The Amnesty Program
By Jeff Moriarty
In the December 1997 edition of Towing & Recovery Phootnotes, I published a California Collection Letter, better known as the Amnesty Program. Many towing companies have incorporated this idea into the owner notification procedure of vehicles abandoned in their yard. This program is fair to the public, and good for towing operations in the Golden State.
Thirty years ago the collection arm of the towing industry was in its infancy. Section 3068.2 of the California Civil Code, which defined vehicle owner liability, was not enacted until 1994. Until then, the statute stated the owner was liable for “removal and disposition” of their vehicle abandoned in the tow yard. I observed vehicle owners getting blindsided by an after-the-fact collection procedure, sometimes months later. Their only option was to pay the very large bill, or have their credit ruined. I thought it would be a good idea to let the vehicle owners know about their liability as soon as possible, and to give them a way out.
Working with a towing company that served as a test client, I started to send a pre-collection letter. After receiving completed lien packets, I would look at the DMV vehicle record and send a letter to the registered owner or last transferee. This initial letter encouraged the vehicle owner to reclaim their vehicle as soon as possible since storage fees were accumulating on a daily basis. It also made them aware of their liability. If they intended to abandon the vehicle, the letter instructed them to call the towing company manager to negotiate a financial settlement, and to bring the ownership certificate to the towing company as soon as possible.
Many early calls from this program were from people that stated they were not concerned about their vehicle or the letter they had just received. Why were they calling if they were not concerned? Knowing this, the manager became skilled in convincing these people to bring in their title and pay just a portion of the total bill on the date of lien sale. As time went on, I would change the wording in the letter to reflect the experience the manager was having in collecting these settlements. Everything changed in 1994 with the passage of Section 3068.2 of the Civil Code. I was able to put more teeth into the letter since vehicle owners could research the code and realize they had a big problem on their hands. The number of calls and settlements increased right away.
The towing company manager reported that negotiated settlements were starting to average about a quarter of the total bill on the lien sale date. At that time I decided to make a standard offer in the collection letter. I recalled the penalty for abandoning a “junk slip” vehicle in Section 22523 of the California Vehicle Code was “towing and seven days of storage.” I tied the collection letter to this figure, and the standard offer became towing fees, seven days storage, and the title. Essentially the towing company is saying to the vehicle owner, “You are abandoning your vehicle in our yard, and we are about to receive title through the lien process. At that time we will have a deficiency claim against you for our total fees, less the amount we receive from the sale of your vehicle. We are making you an offer before the lien clears. We want you to surrender the title and pay us the penalty for abandoning the vehicle, which is towing and seven days of storage.”
This new letter had an advantage because the manager did not have to be present when the calls came in. Anyone answering the phones could quote the standard offer of towing fees plus seven days storage and the title. Large tow bills for extra services such as winch outs increased the Amnesty Offer amount. I noticed fewer lien denials after this letter was sent out – an unexpected bonus! After this idea was published in Phootnotes in 1997, the following year we called it: Notice of Stored Vehicle/Amnesty Offer, and included the letter in the Notice of Pending Lien mailing. I no longer had to do a separate mailing procedure after receiving the lien packets. Many vehicles that otherwise would have been left abandoned in the tow yard were now being reclaimed because the vehicle owners were made aware of the strict law at a very early stage in the process, sometimes before seven days.
I have heard some towing companies have tweaked this idea to perhaps 10 days storage, towing, and maybe the lien fee as well. The experience of the test client showed the results were optimal at seven days storage. Since the Amnesty Offer is tied to a figure in the Vehicle Code, it has more meaning. The deal expires on the date of lien sale. Sometimes vehicle owners will show up to pay the Amnesty Offer and surrender the ownership certificate right before the lien sale date because they need time to get their payment together. Cash in hand today is better than just a possibility of larger payment in the future.
The amnesty letter is sent to only one person or company, the last vehicle owner or transferee. The legal owner (never responsible for an abandoned vehicle) and other owners and transferees do not receive this offer. I have included a statement in the letter that instructs the owners not to send the payment to the DMV. I have also included a disclaimer; the Amnesty Offer is not valid for accident or stolen recovery vehicles with a covered policy. The insurance company is responsible to the towing company for total towing, storage and lien fees. The insured or claimant is responsible for total fees if paid directly by insurance company.
With this program and other versions now being implemented across California, it has become an incredible shot-in-the-arm for towing operations. To view a sample of an Amnesty Letter: click here. The sample letter shown is for $200 tow fees and $75/day storage. Calculate your amnesty amount (tow fees + 7 days storage). The amnesty amount increases as the tow fees increase (winch out, etc.).