SD5 - Regulation of the Towing, Recovery and Storage Industry

  • Published: 1987
  • Author: Board of Commerce
  • Enabling Authority: Senate Joint Resolution 51 (Regular Session, 1986)

Executive Summary:
A. Study Overview

This study attempts to determine the most appropriate level of regulation for the towing, recovery and storage industry. "Unauthorized" or "non-consent" towing has been identified as a unique commercial enterprise in which there is no opportunity for the buyer and seller to negotiate the price of the service to be rendered.

The nature, frequency and severity of business practice abuses by tow truck operators were examined in detail. The regulation of the towing industry by other states and localities in Virginia was also examined. The level of regulation recommended for the towing industry is based on an extensive analysis of this information.

B. Key Findings

1. An extensive complaint search has revealed some limited evidence of complaints and abuses. Consumer Affairs Agencies and Better Business Bureaus perceive problems as being frequent. Although some localities in Virginia have experienced severe problems, the majority of state and local law enforcement officials report problems as being MINOR. The complaint research did reveal that the majority of the problems occurring were in situations of non-consent towing.

2. The most frequently reported complaint against towers proved to be EXCESSIVE TOWING and/or STORAGE CHARGES. The next most frequently cited complaint was VEHICLE DAMAGE due to improper towing or an incompetent operator.

3. The private property towing statutes state only that a vehicle cannot be removed from private property without the written consent of the property owner. Also, the local law enforcement agency must be notified of such towings. The statute does not require that signs be posted notifying vehicle owners that trespassing vehicles will be towed at the owner's expense.

4. State statutes provide local governing bodies with the authority to regulate either through a contract or local ordinance the towing services provided to local law enforcement agencies in the removal of abandoned, unattended or immobile vehicles. Research revealed that relatively few localities have chosen to do so or have seen the need to enact such ordinances. Based upon the survey results, some localities have provided regulation as a response to problems and complaints being reported in that locality.

5. The procedures for the disposition of abandoned vehicles are unclear and pose problems for both consumers and towers. The disposition procedures under the mechanic's lien statutes differ greatly from the procedures required under Section 46.1-3 relating to the disposition of abandoned, unattended or immobile vehicles.

C. Conclusions

Four major conclusions have been reached as a result of this study.

1. Documented cases of towing operators causing damage to vehicles or contributing to third party accidents due to the incompetent operation of the equipment were not frequent enough to justify the imposition of a complex regulatory scheme.

2. The imposition of a complex regulatory structure would not be an effective or desirable means of regulating the rates for non-consent towing.

3. The current State Corporation Commission registration and insurance requirements have not prevented "gypsy towers" from operating without the proper insurance. We therefore question the enforcement effectiveness of establishing a complex regulatory scheme.

4. Without certain amendments to existing statutes, a complex regulatory structure would do little to address the problems and complaints which were cited in the research.

D. Recommendations

It is recommended that the following statutory changes be pursued during the 1987 session of the General Assembly:

1. Enact legislation that would require all towing businesses who provide non-consent towing services to prominently display at their main place of business a comprehensive list of their fees for all towing, recovery and storage services.

2. Amend Section 46.1-3.2 (the statute relating to private property towing) to provide for the following:

a. Requirements that signs he posted which give notice that trespassing vehicles will be towed at the owner's expense;

b. The sign requirement should also include provisions that the name and phone number of the towing company providing the towing be posted and, that the towing companies providing non-consentual towing from private property be available for vehicle redemption for some stated time after the towing is performed and during reasonable business hours.

3. With respect to Section 43-32 through Section 43-34 (the mechanic's and storage lien statutes), the Board feels that several valid issues were raised and many weaknesses in the statutes were cited.

Because the mechanic's and storage lien statutes are not applied exclusively to the towing industry, the Board recommends that these statutes be further examined by the Division of Legislative Services to determine the overall impact of amendments to the lien laws. Some consideration should be given to the model possessory lien statute the towing industry has submitted.

4. The Board further recommends that Section 46.1-3 relating to the disposition of abandoned, immobile, or unattended vehicles be amended to make the notification and disposition procedures consistent with the current lien statutes.

5. The Board also makes the following recommendations to be accomplished through administrative procedures:

a. Ask the Director of the State Department of Consumer Affairs to publish a brochure informing consumers of the current laws and requirements that apply to the towing industry and what their rights are when their vehicles have been towed without their consent.

b. Also, ask the Director of the Department of Motor Vehicles to include the above information in their driver manuals.