A new lease on life for truckers?

Predatory lease-purchase agreements in the trucking industry aren’t new.

The practice of truck drivers paying a motor carrier tens of thousands of dollars for a truck they never end up owning has been going on for decades. However, Congress and the U.S. Department of Transportation haven’t shown a genuine interest in correcting the problem until recently.

One of the reasons the practice has been able to persist as long as it has stems from truck drivers being reluctant to come forward. Whether it’s the embarrassment or that they expect the fight to be futile, it’s likely only a small percentage of the victims have shared their stories.

And that’s exactly why Shelley VandenBerg believes it is so important to tell hers.

VandenBerg, an OOIDA member from Garden City, Idaho, attended the Mid-America Trucking Show on March 21 in Louisville, Ky., to relay her experience with the Federal Motor Carrier Safety Administration’s Truck Leasing Task Force.

“Basically, I was hoping to be the voice for all of the drivers who couldn’t be there,” she said. “I wanted to be the voice for drivers who have gone through this or who are going through it currently … I wanted to be that advocate that you need to do the uncomfortable thing.”

VandenBerg told the task force members and FMCSA officials in attendance that these predatory carriers often use a bait-and-switch approach to get drivers to sign a contract. In 2018, she and her husband entered a lease-purchase agreement for a 2018 Kenworth T680.

“The brochure promised no money down and payments as low as $1,500 per month. But that wasn’t the case at all,” VandenBerg said. “The maintenance costs were always 100% ours regardless of what the contract stated.”

She said they were charged $175,000 for a Kenworth with about 100,000 miles on it. Despite the brochure’s promise, VandenBerg said they had to pay $3,000 down for set-up fees and $1,250 every other week.

“We were treated like company drivers while being made to pay lease-operator prices,” she said. “We never had a choice in the loads we hauled, the maintenance of our vehicle or any decisions of our business.”

VandenBerg was able to get out of that agreement, but that’s when the real trouble started. She said she was locked out of her authority, her business account and her insurance.

“We just need to somehow crack down on these predators in the industry that know all too well how to work around FMCSA’s guidelines and state regulations,” she said.

Truck Leasing Task Force

The creation of the Truck Leasing Task Force was ordered by Congress in 2021 with the goal of ending predatory lease-purchase agreements. In these arrangements, a carrier leases a truck to a driver but still possesses control for the majority of the operation. In fact, the carrier is in control of the trucker’s ability to pay off the loan. It is common for drivers to report owing money to the carrier at the end of a pay period.

“Predatory truck leasing schemes are one of many longstanding problems within the industry,” OOIDA said in comments filed in April. “While traditional lease agreements can allow truckers to operate as independent small businesses, there is a subset of leasing arrangements that almost always exploit drivers … In the end, drivers are paid pennies on the dollar with little chance of owning the truck, and zero independence.”

The task force held its first meeting in July 2023, and Transportation Secretary Pete Buttigieg said that ending these predatory agreements is a priority.

“We’re working to make sure truck leasing agreements are not trapping drivers into predatory situations, and that is going to be the focus of this board’s work,” Buttigieg said during his opening remarks. “We’ve seen a lot of ways that lopsided leases are preventing drivers from ever getting ahead and even leave them in a worse place than where they started through no fault of their own. These conditions are unacceptable for any worker in America and certainly for essential workers like those who get our goods to where they need to be through trucking.”

The task force members include a representative for the Owner-Operator Independent Drivers Association, representatives for labor organizations, motor carriers, owner-operators, attorneys and educators.

So far, the task force has held four meetings to learn about the severity of the problem and to move toward providing a set of recommendations to the DOT.

“We know that there have to be ways to make lease agreements more transparent so that you understand what you’re dealing with before you sign on the dotted line,” Buttigieg told Land Line Now last July. “We have to make sure that there are the right kinds of rules and parameters and guardrails around what those leasing agreements can contain. When you see some of these practices, you see people getting presented with higher mileage trucks than they might have expected. They’re not getting a chance to test drive, or they’re getting service contracts that have a lot of fine print that wind up really creating a gap between what a driver thinks they are going to make and what they’re actually going to make when you take into account the costs, repair bills, insurance and anything else that falls on the driver.”

OOIDA has suggested that all leasing agreements must include language explicitly defining exclusivity with the lessor.

“Optimal leasing arrangements must allow independent contractors to seek their own loads, their own maintenance and preserve a sense of true independence,” OOIDA wrote.

