may be, they’ve made the payment, and never got withdrawn, and the lawsuit comes, they’re not picking up the tab for the repossessor. For the repossessor still picking up the tab, which is really one -sided. So that’s been a big, big challenge for many people. We’ve had a lot of success in the repossession world to get that fair, get that equal, but too many times It’s still an overwhelming number of lenders that really make it one -sided. Now, when you look at the Romp for Repossession Lawsuits coming in, this is the last two years numbers, about 49 point, I think it was 4%, 6%, so we’ll call it 50%, just shy of 50% of the lawsuits that come across our desk have nothing to do with the actual repossessor. It’s all an invalid assignment, lien loss, stuff that the decision making or the really making sure the assignment’s valid is done on the bank side.

And the problem is one on every two that we’re seeing come across our desk. You have nothing to do with the repossessor. However, the repossession company, the repossessor is So you got a, you know, the wrong balancing act of the person making the decision, right, is not held accountable. So the responsible party is not being held responsible. Now, I would like to tell you, you know, we’ve, in the last three, four years, we’ve made a lot of strides. A lot of people have stepped up and changed their contracts to make them fair, make them equal. But still over, Over 50% of the contracts floating around out there are one-sided. 

Andrew Pace: Mike, you know, that really enforces the importance of proper documentation. And, you know, I’m happy to say that the vast majority of the contracts we’re seeing from our clients are not one-sided. 

Now, before a repo even happens, what would you suggest lenders should be doing from a documentation or accountability standpoint to protect themselves? 

Mike Peplinski: Well, from a lender standpoint, they should have a team to go and vet the assignment, right? Make sure that it is true. They are behind. No payment plans have been put in play. There’s no military leave going on. Everything is status quo versus grading it and kicking it out quickly. That’s the key. 

Andrew Pace: Yeah, I can tell you from our experience, we’re seeing more and more clients asking, putting the onus of that responsibility on the vendor, whereas we have to do scrubs for bankrupt, S-C-R-A, deceased. So they’re starting to push some of those things on the vendor. And there are resources out there where, you know, you can hire companies that can do those scrubs for you, but it comes at a cost. 

But no, you’re right. I mean, it really just comes down to capacity, right? Do you have the resources and do you have the capacity to do those things? And it seems like they’re shifting some of that on to the service providers to do those things. 

Mike Peplinski: Yeah. And again, it’s just the responsible party is not being held accountable. And therefore, nothing will really change. You know, because quite honestly, from the attorneys, the plaintiff attorneys that are seeking and, you know, coming after you and soliciting these debtors, you know, that defaulted that, you know, to go sue, that’s going to be there. And that’s, you know, it is what it is right now. 

But if we can have the right responsible party, take ownership and make the payments, whether it’s a repossessor, you know, did something wrong, they take ownership. The bank lender did something wrong. They take ownership. It’d make it a lot better. 

Andrew Pace: Right. Right. So let’s talk about bank consolidation, negotiating power. Switching gears, we’ve, we’ve all seen how bank consolidations, it’s reshaping the industry. Things that, you know, you’ve mentioned earlier. 

The big are getting bigger and that’s shifting the dynamic for everybody involved, how is consideration affecting the balance of power between lenders and their recovery partners? 

Mike Peplinski: So the consolidation, the balance of power is very, you know, it’s tough on the repossessor because there are so few banks, finance companies out there that are holding the majority of the repossession, repossessions. So if you want to have a living, right, you know, these are all small business owners. If they want to be able to supply a good living for their employees, for themselves, they need the work. If you want to get the work, there’s only a, you know, a certain amount of players out there that hold 80 % of the assignments. 

You’ve got to work for them. And if you can’t, well, that’s going to be hard to make a living, hard to support all these employees. And we’ve had, I’ve had some conversations with a lot of political parties in terms of the small business department up in Washington, D.C. back in May, about, you know, this consolidation in the finance world, as well as other industries, they’re trying to offload all their liability on their vendors that are forced to take it if they want a living. 

And it’s really clear the small business department is not happy about hearing that all these large corporations are offloading all their liability to the vendors when there’s really no decision power, nothing at stake for them. So it’s a very big challenge that they have to accept to a degree, and they’re trying to partner with them, but in many instances, they’re just not. In the repossession world, a big piece right now that’s kind of any push back is, hey, for one, they haven’t gotten a pay raise, right? And, you know, a decade we’ll call it, which, you know, it is what is on one side, but I always look at it as like a, you know, a theater, right? The tickets to the movie, keep the lights on, pay the bills, there’s no profit. All the candy, all the soda, all the popcorn, that’s where people make money. 

