Moving Words – Lease Agreements
Timothy Brady
“Everyone has hopes and dreams for where they can invest their money. Everyone wants to do the best they can with it, and they don’t want to be subjected to any sort of predatory lending.” – Dede Gardner
In mid-February 2024, the FMCSA requested information from commercial motor vehicle (CMV) drivers to share copies and details of their lease agreements with motor carriers to aid the agency’s Truck Leasing Task Force (TLTF) in reviewing such leases to identify terms and conditions that may be unfair to drivers.
Congress established the TLTF as a statutory committee under the authority of section 23009 of the Infrastructure Investment and Jobs Act. The TLTF is tasked with examining and reviewing the terms, conditions, and equitability of common truck leasing arrangements, particularly as they affect owner-operators and trucking businesses subject to such agreements.
The FMCSA stated in the notice released in February, “Consistent with the above statutory authority, TLTF will also examine financing arrangements among motor carriers, entry-level drivers, driver training providers, and other involved entities, which may result in new drivers entering the trucking with huge debt and unfair terms for repayment and will identify potential illegal practices to law enforcement or regulators, as necessary.”
In their request for public comments, FMCSA is asking for information from individuals about leasing arrangements they have personally experienced, or of which they have knowledge. The agency will be sharing this information with the Consumer Financial Protection Bureau, which is a technical advisor to the TLTF.
Here’s some of the information they’ll be asking for from truckers with lease agreements (Lessees):
- If you signed a lease-purchase agreement for a CMV, could you provide copies of leasing documents and copies of documents for all other financial products associated with your work as a CMV lessee (i.e., training debt, maintenance debt, earned wage access, contact from debt collectors, etc.)?
- What were the actual terms of the lease (e.g., minimum weekly or monthly payments and their structure, start and completion dates, make/model/year of the truck, depreciation and amortization, mileage at the start and conclusion of the lease, maintenance responsibilities, etc.)? Was the lease- purchase agreement held by a carrier or a third-party entity?
- How was the lease-purchase agreement marketed to you?
- What were you told about the value of the truck and what earnings and work conditions you could expect?
- Were you evaluated for likelihood of repayment, through a credit or background check or some other method?
- What options existed for you to obtain the truck besides leasing it?
- Did other drivers have a different set of options? If so, why?
- What did you understand, or not understand, about the terms and conditions to which you agreed? These terms may include the history, condition, and maintenance needs of the truck you leased.
- Prior to signing your lease-purchase agreement, did you have time to read and understand the leasing contract?
- Did you know the cost of credit (e.g., interest rate or rent charge) before signing the lease purchase agreement?
- Did you have a clear picture of your responsibility in the case of a major mechanical breakdown of the CMV?
- Were you able to negotiate the terms?
- Were you provided any information about other financing alternatives?
- Did other drivers have a different set of options and if so, why?
- Were you informed of how the motor carrier works with independent contractors vs. company drivers and lease-purchase drivers when business is slow?
- Are you treated similarly or is there a difference between the assignment of loads, etc.?
- Please elaborate on any additional restrictions placed on your use of the CMV or additional financial agreements imposed outside of the written lease agreement.
- Did they encompass take-home pay, driver access to loads, etc.?
- Please elaborate on any additional financial products associated with your work as a CMV lessee (e.g., training debt, maintenance debt, earned wage access, contact from debt collectors, etc.). For instance, if you took out maintenance debt, were you required to use the title of your CMV as security?
- Were you able to successfully complete the terms of your lease-purchase agreement? If you did not complete your lease, why? How much did you owe at the completion of your lease?
- Were any charges assessed related solely to your lease payment or were there other charges, such as repayment of a maintenance bill or loan? If there were other charges, please explain.
- If you owe a balance on your lease-purchase agreement, are you being contacted by the motor carrier, third-party debt collectors, or finance companies?
- Are there processes, policies, and procedures for taking and handling disputes about the debt?
- Has information about your debt been furnished to credit reporting companies or employment screening companies?
- Have you been threatened with a lawsuit to collect these debts?
- Do collection efforts cease when a driver files for bankruptcy or obtains bankruptcy discharge?
- How did your expectations about the benefits of the lease compare to the reality of working under that lease?
- What have the effects of your lease-purchase agreement been on your finances, employment experience, professional mobility, workplace health and safety, and family’s well-being?
Here is some of the information they will be asking for from Motor Carriers and/or Lessors of CMVs to truckers:
- If you are or were a lessor of CMVs, what best practices do, or did you implement or recommend ensuring that all leases of CMVs you provide are fair and just? Do you underwrite leases? If so, how? How do you determine the value of a CMV and the expected depreciation? If your lessees are pleased with the terms you provide, please expound on those terms.
- If you lease CMVs to drivers but do not own the CMV (e.g., the CMV is being financed by your company and then you lease it to a driver), how do you determine how much to charge the driver under the lease agreement and how do you ensure the driver can ultimately own the vehicle if there is a lease-purchase agreement?.
- Do you have any specific agreements available to drayage drivers at ports relating to the Clean Truck Program or any similar program to decrease emissions from port operations?
- Do you have any data that would show the impact of truck leasing agreements on the net compensation of CMV drivers, including port drayage drivers?
“Worrying is like paying on a debt that may never come due.” – Will Rogers
