Truck Lease Purchase Deals Come Under Heavy Fire at MATS and in Court

The Truck Leasing Task Force (TLTF), created by the Department of Transportation to study leases that independent owner-operators work under with trucking companies, has had four public meetings.

But it was at the most recent one, at the Mid-America Trucking Show (MATS) in Louisville, Kentucky, that members of the task force went directly into the world of truck drivers. And based on testimony given from the floor of the hearing at MATS, lease purchase plans rarely favor drivers.

The testimony also revealed that a significant legal case is underway in the U.S. District Court for the Northern District of Illinois involving six plaintiffs suing Super Ego Holding and several affiliated companies with which the plaintiffs had "leased on" with, to use the industry term.

The suit dates back to August 2022. Court records make clear that efforts to settle the case via arbitration failed and the parties are in the discovery phase.

James Stark, the lead attorney on the case, spoke at the TLTF's Louisville session. He is with the Stark Law Firm in Wheaton, Illinois, according to court filings.

Stark said about 1,400 drivers have "opted into" the case, "and we expect it to be between 10,000 and 20,000."

There is no indication in court records that the lawsuit has been certified as a class action, though they do contain the document being sent to drivers to expand the list of plaintiffs. Stark did not respond to emails and phone messages to his firm.

"The driver is in the worst position in this whole scenario" he told the task force. If there are issues with a lease contract, "the driver can go to court — that's if they find a lawyer and if they can afford one, which can't always happen."

Load board provider Truckstop.com, which provides other services as well, has a webpage on which it clarifies differences among leases.

A lease operator "leases equipment from the carrier. At the end of the lease, you need to give the truck back." The lease is "effectively just a rental contract. If you ultimately want to own your equipment, this isn't the best choice" Truckstop writes.

A leased owner-operator, who operates under what was called a lease purchase program during the session, makes a down payment and has a payment plan that could leave the driver owning the truck at the end of the lease period. This model came in for much of the criticism.

A third type of lease involves an independent owner-operator bringing his or her own truck to a lease arrangement with a carrier.

OOIDA not finding many success stories

Tom Weakley is the director of the OOIDA Foundation, created by the Owner-Operator Independent Drivers Association. He said his group had done a survey of OOIDA members who had been in lease purchase programs and calculated how many of them came out of it owning a truck.

"It's a small percentage" Weakley told the task force. He added that most of OOIDA's members are likely to have never been in a lease purchase program.

But even getting data on the level of success can be difficult because owner-operators who crashed out of their lease purchase programs probably can't be contacted. "They've gone out of business, so you don't get really good data on that" Weakley said.

Pathway's Harris to the defense

The role of defender in the March 21 session fell to Matt Harris, the president of Pathway Leasing, which offers lease purchase plans to drivers.

Harris said he is "very proud" of the company's programs and "we're fortunate to have a lot of people who have completed leases." But he added that there are "dangers and pitfalls that people fall into. So I thank the task force for trying to address those issues and come up with real solutions."

"I certainly hope that in seeking to do that, the regulations don't make it so difficult on companies that are doing well" Harris added. He noted that anybody with a CDL who wants to become a company driver can do so fairly easily. For drivers who seek to become independent owner-operators, there are "different paths you can take. And some of those will work well for different individuals."

One panelist told Harris that his successful lease purchase deals would need to be compared to the ones that are failing. "That kind of trust you have with your driver costs something" the panelist said. "I guess I'm hopeful that people in your position can be helpful in identifying specifically what you see are the contrasts to your business that we should be aware of there."

Harris cited no specific differences. He did say the weak trucking market in place going back to 2022 has made success in a lease  purchase plan even harder. Harris added that "due diligence" is necessary to "make sure that the money they're spending is giving that person the best opportunity to be successful. Make sure that people have a fair shot at being successful."

Lots of tales of woe

But that sort of optimism was the minority view that panelists at MATS heard.

One speaker, Shelly Vandenberg, reviewed a lease purchase plan she and her husband signed that turned into a fiasco, with high maintenance costs and an attempt to break away from the lease with the company. "That's when the real trouble started" Vandenberg said, citing being locked out of motor carrier authority and insurance accounts. "We had no control over any aspect of our identities" she said. 

But even after reviewing a litany of horror stories, Vandenberg did not want to see lease purchase plans regulated or legislated out of existence. "It's important to keep these options open for drivers" she said. "We just need to somehow crack down on these predatory leasing companies in our industry that know all too well how to work around FMCSA guidelines."

The idea that some lenders are taking advantage of unsophisticated drivers by painting a picture of the lucrative life of a successful independent owner-operator came up several times. As one panelist said of some signing on to bad lease purchase deals, "a lot of them are not sophisticated enough to understand the bad actors, and it's running people out of our industry."

Wheatley said when he was a truck driver, he never signed up for a lease purchase program. But that was not for lack of opportunity. Of companies that try to recruit their drivers into lease purchase deals, Wheatley said, "Let me tell you, they can sell it."

The sales pitch often involves a company official saying he or she got into truck ownership through a lease purchase deal and telling the potential lessee, "You have any problems, you just come in and talk to me because I too came up this way. I support you 100%."

As Wheatley said, "That's pretty hard not to bite into."

The criticisms were harsh. One speaker, Clifford Lawrence Peterson, gave a broad list of accusations about how companies treat lessees. "They skim off the top and they don't tell you exactly what percentage you're supposed to be getting and they steal from you that way. They overcharge you for maintenance. I paid $900 for an oil change. It's ridiculous."

Besides Harris, the leasing companies had no obvious defenders in the room. Panelists who came from the industry were mostly sidelined, given that the event was designed to be a time when the panel went into the field at a gathering of thousands of truck drivers and heard their stories.

But task force Chair Steve Rush, founder of Carbon Express, offered a Horatio Alger defense of lease purchases. He called them "a great opportunity for somebody like myself, a high school dropout who didn't know anything about business but managed to survive. It took me 58 years to get there."

Rush responded to several calls to, as one commenter said, not "throw the baby out with the bathwater." "We don't want anybody to misunderstand what we're trying to do here," Rush said. "We're not trying to hurt the owner-operators, but eliminate the predators that are taking advantage of people."

Status of the lawsuit

The lawsuit cited by Stark has several subsections in its amended complaint from November 2022, several months after the initial complaint, in which allegations are made against the defendant companies: Defendants "fraudulently altered load confirmation documents to pay plaintiffs less than the rates specified in their work contracts; plaintiffs were employees for the purposes of the Fair Labor Standard Act and the Illinois Wage Payment and Collection Act; the companies operated as "alter egos" with drivers being assigned to haul loads for companies other than the lessor."

Further briefings in the case are expected to be filed this month.

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