So it’s all, you know, the different ancillary benefits or, you know, pieces that bring up their ability to do it. That’s what they’ve taken away from a finance company. So flatbed fees to, you know, farther distance, to storage, to all those ancillary pieces of their job, to personal property, clearing out cars, all that kind of stuff has been kind of removed. And that’s really how they make their money. And that’s a problem.

Andrew Pace: yeah I was just going to mention uh or ask you what what are some of the things they can do to stay competitive and in the past they they could make up for it with personal property inventory fees storage um kit cutting keys and this is mostly for the auto auto industry not necessarily on the on the commercial side of things where you don’t deal with a lot of personal property with the exception of you know semi trucks semi-trucks and things like that. But that’s where they used to be able to make up, you know, they’d offset what they didn’t make on the repo. 

They would almost break even on what they were getting paid to do the repo, but they were able to keep the lights on by able. And then things shifted after the recession. You know, banks became more regulated. You had obviously, you know, risk, you have the procurement, you had risk, compliance, and they’ve pretty much just put it all out to the industry and say, hey, this is what we’re paying. Here’s what we can, you know, you can, are allowed to charge for personal property inventory fee. Here’s what you’re allowed to charge for storage, kind of telling the business owners what they can charge, right? 

Mike Peplinski: Right. And a lot of it also came from the CFPB, the Consumer Financial Protection Bureau, now with a new regime running the country, they basically took the CFPB and kind of basically kicked them out. It’s a shell of itself, and they kind of put a lot of consumer protection in there, which is all good, but also, you know, a lot of the lenders said, all right, no, you can’t charge this because it’s going back to the consumer, you can’t charge this, which basically made them work for free in a lot of instances. 

But with that really kind of being thrown out the door right now, we’re putting on pause, that whole piece of consumer law, things will and should be able to open up a little bit for them to get paid on the services they provide. 

Andrew Pace: Right. More fair, balanced view on it. Right, right. So there’s hope. There’s certainly some hope there. 

Are you seeing NDAs in contract language being used more strategically or aggressively or in this new environment? 

Mike Peplinski: So what’s funny is a lot of people will come to me and come to my team and say, hey, can you review this from the insurance standpoint? You know, we’re not attorneys. We’re not trying to be attorneys, but we can tell you from an insurance standpoint, how an insurance will respond based on their insurance requirements and insurance language in there. And a lot of large banks, lenders, finance companies actually put in there, you are not allowed to seek counsel. So the NDAs is a very hot topic also because they’re trying to say, oh, no, no, that’s not what we mean, but yeah, that’s what it says in their contract. They’re not allowed to seek counsel. 

We’ve had some people literally that I know, not get business or lose the business because they pushed back after seeking counsel and said, hey, these are some red flags that were told to me, and they’re like, you’re not allowed to do that. And they literally took the business from them and said, we’re going elsewhere. So it’s a very, it’s literally, you know, David versus Goliath. They know they’re bigger. They know they can flex their muscles and, you know what? If you don’t want to do it, fine, we’ll get the guy down the road to do it.

Andrew Pace: And that’s, you know, and I guess that’s the other, other issues. Then now you have somebody that’s not properly to sustain their business model at, you know, doing it at the rates, you know, how can they sustain that? 

Mike Peplinski: So there’s a lot of pushback on these bank’s lenders. They have their requirements that they want to hold to everybody. But when they get pushed back in certain areas, they’re like, you know what? We’ll let this slide or let that slide or let this slide from requirements.

And they end up getting people to do the repossessions that aren’t qualified. They don’t have the right coverages. They don’t have the right training and there’s that part and not educated and that also brings more lawsuits more consumer problems right to the consumer world it’s really they have separate contracts for different people across the board and it’s not flatlined. 

Andrew Pace: So let’s talk about something that doesn’t always get the attention it it deserves claim denials. 

What typically leads to claim denials? And how does contract language or account segmentation issues play into that? 

