Truck Leasing Task Force tackles lease-purchase programs
For nearly a year and a half, the Federal Motor Carrier Safety Administration’s Truck Leasing Task Force has gathered information about the prevalence of predatory lease-purchase agreements in the industry.
Since that time, numerous stories of truck drivers in bad deals with motor carriers have been relayed. In these predatory lease-purchase agreements, a carrier leases a truck to a driver but still largely holds control over the operation, including the driver’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.
However, the task force is not done. In September, the group scheduled meetings on Oct. 30 and Nov. 20 to get even more feedback from truck drivers who have been involved in lease-purchase agreements.
Previous findings
Based on findings from the Consumer Financial Protection Bureau and input from truck drivers, the task force has focused on the fact that the company in control of the loan is also in control of the truck driver’s ability to pay off the loan.
The Bureau’s 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.
Paul Cullen Jr., a task force member and attorney for the Cullen Law Firm, has contended for several meetings that arrangements where the carrier holds the loan over the driver should come to an end.
“I keep on the table, ‘Why we should try to save this model?’ I think it’s an important question for us to analyze,” Cullen said at the January meeting. “Why should it be saved? I think we should keep that on the table for our potential recommendation at the end.”
Numerous truck drivers relayed problems with the lease-purchase programs during a session with the Truck Leasing Task Force at the Mid-America Trucking Show.
Then in July, the Consumer Financial Protection Bureau delivered a presentation on many of the ways that truck lease-purchase agreements differ from leases involving passenger vehicles:
- Absence of comprehensible financial disclosures
- Broad default provisions
- Expansive remedy provisions
- Use of escrow accounts and personal guarantees
- Ease of inducing driver to relinquish truck
“The broad default provisions can leave truckers in a ‘damned if they do, damned if they don’t’ situation,” said Ryan Kelly of the Bureau.
What’s next?
As of press time, the task force was expected to hold its final meeting on Nov. 20. At the virtual meeting, the task force will receive an update regarding existing case law about lease-purchase agreements and will take comments from the public.
In addition, the task force will use the meeting to work on drafting its committee report for FMCSA. The Nov. 20 meeting is scheduled to start at 10 a.m. and end at 4 p.m. Eastern. Requests to submit written materials for consideration must be received no later than Nov. 13. Go to the Truck Leasing Task Force webpage to register.
The Department of Transportation is hopeful the task force will deliver recommendations that will create a level playing field.
“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,” Transportation Secretary Pete Buttigieg told Land Line Now in July 2023. “We have to make sure that there are the right kinds of rules and parameters and guardrails around what those leasing agreements can contain.” LL