IRVING, Texas -

The American Recovery Association (ARA) recently distributed a message to the industry, reiterating its positions regarding personal property in repossessed vehicles. The move was triggered by the $5 million settlement Nissan’s captive finance company reached with the Consumer Financial Protection Bureau after the regulator said it found several violations by Nissan Motor Acceptance Corp. in connection with vehicle repossessions.

ARA focused its attention on one specific piece of the consent order, which states:

“The practice of withholding consumers’ personal property unless consumers paid an upfront fee to recover it caused or was likely to cause substantial injury that is not reasonably avoidable or outweighed by the countervailing benefits to consumers or competition.”

The association insisted that many states have recognized that a fee associated with handling personal property is a legitimate expense and a reasonable fee can be charged to the consumer.

That assertion led ARA to reiterate three points it also highlighted in a white paper compiled in August. The ARA said:

1. Nothing in this order changes what a collateral recovery agency is permitted to charge. The latest ARA White Paper on personal property demonstrates the validity for this fee and establishes the handling of personal property as a separate and distinct service not included in a repossession fee.

2. It states lenders must prohibit their repossessors from charging personal property fees directly to consumers and demanding fees as a condition of returning personal property. Nothing in the consent order prohibits the repossessor from collecting those fees by way of contractual agreement directly with the lender.

3. The CFPB, in several points in their Supervisory Highlights Oct 2016, suggest that the fees associated with personal property handling can be billed to the creditor.

“The legitimacy and permissibility of this fee has been established for 30 years,” ARA added in its latest message. “The handling of personal property is very time consuming. Occasionally, it is also unsafe.”

ARA recommended that finance companies collaborate with the legal counsel on how to proceed with this portion of the repossession process.