Mike Peplinski: That’s a great question. And this is where we spend a lot of time educating the lenders, finance companies, forwarders. They’re the ones really scripting these contracts. And a couple words here, a couple words there, change everything when the claim comes in. And really from their perspective is they want the repossession company’s policy to extend and pick up their tab, really, when the lawsuit comes in that they weren’t responsible for. 

So the repossession company did something wrong, we’re responsible for all of it. Hey, it’s their responsibility to pick up the tab. But if the contract’s not written properly, it cannot extend, right? Because again, anytime there’s a lawsuit, it all goes back to the contract. So the biggest thing that consists of denials for the extension of coverage, for the lenders, for the foresters, is the additional insured request. 

There’s a lot of policies out there, or contracts, I should say, I’m sorry, that don’t have the proper request for to be named additional insured. Specifically, a lot of them in the forwarding operators, some of the banks, but if they don’t, you know, from a forward perspective, if they’re not saying, hey, you know, we need to be named additional insured and our clients, well, the buck stops at the forwarder does not extend off to the clients. And nine out of ten times, the people that are named in the lawsuit are the repossession company because they’re aware of them, and then lender of bank because they know who had the loan on it. 

So that’s a very big piece. It’s additional insurer requests. A lot of them don’t put it in there at all. And the other piece is when they do write it in, they’ll put it in the indemnification piece. So the indemnification portion is a contract. It’s part of the contract that’s with the two parties signing the contract. It has nothing to do with the insurance policy. So the easiest way to say indemnification is not an insurance obligation. Okay. So they need to take that additional insured request and have it in the insurance portion of the contract. That is probably the number one reason why a lot of lenders, banks get very frustrated, saying, I told them to, you know, cover this. They said they have it. It says on the certificate of insurance that it’s covered. And yes, it does. But on the insurance certificate, if anyone ever reads one, right, it is also saying this is not a contract, right? It’s a snapshot of coverage. So, yes, it’s there if it’s part of the contract. If it’s not part of the contract, this part is irrelevant. 

Andrew Pace: Right. 

Mike Peplinski: So that’s a very hot topic. And a lot of people don’t, don’t grasp it or don’t understand it. And you wouldn’t if you’re not in the game, right, in doing it. That’s why it’s important to get the right people to review the policies, review the coverages. 

And we stress on even all the repossessors that we look at and say, hey, go educate your clients to make sure you’re a good partner to them. Because if you do something wrong, you want coverage for them. You want to be able to take care of it. 

Andrew Pace: Right. And looking at the assets they’re picking up, you know, are they insured, do they have enough coverage to cover the loss of that asset, right? And if they don’t, you know, are they going to self-insure the loss, you know, the overage, right? 

So if they have a $100,000 asset, but they’re only covered for $50,000 of cargo or on hook, you know, is that agent or company, that national agency, are they going to self, you know, self-fund that if they have you know if they care about the relationship that they have with their with their client right yeah I mean how about you come across that. 

Mike Peplinski: Most people don’t have the funds or the means to take on these claims themselves. It’s why they buy insurance because it’s transferring their liability to someone else, it’s depending on the claim lawsuit it can be very very hefty. 

Andrew Pace: So to close things out, Mike, let’s talk about litigation, how and how lenders can better protect themselves in an increasingly risky environment. 

Why do you think lenders are becoming more frequent targets for legal action?

Mike Peplinski: Well, simple answer, all these plaintiff attorneys are going after where there’s money, right? They’re going after deep pockets, and where deep pockets are, lies in insurance policies. You know these plaintiff attorneys that are that are coming after all these consumers in turn to go after the landers the lenders the lenders the banks and ultimately the insurance policies there they know there’s money there’s no they know there’s big money um and they know it’s very challenging to defend it right you know it is what it is if we don’t have hard evidence nobody is going to side with the single mom that just us their car that’s trying to make ends meet to make, you know, a living for their kids. 

No one’s going to side against them. So the only way to get out of it is if there’s hard concrete evidence. And that means, you know, it’s just getting more and more popular. Body cams are becoming very popular. Cameras on all the trucks to be able to videotape everything. Without that, you lose. It’s that simple. He said, she doesn’t mean it’s a split decision. It’s he said, she said it means you lose 100% of time. 

