DOT Panel Examines Maintenance Language in Lease Agreements
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A specially appointed U.S. Department of Transportation leasing task force has begun examining maintenance provisions in lease-purchase agreements that they allege can create a predatory revenue stream for motor carriers serving as lessors to owner-operators.
The task force, which met for five hours on Jan. 18, began drilling down on contract agreements that they say can make it difficult for owner-operators to pay for maintenance on the vehicles they lease or buy from motor carriers.
Task force members have been asked by regulators to examine leasing agreements in the motor carrier industry and determine whether they contain inequitable terms that may affect “the frequency and quality of maintenance performed on subjected vehicles,” it said.
Although task force members have yet to establish how prevalent such predatory lease-purchase agreements may be, a yearlong study by a U.S. government financial consumer group concluded that there is widespread risk for truckers to be rushed into signing lease-purchase agreements that fail to make clear the costs drivers are agreeing to incur.
Cullen
“Our problem is not necessarily always the language of the agreements themselves,” said Paul Cullen, an attorney and member of the task force. “The problems that occur also are with the motor carriers or the leasing companies’ failure to abide by the agreements.”
Some lease-purchase agreements require the lease-purchaser to be responsible for all repairs, maintenance, service and upkeep, said Jim Jefferson, supervisor of regulatory, compliance and consumer protection for the Owner-Operator Independent Drivers Association.
“All that responsibility falls on them to make sure that the truck is maintained,” Jefferson said.
The challenge is exacerbated for younger truck drivers who tend to be less familiar with the nature of lease agreements, according to committee members. They sometimes don’t understand their expected income, the type and amount of expenses that will be deducted from their pay, or that the agreement may include maintenance fees.
American Trucking Associations stressed that a distinction should be drawn between dishonest business practices and fair-minded agreements that give drivers an opportunity to build a business.
Mehrens
“ATA believes that unscrupulous actors in our industry should be addressed, but painting all lease agreements as deceptive or worse is simply an inaccurate picture of industry business practices,” said Vice President of Workforce Policy Nathan Mehrens. “Efforts to root out deceitful lease agreements should not preclude carriers and drivers from entering into arrangements that preserve individuals’ opportunities to pursue their careers in the manner they choose.”
The task force is inviting both owner-operators and carriers to share their maintenance challenges and their actual agreements at a special task force session during the Mid-America Trucking Show in late March.
- Specifically, they’d like to hear answers to some of the following questions:
- Did you have enough time to read and understand the lease agreement?
- Did you have an opportunity to inspect the equipment in the agreement?
- Did you receive the history of damages to the vehicle?
- Was a lease-purchase your only option?
- Did you have a clear responsibility in case of a major breakdown?
- What are the biggest challenges about your relationship with motor carriers?
- What would you change about the relationship with your motor carrier?
“We have hit onto something very big,” said task force chairman Steve Rush, founder and chairman of New Jersey-based Carbon Express. “No matter how you shake it out, the maintenance is critical to the safety of the highways and to the safety of everyone around a truck.”
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