WASHINGTON — Tow truck operators, fighting allegations of rampant price gouging against trucking companies, say insurance companies should take some of the blame for spiraling costs.
The issue of alleged price gouging of motor carriers by unscrupulous towing operators was raised in a Federal Trade Commission proposed rulemaking last year, in which the FTC recommends requiring more billing transparency from tow truck operators.
In support of FTC’s proposal, the Federal Motor Carrier Safety Administration sought further public feedback on how it could provide additional oversight on the problem.
But towing companies and their representatives told FMCSA the issue has more to do with underinsured carriers than with tow truck operators charging exorbitant rates to remove trucks from crash scenes.
“Many truckers are misled into purchasing insurance with inadequate coverage, only to discover that their policies fall short in the event of an accident,” wrote James Austin, who represents the Michigan Towing Association, in comments filed with FMCSA. “This issue is a serious concern that the [FTC proposed rule] does not adequately address.”
Austin stated that FTC’s proposal also overlooks uninsured and underinsured truckers who operate vehicles without proper registration and inspection certifications. “These irresponsible operators pose a significant risk to public safety and create additional burdens on towing companies, which are often expected to respond to accidents promptly without assurance of payment.”
Fee nonpayment, according to an anonymous towing company responding to FMCSA, has risen to 40% in heavy-truck crash recoveries and cleanup.
“We have seen videos taken from insurance industry conferences in recent years where they are laughing about their latest and greatest tactics to deny payments to towers,” the commenter claimed. “It’s funny to them, it’s not funny to me. I have employees to pay, extremely expensive equipment to purchase and maintain, and sub-contractors that often require payment from me after the job.”
Josh Tillett, representing Jonestown, Pennsylvania-based Blatt and Tillett Truck and Trailer Repair, agreed with Austin’s argument that truckers frequently are persuaded to buy inadequate coverage and that the FTC’s plan doesn’t put enough focus on that.
He also cautioned against over regulating towing operators. .
“The FMCSA should not dictate the charges or operational practices of an industry that is already governed by existing consumer protection and business laws,” Tillett stated. “Such regulation seems unnecessary and intrusive, particularly when the current legal framework is already designed to ensure fairness and protect consumers.”
Out-of-control rates
The American Trucking Associations contends that a “patchwork” of regulations among different states and within each state makes “conditions ripe for predatory towing companies to prey on truck drivers and trucking companies.”
The Owner-Operator Independent Drivers Association provided FMCSA with a list of recent bills charged to some of its members, including a towing charge of $100,386 that included a 5% administrative fee of $4,463.
“Our objective, which should be shared among all interested parties, is to develop or amend laws and regulations to deter bad actors within the industry without harming those who operate the right way,” according to OOIDA.
Insurers push back
The American Property Casualty Insurers Association (APCIA), whose members write commercial trucking insurance policies, pushed back on the assertions from towing operators, contending instead that a lack of local, state and federal regulations enable predatory towing companies to overcharge truckers.
“In fact, towing and recovery companies have historically sued both state and local governments to invalidate any attempts to regulate the industry, citing … federal preemption,” APCIA stated in comments to FMCSA.
“Without the removal of the federal preemption, the FMCSA must begin to take steps to implement appropriately tailored regulations for the towing industry to ensure that all drivers, both commercial and personal, are protected from abusive practices by the few bad actors in the industry.”
Whether regulation is put in place by the FTC, FMCSA or both, APCIA said, “the public should be protected from predatory practices during these highly stressful and vulnerable experiences.”
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Click for more FreightWaves articles by John Gallagher.
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