And it’s that simple. If you do not have proper evidence, and that’s hard footage, body cams, hard footage, you know, dash cams on your vehicles, you will lose. And you will lose a lot of money. The insurance carriers will lose a lot of money. The insurance premiums go sky high as anybody knows right now, especially in commercial auto and the repossession world that’s just going up and up and up, why? Because not a lot of people have invested yet in all these cameras, in all these body cams, and then these plaintiff attorneys are coming at them, and it’s like, all right, where do we stroke the check? And then, you know, that’s all their misconsumption out there. 

Everyone’s like, oh, these insurance companies, they just give anybody anything they want. And the reality of it is if they don’t have evidence to support a case to win, they want to stroke the check as fast as they can and close out the claim because the faster they do, the claims stay small, right? And it’s not about settling fast. It’s settling fast because they have no way to fight. 

Andrew Pace: Right. 

Mike Peplinski: Now If there’s, now, if there’s hard evidence, then they can look at, hey, let’s, let’s challenge this, let’s deny this. but the other piece that’s kind of coming out and because more and more are getting these dash cams, are getting these body cams, now these attorneys are getting smart. It’s not about, really, they don’t even care about the facts of the case. It seems odd to say. 

They’re like, what venue can we try you in? And then they come at you for training, hiring practices, training, and holding people accountable. You could hire them well. You can train them, but if you’re not holding them accountable to, you know, adhere to your policies, they’ll say, hey, that’s on you. And maybe my person was 100 % at fault for whatever they did, but you know what, 30% is on you, and it wouldn’t have been as severe if you did what you were supposed to do. So they have all their little tricks, the little loopholes that they try to come in and do and get you hit.

Andrew Pace: Do you find agents that use technology like dash cams, body cams, do you find that a lot of customers will act differently? And having that technology will almost deter customers or from things being escalated or having a breach of the piece. 

Your experience with talking with boots on the ground, you found that that’s prevented a lot of, a lot of, uh high stake situations?

Mike Peplinski: As soon as people see that way, that camera, majority, hmm, not everyone, right, but majority instantly change. Their demeanor changes, their tone changes. Everybody changes. Now, don’t get around. There’s that small percentage that doesn’t really matter, but yes, the more they see that, and they point out everything’s being recorded, everything changes instantly. 

So it’s really, really important that more and more get it, but it is a cost to do. It’s an expensive piece to fully outfit your entire team. 

Andrew Pace: Sure, sure. Is there any benefits with rates for companies that implement and use, you know, camera, you know, video technology on all their recoveries. 

Does that benefit them?

Mike Peplinski: So, that’s a good point. So from the cameras right now, it’s one of those that, no, there’s not a direct, you get 10% off. But indirectly, yes, if you use it and you adhere to it and you train and use for training, ultimately your claims should come down. 

You know, I always kind of say it’s just because, you know, you sent someone to a defensive driving class doesn’t mean they’re going to be a defensive driver. They have to put it in play, put into action, right? 

Andrew Pace: Right.

Mike Peplinski: The telematics is the biggest piece that you can sometimes get some discounts for, and that just really dictates driver behaviors and really your employees’ behaviors of how things are going. And that’s really a proactive tool to help coach them before something bad happens. And that’s the biggest tool to use, but also the biggest tool that’s not used. You know, we did a hard push in our insurance program that we wanted that for everybody. And over 90% of the people out there, the operators out there, had a telematics system in all their vehicles. 

However, less than 10% were actually doing anything with it. We’re even looking at it, it’s just kind of checking a box and there it is. And that’s almost worse because you have all the evidence that this person, you know, is now on their phone while they’re operating a vehicle or whatever the case meet and you didn’t call them out on it. So they continue. So it’s one of those technology can be your greatest friend and your greatest enemy if you’re not used properly. 

Andrew Pace: No, that’s a great point. From your perspective, how do insurers evaluate preventable claims and does it affect how they price or renew their coverage?

Mike Peplinski: So the preventable claims is simple. It’s making safety culture important, right?

You know, I was, I get invited to a lot of safety meetings to help assist, help partner to run throughout companies. And, you know, I was at one operation, and the whole thing was this big safety push, supposedly. 