At the October meeting, the Consumer Financial Protection Bureau spotlighted problems that arise when the worker’s ability to repay the debt is controlled by the issuer of the debt itself.

The presentation showed examples of lease-purchases where truck drivers brought home as little as 67 cents in a week after payments and expenses, as well as accounts that paid $20,000 for the year to the driver and $95,000 to the company.

“Businesses controlling the debt is the origin of some of the problems,” said Emma Oppenheim of the bureau.

Task force member Jim Jefferson, who represents OOIDA, said that it’s advantageous to these companies to keep the drivers in the lease rather than have them pay off the truck.

“They control every aspect of what that driver is able to do,” Jefferson said, adding that this control includes essentially making the driver an employee who is responsible for costs that normally belong to the company.

Such findings have sparked some members of the task force to ask whether the best way to move forward would be to simply eliminate lease-purchase agreements that involve the motor carrier loaning the truck to the driver.

“Why are we trying to get into the nitty gritty of fixing these lease-purchase agreements? I would like to keep on the table that instead of creating regulations, no debt related to a lease-purchase program should be held by the carrier or affiliated company. This would address the majority of the problems we are discussing,” Paul Cullen Jr. of Cullen Law Firm said at the October meeting. “Why is this a system we should save?”

MATS meeting

While the previous Truck Leasing Task Force meetings had been held online, the March meeting at MATS gave members the opportunity to hear directly from truck drivers who have been affected by lease-purchase agreements.

However, the meeting also spent time discussing the ways that predatory lease-purchase agreements negatively affect the trucking industry beyond the direct victims.

The Federal Motor Carrier Safety Administration believes that is a safety issue.

Brian Stansbury, chief counsel for FMCSA, said at MATS that predatory lease-purchase agreements are harmful beyond the financial ramifications.

“The reality is that the safest drivers are the most experienced drivers,” he said.

FMCSA realizes that these agreements often prey on new drivers. After the lease-purchase fails, they commonly leave the industry and have to be replaced by another new, inexperienced driver.

“In many cases, we have seen drivers exit the industry in financial ruin,” Stansbury said. “This is not what we want. We at FMCSA want to ensure that truck leasing is a gateway to prosperity, not a pathway to suffering and exit from the industry.”

Tom Weakley, of the OOIDA Foundation, noted that inequitable contracts put stress on drivers and can lead them to make unsafe decisions in terms of how fast they drive and how they maintain the truck.

“When you’re under pressure and not able to make the payments, you might drive a little faster,” Weakley said. “You might do some things you wouldn’t normally do because you’re struggling to make those payments.”

A lack of funds also can encourage a driver to hold off on important maintenance or repairs.

Steve Viscelli, a task force member and economic sociologist at the University of Pennsylvania, recently told Land Line Now that these predatory arrangements harm all truck drivers.

“I believe that these lease-purchase agreements that are unfair to drivers and have little to no chance of completing … are a problem that actually affects all drivers out there in one way or another by undercutting rates and by undercutting wages for employees,” he said.

These are among the reasons Cullen Jr. has maintained his stance that the task force should recommend eliminating the model where motor carriers are the ones that hold control of the loan and a driver’s ability to repay that loan.

“No motor carrier should own the debt of the driver,” Cullen said. “They have supreme control over the driver, the driver’s finances, when they drive, how or when they prepare their truck. Why can drivers not get leased trucks from traditional leasing companies?”

In these instances, the same entity that controls the loan possesses the power to assign loads that will determine whether the driver is able to pay off the loan.

On the other hand, some have suggested that the few success stories are reason enough to create rules for improving the carrier lease-purchase model rather than eliminating it entirely.

Jefferson said carriers take advantage of truckers who dream of being an owner-operator.

“Their dream is to be a truck driver and own their own truck,” Jefferson said. “But they don’t have good credit and can’t do it the traditional way. They sell it as the American dream. The reality, it’s just a dog and pony show. They’re rushed to sign a contract. They jump in the truck and expect big things. Three weeks later, they’re sitting on the road and haven’t even received a paycheck.”

At least one truck driver at MATS believed that trying to create regulations to stop these predatory companies is a lost cause.

“There is no fixing it,” truck driver Justin Martin said. “It needs to go away.”

As for VandenBerg, she believes the time is now for truck drivers to speak up and let the decision-makers know why change is necessary.

“I really want to encourage drivers to get involved,” she said. “We’ve sat idle for too long. Without the pressure from the public, nothing is going to happen. It’s vital that people start speaking out.” LL