Tow truck commissions

Nicholas Jones at NZ Herald reports:

Tow-truck companies have been accused of paying “spotters” to dob in motorists – a lucrative practice that helped to pay the rent for one former student.

Several Herald readers yesterday said they knew of cases in which flatters and a dairy owner were paid to report illegal car-parkers in a practice going back at least nine years.

One reader said he’d seen taxi drivers “spotting” for tow-truck drivers, but did not know if they had been paid.

Tow firms dismissed the claims as “rubbish”, but Luke Turner, 32, said his flat was paid a $10 kickback from a towing company, which has since changed hands, when he lived in Galatos St, Newton, nine years ago. …

Tow firms the Herald contacted said such arrangements did not exist and to their knowledge never had.

I have no doubt such commissions have existed and may still exist. I don’t see why the tow truck firms deny it, as I don’t see anything wrong with it from their perspective? I mean in a moral sense, it is like being a Stasi spy, but in a commercial sense it is not an issue and tow truck firms are already hated.

Just to show you how money hungry they are, let me relate a story told to me by a friend who used to manage some inner city land in Auckland which he turned into a parking lot. Obviously he needed the services of a tow truck company to deal with those who parked there without paying the fee. He got paid a portion of the towing fee, in return for having selected that company. So that generated a bit of extra income, on top of that from actually leasing out the parks (which was considerable). There were a total of 30 parks or so, so at say $30 a day that was say $900 a day income.

Anyway after this business had been going on for some time, the tow truck company made a suggestion. They said that what he should do is actually refuse to lease out any of the car parks to people wanting them. Why? Well a piece of land with 30 empty car parks would be an irresistible honey trap to motorists. They would risk a quick park there, not knowing there would always be a tow truck waiting around the corner to pounce and tow them.

I don’t recall the exact numbers but the tow truck company was insistent my mate could make much more money by not allowing anyone to park on his site through a commission on towing them, than through actually leasing the parks out to motorists who want them.

My mate declined. He is a fervent capitalist and loved making money. But that was a step too far for him. however it does give a good insight into the behaviour of tow truck companies.