And the first 45 minutes of their safety meeting was doing awards on nothing to do with safety, right? It’s all production, production, production, nothing to do about how safe or how clean their production was, right? And then the safety meeting was like smaller than that. And once people realize they need to put emphasis on safety and make it at one’s forefront of their mind, that’s never really going to be a true culture. You know, I always say a clean loss history is not by chance. It’s not by luck. It’s about doing the day and day and grind of making sure everybody’s on the same page it’s that’s culture that the management you know built in and it’s not unlucky when their lost history is terrible right if you see this frequency all the time listen you just don’t have a good safety culture going on you don’t hold people accountable you’re not doing the right steps to to create that what is necessary um so from preventable, it’s not, there’s no silver bullet, hey, you do X and you’re good. 

It’s constant awareness, making sure your drivers are very aware, your employees are very aware of all the situations, how to, you know, they do a lot of training now on situational awareness to avoid situations to be aware, pull out. You know, we always use this phrase from a deriving perspective. Just because you’re not at fault doesn’t mean it couldn’t have been avoided, right? If you’re driving defensively, you’re going to avoid all these things that you probably weren’t even at fault to begin with, but it still happened because you were paying attention. 

And that’s a lot of it. It’s just a lot of awareness, a lot of emphasis on the management, pushing down on all their employees, on their staff to do the right thing and just make it a big emphasis, and it’ll turn. 

Andrew Pace: Yeah, I love that. Making safety part of your culture and policies and procedures only work if they’re followed, right? 

So, you know, it’s that constant reinforcement of what are your best practices, right? 

Mike Peplinski:Yeah. 

Andrew Pace: So what are a few major don’ts when it comes to recovery actions, you know, the kind of things that almost always land somebody in hot water or we can say in court.

Mike Peplinski: So one thing that’s been out there that it always is just a training tool is

police are involved for one reason. Police are involved to get any repossession company person out of a bad situation. Police are never involved in helping assist with the repossession. As soon as a police officer has to come, it was a breach of peace, right? There’s no more peaceful repossession going on. 

Okay. Are you legally allowed to take it? We have most police officers say, no, no, take this and go. You’re allowed to, I see everything, you’re good, go. So yes, you’re legally allowed to do it, but it’s also a breach of piece and you will get sued nine out of ten times. So a big, you know, misunderstanding and trying to make sure everyone understands, police are called for one thing to get yourself out of a bad situation. 

Andrew Pace: Safely. 

Mike Peplinski: Safely, right? You never call to assist. That’s it. If you’re calling them to assist, you’re going to get sued. You call them to get you out of a bad situation safely and that’s it and then you’re done move on and that’s a lot of um we see a lot of lawsuits coming like that where police will come you know because it’s got a hostile environment right and then they’re like no you know take the take the you know whatever you’re repossessing and so they do and days to follow there’s a lawsuit and now hear well police said I could take it yes you can but clearly that wasn’t a peaceful repossession right and then you lose. So again, it goes back to training and misconceptions out there.

Andrew Pace: Have you ever seen, have you ever seen police or law enforcement agencies get named in lawsuits and situations like that. 

Mike Peplinski: I have not, to be honest with you, they name The company, and they name the lender. Yeah. I have not seen the police. I’m probably pretty sure no attorney wants to go after a lawful, you know, the police officer of law force, that’s where they want to make buddies with and, you know, go get the bad repossessor and the lender for being bullies of taking a vehicle or equipment that they didn’t pay for.

Andrew Pace: Right. One of their, uh, one of the comments they had is the importance of, uh, case management, like with the consolidation of repossession companies over the, you know, since the pandemic, right? And obviously the cost to get insurance, right, in a high risk, in a high risk environment. And you have, because of the limited number of repossessors that are out there that are properly insured, betted. 

Obviously, they’re getting a lot of work. So there becomes a case management problem, right? So what advice do you have for companies when it comes to the importance of proper case management? Does that make any? 

Mike Peplinski: Yep. So, you know, before the pandemic, it was very heavily, listen, you to take what you get, right? Your workload is X and you have to take it no matter how good or bad paper it is. The pendulum has slowly swung in the last two or three years. The volume is over -exceeding really the workforce in terms of repossession world, where, you know, I’ve become very close with a lot of lenders, a lot of large banks because I work with them very closely on a lot of, you know, from claims to writing their contracts up, from insurance requirements, standardizing stuff. And they said, there’s so much work out there that they, you know, they actually have to push out the repossession more. So what used to be about a 55, maybe 65 day, past due, they’ll kick out the assignment to get repossessed. Then they went to like 75, 85, 85. They’re over 100 days now. Two of the largest lenders out there are right around 105 days past due before they’ve been sending an assignment out to the field.

