A consumer advocacy group recently became aware of a towing industry practice that may negatively impact unsuspecting drivers. As post-COVID activities begin to return to normal, more drivers are on the road and, unfortunately, parking in areas they may be unfamiliar with. Some towing companies have taken advantage of this situation and partnered with local businesses to provide them with kickbacks in exchange for giving the tow company tips about illegally parked vehicles. The U.S. PIRG Education Fund is one example of an agency carefully evaluating practices in the towing industry.
The problem behind the practice isn’t when a company gives legitimate information to a towing company about a car that has parked inappropriately and met the time requirements for a legal tow. Instead, because companies are incentivized to call in these tips, many report cars as being parked illegally when they either are parked legitimately or have not met time requirements. As a result, there has been an influx of consumer complaints about being towed inappropriately (a costly issue for the driver to deal with) that have been traced back to this practice.
What is the U.S. Pirg Education Fund?
The U.S. PIRG Education Fund took a look at the growing towing industry. According to statistics, the industry is expected to take in $11.3 billion in 2022–10% over pre-pandemic 2020 numbers. U.S. PIRG Education Fund is a nonprofit organization that works to protect consumers and promote good government. This group investigates problems, develops solutions, educates the public, and provides meaningful opportunities for civic participation.
“Banning kickbacks should be a no-brainer,” said Teresa Murray, Consumer Watchdog with U.S. PIRG Education Fund. “Kickbacks give people incentives to get vehicles that aren’t breaking any rules towed. Why would we incentivize that?”
In their latest report, “Getting Off the Hook of a Predatory Tow Part II,” the organization disclosed that only 16 states have laws banning kickbacks to property owners or others for private property towing. Among those states, there was variation in the comprehensiveness of the statutes. The group also identified other perceived regulatory gaps, such as states not having caps on towing or storage fees or not allowing drivers to be able to access their wallets or medications left in the vehicle without paying the towing fees.
For towing company owners, it’s essential to understand the laws that govern your business within your state or municipality and be aware of the focus placed on typical industry practices such as this. Often practices may originate with good intentions as a win-win method to solve a problem, but those practices can get out of control without proper management.
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