Towing operators are not allowed to compel vehicle owners to take out loans in order to retrieve their cars after being towed, the Colorado Attorney General’s Office wrote this month.
In a July 17 letter to the Public Utilities Commission, Deputy Attorney General Nathan Blake said last year’s Towing Bill of Rights law is clear: “Neither the plain language nor legislative intent of HB22-1314 permits such a practice.”
“The intent of this statute was to allow consumers to retrieve their vehicles quickly and avoid (as much as possible) the devastating collateral consequences that can accompany a non-consensual tow,” Blake wrote. “The practice of withholding the reduced release unless a consumer signs a loan agreement violates the letter and purpose of the statute.”
The letter comes in response to accusations from lawmakers and consumer advocates that Wyatts Towing, the state’s largest tow company, has been asking vehicle owners to apply for loans in order to get their cars back.
The new law, which went into effect Aug. 10, 2022, allows individuals to retrieve their cars if they pay 15% of its tow fees upfront, not to exceed $60. The vehicle owner would then be on the hook to repay the rest of the bill over time.
But loan documents and video reviewed by The Denver Post last month showed Wyatts has rejected people from using this new provision and has charged interest as part of these loans. The agreements also would ask applicants to list their employer, income, rent/mortgage and banking information, The Post found.
State lawmakers, during a hearing before the Transportation Legislation Review Committee on Monday, grilled Wyatts CEO Trevor Forbes on the loan program, with one Democrat calling it “predatory and illegal.”
Forbes, despite evidence to the contrary, said no vehicle owners had been denied a loan and that the company stopped issuing them after reading the letter from the attorney general’s office. Around 200 people have used the 15% or $60 program since Aug. 10, he said, but fewer than 20 have paid their bills in full or in part.
The CEO, during a public rulemaking hearing Tuesday in front of an administrative law judge, said Wyatts has lost $150,000 in revenue since the law went into effect.
“We knew no one would come back and pay us again,” Forbes told lawmakers Monday. “And we also knew the economics of collection would make it not economical to pursue collections either.”
Compulsory loans increase the amount the consumer owes a tow company on top of the towing fee, Blake wrote in the letter. They could also harm someone’s credit score. As a result, the loans “create a mandatory requirement that acts as a barrier to a consumer exercising (their) statutory rights,” he stated.
The attorney general’s office recommended the Public Utilities Commission clearly state in its rules that a towing carrier may not require a consumer to enter into a loan as a condition of releasing the vehicle.
Forbes, in Tuesday’s hearing, said the towing industry would not fight for collecting interest on these exchanges.
“We’re not gonna create a new business model from predatory lending,” he said.
The PUC, which oversees towing in the state, acknowledged that the new provision has been difficult to navigate as it promulgates rules surrounding the 2022 law. The administrative law judge on Tuesday scheduled an additional public hearing for next month before the rules are codified.
Consumer advocates have scored wins on minute language changes to the proposed rules that broadened the definition of “vehicle owners” to include “authorized operators.” The expanded definition would allow the vehicle owner or lessee to give written or oral permission for another individual to drive their car.
Advocates and the attorney general expressed concern that a narrow definition of vehicle owner would significantly limit who would be allowed to reclaim their cars after a tow.
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