But saying that, the volume is so high right now that from the repossessor, they actually can actually be picky, you know, pick and choose. You know what? Hey, if you don’t want to give me what I’m asking for or you don’t want to be fair in contract terms or pay me a fair wage, that’s fine. I’ll get to your assignments when I get to them. I’m going to focus over there. 

So the last, you know, I’d say one to two years, the volume of people picking up hasn’t really changed, but they’re becoming more profitable solely because they’re working on better paper. They’re getting better assignments. They’re getting closer to the better clients of theirs, right? And that’s helped the repossession world a lot. And again, like I said, these lenders are pushing things out, making themselves look better in the sense of, hey, we’re not going to send you out to a collection agency until, you know, almost double what they used to, just because it’s almost too much for the workflow to even happen. 

Andrew Pace: So the lenders that are more proactive, they’re not waiting, taking longer to make a decision to whether or not assigned it out or not. Those, they’re actually getting, you know, preferred treatment on those accounts. Lenders who perhaps maybe pay those agents quicker will obviously get preferential treatment as well. 

That’s, that’s, you know, that’s obviously something that I think a lot of companies you know hey who’s who’s paying me fairly and who’s paying me the quickest and who has the best work right and those are the accounts they gravitate towards and you know when they have time they can kind of backfill and work some of those other um some of those other accounts that may not be as easy they don’t have GPS they don’t have good intel um so they’ll obviously get to those when they can but they’re not going to invest a lot of time because the longer the lender waits to assign it out, the harder the effort becomes, right? 

Mike Peplinski: Storage lots is another big area. Storage is tough to get and very expensive. So, you know, these repossession companies only have X amount of, you know, space to put their collateral that they repossess, and they’re not going to fill it up with, you know, bad, bad assignments aren’t paying as well, and then they’re stuck because they’re not getting off them quicker. So they’re filling them up with people that get them off the lot faster, that are paying them better, paying them on time, as you said, and all those variables. 

So really in the last couple years, the pendulum has swung where the repossessor has more power than they ever have. Don’t get me wrong when I say that, because the big banks and lenders still flex her muscles when they have too. But they have more power. They’re winning better, winning more, you know, struggles with them that are going their way.

Andrew Pace: So let’s talk about unlicensed repossession activity. So there seems to be a lot of that going on. There are a dozen or so states that you’re required if you’re doing a voluntary and voluntary repossession where you have to use, you should be using a license repossession if you’re doing the right thing. 

What are your thoughts on that? How do you educate or what can you do to educate to make sure that some of the people that you’re working with are properly insured, properly licensed in the states, and those states that require it so that, you know, everybody involved in that transaction isn’t potentially exposed to a wrongful repossession lawsuit. 

Mike Peplinski: Yeah, so I’m a big supporter. I’m a big fan of licensing in states. And I know that’s everybody’s opinion. But here’s the reason why I’m a big fan of it. So those that are licensed, yes, it does cost money to go do the training, get vetted properly, get licensed, which are the reasons why people push back on. However, if you’re doing all that. You’re investing in that. You’re going to get properly trained people. And then the lenders, afforders, et cetera, have to go through you to get the work. 

So you’re going to weed out all these untrained, you know, doesn’t have the right insurance, you know, that are just kind of fly-by-night companies. They’re out of the game. So you’ll control more of the work, right, better than you do now, even though you have to do a little investing. Long term, it’s going to be better. And long term will be better for the consumer, for the bank, for everybody, because you’re getting trained professionals versus, hey, I just hired this guy off the streets and I threw him in the truck and said, go pick up a, you know, go pick up a car tonight. They’re not trained. 

They don’t know, you know, what to be looking for, how to handle situations, how to handle hostile debtor situations, how to handle all that kind of stuff, what to do, and that’s when you see your frequencies start pumping up. So I know why people are like that, but I’m a big fan of it. I wish it was across the board solely because you’re going to weed out the people that are not trained, not compliant, don’t have the proper insurance coverages, and less issues will happen from it.

