The Ohio Independent Auto Dealers Association
Mr. Chairman, Vice Chair Duffey, and Members of the House Commerce, Labor & Technology
Committee, my name is Wendy Rinehart, Executive Director of the Ohio Independent Automobile
Dealers Association (“OIADA”). On behalf of the Association, I appreciate the opportunity to
testify in favor of House Bill 592.
The OIADA represents the interests of the more than 5,000 licensed used car dealers in the state
of Ohio. They are businessmen and women, many of whom small businessmen and women with
five or fewer employees, that have dedicated their very existence to the establishment and success
of their business. They are the small car store that survives in the best of times and the worst of
times because they are a part of their communities as fathers, mothers, Better Business Bureau
members, Chamber of Commerce members, city councilmen, school board members, churchgoers,
youth organization sponsors and coaches, and task force members who look for ways to make our
cities and our towns better places to live.
Many of the state’s independent dealers are those engaged in Buy Here Pay Here transactions.
In a Buy Here Pay Here transaction, the dealer serves as both the seller of the vehicle but also as
the financier of the consumer’s purchase, often because the consumer is not available to get
credit from any other source. Those dealers engaged in Buy Here Pay Here transactions go to
great lengths to finance their customers, expending their own capital to ensure the consumer has
the opportunity to have transportation. Thus, just like any prime or subprime lender, protection
of the Buy Here Pay Here dealer’s lien is of utmost importance to the dealership’s survival.
One of the most significant threats to a Buy Here Pay Here dealer’s lien, a threat over which the
dealer has no control, is the practice of tow companies, storage facilities, and repair facilities
failing to notify lien holders when a tow has occurred, or when an agreed upon term of storage
has expired, or when an agreed upon repair has been completed. What can happen, and what
OIADA and its members are seeing happen far too often, is a tow company removing a vehicle
from a tow away zone and storing it for a period of time in which storage fees are accumulating.
Then, when the storage fees have accumulated to the point where they reach a significant value,
the tow company will alert the vehicle owner (and sometimes the lienholder as well) that the
vehicle has been towed and that in order to retrieve it, the owner or lienholder will have to pay
the significant storage charges. If they are not paid and the vehicle value, after deducting storage
fees, is less than $2,500, the tow company will apply to have the vehicle’s title transferred into
its name. This same fact pattern has happened with repair facilities and storage facilities as well.
Consider a few anecdotes from dealers around the state:
From a dealer in Painesville. “We received a notice that a vehicle that we are lienholder was
impounded on 1/29/14. We received this notice on 5/8/14. That’s over 100 days! I called the
impound company holding the vehicle on what the cost was to get the vehicle out. He quoted
2040 Brice Rd, Ste. 110, Reynoldsburg, OH 43068 ~ Phone - 614-863-5800 ~ Fax - 614-863-5801
~ [email protected] ~ www.ohiada.org ~
$1540 (and would not negotiate price). Why so much, I asked? He told me they get $15 per day
plus towing fees. The vehicle was a 2005 Pontiac G6. Its value is about $2500. Why did it take
over 3 months to get notified? When we repossess a vehicle we have to let the owner know
within 10 days. Why should this scenario be any different?”
From a Cleveland area dealer:
“We sold a vehicle on Oct 10, 2013. The customer made one
payment of $100 and was no longer in contact with us. We could not find the customer and our
recovery vendor was unable to find the vehicle. On May 8th, we received a call from Heisley
Tow that they had the vehicle. Storage and tow fees accrued to $1600. They would not
negotiate 5 cents.”
From a Canton area dealer: “We have had several cars towed and/or impounded that we as the
lienholder were never notified until the balance for fees, storage and other, was so high that we
just forfeited the vehicle to the tow company.”
From a Chillicothe area dealer: “In 2008, a customer rolled his Saturn SC1 near his home in
Londonderry, Ohio totaling the car. The customer, not having full coverage insurance doesn't
tell us about the wreck and stops paying for the car. After several months searching for the car,
we finally find the customer who fesses up to the accident. I then contacted area tow yards
finally locating the car only to find I'll need $1650.00 to recover it. I offered a lesser amount but
the owner told me that he could easily sell over $1000.00 worth of parts off of the car so “no pay
-no play”. A $2400.00 loss to me.”
One dealer in business for over 20 years said he has had similar stories happen to him over 100
times during those two decades.
Senate Bill 274 will help alleviate the concerns so many Buy Here Pay Here dealers have faced
over the years. This bill would require tow companies or storage facilities that remove a vehicle
from a private tow away zone to notify both the vehicle owner and lienholder within 48 hours of
removal from the tow away zone. The notice must be sent via certified mail to ensure that the
owner and lienholder receive it. Once notice is received, the owner and lienholder can make an
informed decision on whether to retrieve the vehicle, and pay to the tow or storage facility
reasonable charges. If after thirty days the owner or lienholder has not retrieved the vehicle, then
assuming other conditions are met, the tow or storage company can begin the process to have the
title transferred into its name.
Such language only makes sense. OIADA believes that the tow companies and storage
companies should be reasonably compensated for the services they render and have the
opportunity to have title to the vehicle transferred if the vehicle is truly abandoned after notice
has been received. That is fair. However, it is not fair to either the owner or lienholder to have
the tow companies, storage facilities, and repair facilities sit on their hands and rack up hundreds
even thousands of dollars in tow and storage charges because they won’t send timely notice of
the tow. Consumers need their cars and if they don’t want them, then secured creditors need to
protect their collateral. 48 hours is ample time to notify them and 30 days is ample opportunity
for them to retrieve the vehicle.
2040 Brice Rd, Ste. 110, Reynoldsburg, OH 43068 ~ Phone - 614-863-5800 ~ Fax - 614-863-5801
~ [email protected] ~ www.ohiada.org ~
OIADA expresses its gratitude Representative Gonzalez for taking the leadership to introduce
this Bill into the House and to Senator Hughes for working with our association to hear our
members’ stories and for his willingness to introduce important legislation. Likewise, we
express our gratitude to this committee for conducting this and other hearings on the bill.
Mr. Chairman, thank you for the opportunity to testify today. I am available to take any
questions that members of the committee might have.
2040 Brice Rd, Ste. 110, Reynoldsburg, OH 43068 ~ Phone - 614-863-5800 ~ Fax - 614-863-5801
~ [email protected] ~ www.ohiada.org ~