Repossession Industry Fuel Surcharge

• Mar 21, 2011 • ARA News and Events, Recovery Industry News, Tools & InsightsComments Off on Repossession Industry Fuel Surcharge

It was clear to us from the conversations at the North American Repossessors Summit (NARS) that this industry is being dragged to the alligator pits under the weight of the recent fuel price increases. Since mid-February, ARA has been researching various fuel surcharge formulas that could be applied to our business model. Although it may not be perfect, we have found one based on numbers that clearly demonstrate the added burden that recovery agents nationwide are currently enduring. It allows the flexibility to use regional cost differences in the equation and it is one that everyone in the industry can use. It also has an important facet we heard about from the stage at NARS – it needs to be able to reverse the surcharge as fuel prices begin to retreat.

A major challenge in identifying a single solution is the various business practices within the industry, and the type of area each of you serves. Some agents are in a more rural setting where there may be many miles between assignment addresses. We also have the larger city-based companies that can cover several accounts in a small radius.

We hear of clients that use a “as the crow flies” mileage structure that is totally unworkable and adds to the difficulty in providing a solution to this serious issue. Can you imagine working in the Appalachians and trying to work accounts “as the crow flies?” The last time I was in the Appalachians there were very few roads over the top of the mountains. A crow may be able to fly 20 miles to a given address but he will struggle to haul a 3,000-pound automobile back over the mountain. When he finally decides he needs a truck to help him, he now has to wait while the driver drives one hour/40 ground miles to get there and then one hour/40 miles back – traveling 80 miles and getting paid for 40 miles.

We need the clients to be a part of the solution – not create untenable positions that add to the burden business owners are bearing. We have circulated this fuel surcharge calculator to many of the lenders. A few were quick to respond and say they appreciated the effort and would approve a separately billed fuel surcharge. After polling a cross-section of the ARA membership in different sized and populated areas, we found an average of approximately 13% of their monthly expenses were fuel. We know this will vary but this calculator will allow you to determine a fair surcharge rate for your area.

I believe the first major lender to implement a fuel surcharge that allows the agent to get back to where they were will be seen as a hero and garner a great deal of loyalty from their agents. I even predict the lender will see an immediate increase in recovery rates.

Again, we are not claiming this is “THE DEFINITIVE” solution but it is the best we have seen presented. We are working to elevate this conversation to the level of importance that it deserves. If you have another formula or an idea on how we can improve this one, please contact me at 972.755.4755 or


Les McCook
Executive Director of American Recovery Association, Inc.

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