Andrew Pace: Agreed. I, you know, what about the companies that are participating that don’t have the proper insurance? You know, they’re picking up assets where they don’t have wrongful repo insurance or and then they’re subcontracting out that job to a company that may not have wrongful repo insurance themselves and they go pick up the wrong asset or they they were told it was involuntary, but they show up and the customer changed the mind. And they’re like, what are you doing here? You can’t have this truck. 

And now, like you mentioned earlier, you have somebody that’s not trained and not handle situations like that. And oftentimes you find yourself in a breach of the peace situation. Now there’s a confrontation, right? So what are some things that, you know, you can share with, you know, with our listeners about making sure that they are, if they are going to be doing things like that, that they have the right insurance. So they’re protecting everybody involved in that transaction.

Mike Peplinski: So a couple things on that answer. One, from the insurance standpoint, you want to get with someone that does what you do, right? You know, there’s a lot of people out there like, oh, yeah, I got the right insurance. And they’re their only, you know, your You’re their only client that does what you do. Like they don’t specialize in what you do. This is a very unique industry. There’s so many things that you need to know. If you’re the one teaching the insurance agent, what’s going on, they’re probably not the right fit for you. Right.

You want to align yourself with somebody that’s going to help take your risk off your plate, advise you properly to get you properly covered, for one. But two, right, this kind of goes to the lender side of things, they really should be going through these associations. They really should be going through, you know, these national or state associations to get the better cream of the crop, the ones that are, you know, vetted properly, trained properly to do their, you know, collateral. And you’re going to have less risks. 

You know, I work very closely with a lot of the state associations, national associations, specifically the American Recovery Association, and they have all the training that they have to kind of get green lighted for. They have to be vetted properly, and you can go as a lender forward. You can go see who has done the training, who has not done the training. And, you know, it’s one of those things that said, hey, I did everything I could to get a proper repossession company, a trained, skilled repossessor out there to perform this, you know, challenging, challenging task, really dangerous task at some instances. 

So from both sides, lenders can do better on, hey, where do we find them? Right. And then the other guys, make sure you’re properly insured with an agent that does what you do. You know, that’s really for any industry, right?

Andrew Pace: Sure. I mean, if you need electrical wiring done in your house you should hire a certified electrician you’re you know if you’re going to need plumbing work done in your house you should hire somebody that’s certified that you know that’s a certified plumber I mean you’re really taking a big risk by hiring somebody that’s not properly licensed and if they’re not properly licensed they’re probably not properly insured right right so if they’re if they’re you know circumventing something over here there’s going to be something missing over here. 

Mike Peplinski: You know, I tell everybody that, you know, when you’re, when you’re looking for a proper insurance agent, you ask them, you know, what do you, you know, how many clients you have like me, or how many clients you have in the repossession world, you know, how much of your, you know, how much are you involved in the space? Are you sponsoring things? Are you putting your money where, you know, your book is, right? Are you attending these conferences and helping this industry progress in the positive way. And you’ll find very quickly, very quickly, who knows what they’re talking about, who doesn’t. 

Andrew Pace: Yeah. So I think we covered everything today. Is there, is there anything that we didn’t, we didn’t talk about during our time that, Or do you have any questions for me?

Mike Peplinski: No, you know, there’s an insurance piece itself that’s very challenging. We don’t need to go down how challenging insurance is right now. I think everyone knows that, but I think it was pretty good.

Andrew Pace: Great, great.

Mike Peplinski: Hopefully I cover what you wanted me to cover.

Andrew Pace: Yeah. No, this is great. This is a great discussion. I think it’s extremely relevant. I just came back from a credit and collection conference, and, you know, there’s a lot of new people, you know, entering the space because obviously there’s a high, high demand for repos, especially in the commercial side of things. So you see, you see new people enter the space. So, again, competition’s great. You just want to make sure that, you know, they’re educated. They know, you know, they’re not exposing their clients, they’re talking to the right people, they’re properly insured, things like that. So the timing for this call couldn’t have been any better, Mike. 

Thanks again for being here today. Your experience and wrongful repossession claims, contract enforcement, and regulatory accountability made for a really insightful discussion. You’ve given our listeners a lot to think about when it comes to protecting themselves while still running effective recovery operations. 

To our audience, thanks for tuning in to ACS Portfolio Perspective. If you find today’s episode helpful, be sure to subscribe, leave a review, and share it with your network. We’ll be back soon with more conversations from across the asset-based lending and recovery world.

Until next time.