FMCSA panel recommends ban on truck lease-purchase contracts

WASHINGTON — A federal task force has released its final report on trucking lease-purchase agreements and recommended to Congress an action proposed at the task force’s first meeting in 2023: an all-out ban on such agreements.

The 51-page report, issued by the Federal Motor Carrier Safety Administration’s Truck Leasing Task Force (TLTF), was sent to Congress and to the U.S. transportation and labor departments on Friday.

The task force was created by the U.S. Department of Transportation to investigate the prevalence of contracts drawn up by trucking companies to purposely take advantage of drivers.

“TLTF’s findings are clear. It formed a consensus to recommend that such arrangements, whereby a motor carrier controls the work, compensation, and debts of the driver should be prohibited,” the report states.

“Lease-purchase programs are regularly established to enrich motor carriers at the expense of drivers. These programs promote a race-to-the-bottom in driver compensation and treatment, pushing qualified drivers out of the profession. Currently there are no effective checks on these programs or remedies for drivers harmed by them. Litigation, currently the only avenue for relief, can provide some remedy for the drivers involved, but has not led to reform of these programs.”

Therefore, TLTF asserted, Congress should ban lease-purchase agreements “as irredeemable tools of fraud and driver oppression that threaten a safe national transportation system and diminish the number of truck drivers attracted to and who stay in the trucking industry. Such a prohibition would be the most efficient and effective remedy to stop the damage created by lease-purchase programs.”

When the task force began, there was a “range of perspectives” on the panel regarding lease purchase programs used in the trucking industry, the report noted, including those that saw them as a potential path to small-business ownership.

But outside information collected by the group over the course of its eight meetings “told a consistent and increasingly troubling story: Lease-purchase programs cause widespread harm without offering meaningful scale opportunities for truck and small business ownership.”

The Consumer Financial Protection Bureau (CFPB), which served as a technical adviser to the task force, provided TLTF with information taken from actual contracts, along with experiences shared by truck drivers working under such contracts, to uncover the extent of the problem.

“Based on the CFPB’s analysis … there does appear to be use of ‘inequitable leasing agreements and terms in the motor carrier industry,’ with noted differences between truck leases and auto financing that may create significant financial risks for drivers,” CFPB concluded in a separate report.

“Those financial risks may in turn lead to potential safety risks by not ‘properly incentiviz[ing] the safe operation of vehicles.’”

Taking remedial action

Recognizing the difficulty of relying on Congress to prohibit the practice, the task force recommended alternative actions that could be taken, among them:

Congressional oversight: Enact whistleblower protection legislation for drivers reporting lease purchase programs to FMCSA, CFPB and the Department of Labor (DOL).
FMCSA oversight: FMCSA should mandate that motor carriers and their affiliates offering lease-purchase programs keep accurate records of the experience of those who signed such agreements, including take-home pay per week, average mileage driven per week, average days on the road per week, and the number of drivers per year entering into the arrangement.
DOL enforcement: Conduct targeted audits and enforcement of companies deploying lease-purchase programs to ensure compliance with DOL regulations concerning misclassification and independent contractor status.
CFPB enforcement: Prohibit deceptive practices and require disclosures about lease-purchase programs.
State and local law enforcement: Review the contracts and agreements to determine whether state rules apply to address fraudulent or oppressive contracts and take any enforcement action necessary under those laws.

The Owner-Operator Independent Drivers Association, which was represented on the task force, agreed with TLTF’s findings and pointed out it has been concerned about lease-purchase contracts for decades.

“Many people are drawn to trucking under the belief that hard work guarantees success,” OOIDA President Todd Spencer said in a statement. “But predatory lease-purchase agreements prey on that trust, leaving drivers financially and emotionally broken.”