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American Towman Magazine Presents the Week in TowingJune 21 - June 27, 2017

City, State
Sheridan, IN
(Pop. 2,665)
Eastsound, WA
(Pop. 4,500)
Blackwood, NJ
(Pop. 4,545)
Byron, GA
(Pop. 2,887)
Light-Duty nonconsensual tow rates as provided by Police Towers of America.

No Tolerance for Gouging

money 73 11843By Randall C. Resch

Tow companies are constantly in the media's cross hairs, accused of intentionally stacking charges by inflating an invoice's bottom line. Since the inception of rotator services, it's not uncommon to see invoice totals that range upwards to $50,000.

In one particular scenario, a tow company was suspended from a law enforcement contract because of alleged gouging. A vehicle's owner complained that a company's tallied fees were excessive for a tow that (he says) took no more than 40 minutes and was only a few miles from the tow company's yard. The tow company's owner responded by saying the fees may have been a mistake, and he made it right by lowering the bill. By lowering fees after a complaint was initiated, doesn't that suggest a certain level of culpability by the tow company?

A southern California tow company transported an off-duty police officer's wrecked vehicle a short distance and charged highway patrol rates. When the off-duty officer arrived at the tow company's yard a couple of hours later, he was handed a gigantic bill. Because the off-duty officer was there at the accident scene, he knew that an additional truck and driver weren't there, he knew there was no need for stand-by time, excessive labor, additional mileage, flares and absorbents, even dollies. Most damaging was that his wrecked vehicle was transported on a carrier and the tower actually drove the damaged vehicle onto the carrier. A subsequent complaint was filed with the agency's tow boss, leading to a surprise audit a week later. The audit eventually determined that other invoices substantiated intentional gouging resulting in them being terminated as a rotation tower.

These types of complaints plague the towing and recovery industry. When tow operators get paid straight commissions, adding charges is a typical way to bolster commissions. Typically, when tow company staff enters job information into the company's computer, tow company owners don't see what is entered. Ultimately, if owners don't review invoices for accuracy, jobs that may have been inflated oftentimes make their way to unsuspecting customers.

Owners: To say, "I didn't know," is not a defense.

And, because there's an earned distrust between insurance companies and tow company invoices, the industry has experienced a difficult road-to-hoe because of padding and stacking false charges on invoices.

Because invoices don't write themselves and are the product of mandatory office administrations, responsibility to demand accuracy in billing begins with the company's individual stand on honesty, reputation, and fair play to not get caught up in dishonest fees and charges.

Owners can't review every invoice or computer entry, but they will have to defend the company's reputation. Owners can set the tone of accuracy by training and demanding that your personnel only specify honest charges and fees approved by the agencies you serve.

I fully support tow companies being paid for the work they've done or services they've provided, but when false charges or fees are added and work hasn't been done ... that's nothing less than committing fraud. Tow companies should be required to openly submit to periodic audits of collected invoices. Companies that truthfully and honestly conduct work and services should be paid.

Doing Away with Credit Card Fees

15 0bf10By Don G. Archer

What once was considered a cost of doing business is now a thing of the past.

In 2005, 7 million business owners sued Visa and Master Card over service agreements. They claimed the credit card companies were forcing them to bear all the fees incurred when customers used their cards to make purchases.

As a condition of accepting their cards, Visa and Master Card told business owners that they could not pass these costs down to the consumer. They couldn't even steer them to less expensive payment options. If they did so, they would lose their ability to accept their cards.

When this was going on, I owned a convenience store and knew nothing about the suit; but I felt the pinch. A load of gas would come in off the tanker and it might cost me $2.45 per gallon. I would retail it, in step with the other gas stations in my area, at $2.49. This meant that if a customer paid with cash I would get four cents per gallon; but if they paid with a credit card ... well, that's another story.

Depending upon the card used, I would pay anywhere from 2.5 percent to 4 percent of the purchase. This meant, as a business owner barred from passing these costs down, it cost me money to sell them gas. At $2.49, the credit card fees would have been between six to nine cents per gallon, which meant I was losing between two to five cents per gallon.

Why should a business owner pay extra fees based on the type of payment used? It might have made sense in the past. If your business was the only one in the area accepting credit cards, you had an advantage. When profits were higher and margins weren't as slim you could afford these fees; but in this economy where everyone accepts credit cards, there's no need for business owners to continue to pay.

Fast-forward a few years to 2011. I'm out of the gas business, the attorneys have finally quit squabbling and justice has prevailed. Visa and Master Card are ordered to pay back some $6 billion. They were also sent back to the drawing board to rewrite their service agreements, with direction to allow business owners to pass on their fees.

But like any good movie, this can't be the end.

With the precision of surgeons, the Visa and Master Card lackeys began dissecting every word in the judge's decree looking for a "legal" way to comply with the ruling and bring in more revenue.

They rewrote their service agreements to allow business owners the option of passing their fees onto the consumer—as a surcharge.

As a result, the credit card companies were still charging business owners a transaction fee on top of what they were collecting. That fee was bigger due to the surcharge.

To illustrate: With the new service agreements, if you had a $100 sale and added a 3-percent surcharge to the customer, the credit card company will then charge the business owner somewhere in the neighborhood of 3 percent or 4 percent for the entire amount.

($100 x 3 percent = customer pays $103 x 4 percent charged by the credit card company = $104.12.)

This $100 sale nets the credit card company $4.12, and the business owner is still paying $1.12 of it. The numbers may be hard to digest but the gist was—the business owners were still losing out.

After numerous complaints, the Justice Department stepped in and sued the credit card companies. Visa and Master Card quickly settled; after a seven-week trial in 2014, it was ruled that American Express had violated anti-trust laws. Things began to change.

The ruling opened the door for businesses throughout the U.S. to pass on all those fees. My towing business was doing more than $60,000 per month in credit and debit card transactions. If this has taken place from the start, I could have saved more than $2,000 per month.

When I first learned about the changes in the law, I was skeptical. I called the company that did my credit card processing, and they had no idea what I was talking about. It seems that this is so new that only a handful of companies are doing it. They're all using the software of a company called SignaPay, who claim to be the only legally compliant software available.

As far as the viability of passing credit card fees down to towing customers, that's a whole other discussion; but if anybody out there is using this already and saving loads of money, I'm sure others would like to know about it.

American Towman Field Editor-Midwest Don G. Archer is also a multi-published author, educator and speaker helping others to build and start successful towing businesses around the country at Don and his wife, Brenda, formerly owned and operated Broadway Wrecker in Jefferson City, Mo. E-mail him direct at
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