Colorado's New Towing Law In The News

[TowNews]

How Wyatts Towing allegedly circumvented Colorado’s new towing law — and why legislators are pushing for further reform

 

On the morning of Oct. 19, Wyatts Towing removed a 2016 silver Honda Civic from the parking lot of a gated Broomfield apartment complex for an alleged permit violation.

 

The vehicle’s owner said Wyatts towed the car improperly and filed a complaint with the Public Utilities Commission, which regulates the Colorado towing industry.

 

An emailed authorization for the tow appeared to have come from the property’s manager, complete with the person’s name and job title on the apartment complex’s letterhead.

 

But a PUC investigation found the company set up an email account for the property that Wyatts could access and use to approve tows on its own behalf — an act that goes against state law.

 

“This subterfuge was just plain wrong from the start,” the PUC investigator, Stephen Seeger, wrote to Wyatts. Since the company makes money from these private-property tows, he continued, “the argument could be made that this amounted to criminal fraud.”

 

The tow documented in PUC records was a single event at a single apartment complex. Wyatts’ attorney forcefully denied to The Denver Post that the company ever instituted this email practice, though a Wyatts representative didn’t deny the allegations in emails with the PUC.

 

But the October case represents to consumer advocates and lawmakers why the state needs more stringent guardrails on what they have called systemic predatory towing in Colorado.

 

HB24-1051, introduced this legislative session, would outlaw property owners from using automated emails to authorize tows. The bill also would mandate that the authorizing party must be a property owner or someone from a rent-collecting third party — banning parking management companies from doing this on the tower’s behalf.

 

The bill, as introduced, sought to tackle what lawmakers and consumer advocates said was an economic incentive for towers to haul away as many cars as possible. They wanted to shift the entire landscape of residential towing by making property owners pay for tows rather than vehicle owners.

 

But amid heavy lobbying from the Colorado Apartment Association, one of the state’s most powerful industry groups, legislators have watered down the meat of the bill, eliminating property owners’ financial responsibility.

 

“They don’t listen up there on (Capitol Hill), they just don’t listen,” said John Connolly, president of the Towing & Recovery Professionals of Colorado, a trade group representing the state’s towing operators, who supported the planned shift in financial responsibility and helped drive this year’s bill. “When you get them under the fire, they buckle.”

 

“Clearly designed to be deceptive”

 

When lawmakers and consumer advocates have spoken publicly about the flaws in Colorado towing law, they’ve made not-so-subtle references to one operator in particular: Wyatts Towing.

 

The company’s owners have cornered the market on every step of the towing process, The Post reported last year. The same people who sell residents permits to park in their apartment complex lots also tow vehicles and can sell those cars at auction if owners can’t afford the fees to retrieve them.

 

In 2022, legislators passed HB22-1314, a landmark bill that was supposed to tilt the balance of power back to vehicle owners and away from towing carriers. The law, among myriad other changes, forbids towers from authorizing their own tows. Previously, tow truck drivers could approve tows themselves.

 

The Colorado attorney general, following a yearlong investigation, last year found Wyatts — despite the new law — still allowed its drivers to authorize tows on residential properties for a roughly five-week span in August and September 2022. Wyatts agreed to a $1 million settlement after the AG found “numerous violations of state laws.”

 

But the alleged email scheme in October outlined in the PUC investigation suggests Wyatts continued the practice of approving the company’s own tows.

 

On Jan. 10, a community manager for the Arista Flats apartment complex in Broomfield told a PUC investigator that she did not recall authorizing the tow at the heart of the state’s probe.

 

She told investigators that she had discussed with a Wyatts representative that the apartment complex was not staffed overnight. The towing rep, she said, asked her to set up an email account that Wyatts could access and use to approve tows, the woman said, according to PUC documents.

 

A few weeks later, Wyatts decided it could not continue with this email authorization and stopped the practice, the PUC investigation found. Still, the scheme represented an “egregious violation” that was “clearly designed to be deceptive,” investigators wrote.

 

“To be clear, this ‘program’ was designed simply to disguise self-authorized tows by Wyatts’ employees,” Seeger, the state investigator, wrote in an email to the company.

Despite raising the criminal fraud allegations, the PUC fined Wyatts just $258.75.

 

The Wyatts representative, Matt Phillips, did not deny the email authorization practice in a response to the PUC, only saying he appreciated the explanation for the fine and that the company would comply with the 2022 law.

 

But Wyatts’ attorney, Jason Dunn, called the fake email allegations by the PUC “a complete fabrication.” He told The Post in a text message that the property manager used an automated email response from their regular work email since many tows occur in the middle of the night — a practice the company has since learned is not a valid form of authorization.

 

He strongly denied Wyatts had access to an apartment complex’s email account.

 

“Wyatts did not challenge that conclusion, paid the reduced penalty, and has since advised all property managers that automated authorizations will not be accepted,” Dunn said.

 

Zach Neumann, executive director of the Community Economic Defense Project, which authored a report on Wyatts’ vertical integration, said the case “reinforces all the concerns we’ve had about their business structure.”

 

“If you make money from towing you shouldn’t be able to direct tows, because within that structure you have an incentive to take people’s cars improperly,” Neumann said. “It looks like that’s exactly what they were doing.”

 

“Nobody wants to pay for it”

 

Bill sponsors this session, in conjunction with the state’s towing association group, wanted to tackle what they called a skewed incentive structure.

 

Led by Rep. Andrew Boesenecker, a Fort Collins Democrat, the legislators introduced a radical proposal that would have fundamentally changed the way towing is conducted in the state. The drafted bill said, in most cases, private property owners would pay for tows from their lots — not the owners of the vehicles.

 

This way, they argued, property owners would be far less inclined to call in tows unless they had an urgent need.

 

“The attorney general has done his job,” Boesenecker said in a Feb. 6 legislative committee hearing. “Now it’s time for the legislature to do ours.”

 

But the Colorado Apartment Association and other property owners forcefully opposed this change, arguing the increased costs would be passed on to tenants, leading to higher rents. The legislation, the critics argued, would also lead to more unauthorized parking in permitted spaces.

 

“It’s inviting parking anarchy,” Ed Schoenheit, president of a homeowners association in Colorado Springs, told the committee members.

 

Bill sponsors feared the industry group’s opposition would prevent the law’s passage as written. As a result, amendments set to be introduced Monday have carved out the property owners’ role in towing payments entirely.

 

In exchange for these concessions, the apartment association agreed to take a neutral stance on the bill.

 

Lawmakers wanted to scrap the entire towing system and start over. Instead, some of the financial incentives that drive predatory towing will remain in place.

 

“I gave them the path,” said Connolly, the towing association president who pushed for the drastic law change. “If they choose not to take it, I don’t know what to say. I’m only one man fighting the battle. No one listens to reason. No one wants to make the hard decision. Nobody wants to pay for it.”

 

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