Woody Webb of The Edmisten & Webb Law Firm in Raleigh, North Carolina has been an attorney associated with the rent-to-own industry for over twenty three (23) years principally on behalf of ColorTyme, Inc. and its franchisees.

Wow, what a summer! An NBA referee is indicted for and pleads guilty to corruption, Michael Vick is indicted for and intends to plead guilty to operating an interstate dogfighting enterprise and, last but not least, an allegedly performance enhanced Barry Bonds breaks the career home run record of Henry "Hank" Aaron. And, has it been hot! What can we take away from all of this?



1. Be careful who you associate with and what you do

2. Be aware of the law of unintended consequences

3. Be wary of cutting corners

4. Stay cool even when things get hot



My law firm does a good deal of white collar criminal defense work in federal court. From this vantage point the best advice we give businessmen is to fly beneath the law enforcement/regulatory agency radar. The government, whether federal or state, is relentless once it has you in the crosshairs.

Both independent contractors and employees need to know that cutting corners and breaking the law in the recovery of rented merchandise will not be tolerated.

I bring this up now because I have lately discovered a certain level of frustration with "uncooperative" customers which has led rental-purchase dealers on occasion to resort to creative, but risky, methods of getting their property back. While risky recovery methods might be acceptable in certain circumstances, the dealers and their employees should know that there is sometime a fine line between lawful and unlawful methods. And, certainly, there are some recovery practices which are clearly illegal. Even legal practices, however, can have unanticipated but profound consequences for dealers.



Employing simulated judicial documents such as a bogus criminal summons or warrant or letter from the District Attorney’s office is obviously a "no-no" under any and all State Fair Debt Collection Practices statutes.



Using law enforcement officers is normally not only an acceptable but a preferable means of repossessing rental property since the officers are presumably acting under and pursuant to lawful authority. I am aware of several dealers who have such good relationships with law enforcement personnel that they can call upon them, presumably on a selective basis, to recover merchandise from the hard-case customers. A word of caution, however-do not become a part of the law enforcement operation. The police and sheriff deputies all act under color of state law and can be sued for violating a person’s federally protected civil rights such as to be free from unreasonable search and seizure (Fourth Amendment). If a dealer’s employees are involved in the operation (e.g., by accompanying the officers to a customer’s residence), they too can be sued for violating the customer’s civil rights as has happened in California. They should stay as far away from the operation as possible until officially called on to pick up their merchandise.



Using off-duty law enforcement personnel or other non-employee third-parties ("repo men") can be both helpful and fraught with problems. For their own protection these individuals should but probably will not become familiar with their state’s debt collection practices statute. In fact, judging from recent reports their success seems to be the result of the "hard-nosed" approach they employ with "uncooperative" customers. Therefore, it is critically important for the dealers who decide to engage the services of such personnel to accord themselves the maximum legal protection possible. I counsel the use of and have prepared Independent Contractor Agreements for non-employee collection/repossession individuals including off-duty police, constables, and sheriff deputies. These Agreements make it crystal clear that such personnel are not under the control of the dealer and are acting totally independently and on their own. I also always include a provision that the independent contractors are expected to know and comply with all applicable State and Federal laws. These Agreements have on two recent occasions that I can recall prevented dealers from being drawn into lawsuits.



However, both independent contractors and employees need to know that cutting corners and breaking the law in the recovery of rented merchandise will not be tolerated. In fact, I recommend giving the independent contractors and employees photocopies of the applicable state debt collection practices law and executing a written acknowledgment that they have received a photocopy of the law. Twenty Six (26) states have such laws and Arizona, California, Minnesota and West Virginia actually have such statutes within their state’s Rental-Purchase Act . Other laws are also applicable and particularly pertinent for those dealers in the tire and rim business. The criminal statutes on trespass and damage to property may well be invoked by a customer who has had tires/rims "repo’d" in the middle of the night.



So, when the frustration with "uncooperative" customers leads a dealer to consider "creative" recovery methods, there should at least be an informed recognition as to the pros and cons, the pitfalls and the available legal protections. Good luck.



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Woody Webb of The Edmisten & Webb Law Firm in Raleigh, North Carolina has been an attorney associated with the rent-to-own industry for over twenty three (23) years principally on behalf of ColorTyme, Inc. and its franchisees. A former member of the North Carolina Attorney General’s Office and a United States Attorney in the Eastern District of North Carolina, he concentrates his practice in the federal courts. Woody has been a Guest Commentator for Court TV since 1991. Woody has most recently been commentating for Court TV on the Duke lacrosse alleged rape case.

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