New regulations will be implemented to strengthen oversight of medallion brokers & provide drivers information on violations by brokers
Mayor de Blasio today announced the findings of his 45-day investigation into the practices and policies of taxicab medallion brokers. The joint Taxi & Limousine Commission (TLC), Department of Consumer and Worker Protection (DCWP) and Department of Finance (DOF) investigation into brokers licensed by the City to assist clients in the buying or selling of taxicab medallions was ordered by the Mayor following allegations of broker misconduct. The TLC will soon publish its proposed rules to enact these and other recommendations detailed in the report.
Full report can be found here.
“We will never stop fighting for hardworking New Yorkers’ right to put food on their table and support their families,” said Mayor de Blasio. “This report shines a light on many of the predatory practices of the broker industry and with this new insight, we’ll be able to do even more to help taxi drivers too long taken advantage of by those they trusted for guidance and help. If you’re a cab driver in New York City, know we’re in your corner and that this is just a start. We will never stop looking for ways to help."
Findings of the 45-Day Review
During this 45-day investigation, TLC, DCWP and DOF staff reviewed 5,513 pages of records, conducted and analyzed a survey of drivers who own their medallions, and held outreach events in each of the five boroughs. The investigation provided valuable insight into the City’s 20 licensed taxi brokers’ business practices, including the following:
· TLC rules require brokers prepare documents summarizing loan and purchase agreement terms, as well as disclose any interests they may have in medallion transfers. The investigation revealed that in many cases the required documentation and disclosures brokers provide their clients were often confusing and were not easily understandable to potential purchasers. Documents were not provided in any language other than English, in an industry where over 95% of taxi drivers are immigrants.
· Although brokers frequently help drivers negotiate a loan for the medallion purchase, brokers fail to adequately explain the terms of these loans to their clients. The investigation found a majority of surveyed drivers who used a broker reported they did not have a clear understanding of their loan agreements.
· Brokers did not consistently use written broker agreements. Less than half the records provided included these agreements. Following the recommendations of the report, written agreements will now be required.
The investigation uncovered violations of current rules, and more importantly it generated a number of recommendations that TLC will act on quickly to ensure that brokers are held to an appropriately higher standard going forward.
Driver Assistance Center
As announced in June, the City is creating a new Driver Assistance center within one year that will have on-site staff to screen drivers for various issues and then connect to relevant services including advocacy, financial counseling and debt restructuring assistance, referrals to health services and screening for HRA benefits. Advocates will be on hand to help drivers navigate loan terms and refinancing.
Loan Transparency & Advocacy
The investigation found potential conflicts of interest in all parts of loans transactions involving brokers. In response, the City will mandate disclosure of broker-provided purchase and loan agreements, as recommended by the report. This will enable the TLC to closely monitor lending facilitated by brokers to ensure brokers work in their clients’ best interests in these negotiations.
Similar to tenant legal services, drivers will now have an advocate by their side when they refinance, to fight for the most favorable loan term possible and help prevent predatory practices like all-interest payments. Additionally, TLC will launch a new Business Practices Accountability Unit (BPAU) that will monitor and routinely audit the practices of TLC-licensed businesses, including brokers. The new BPAU’s work will inform and complement the Driver Assistance Center’s mission of fighting for loans and refinancing that are as favorable as possible for drivers.
Broker Watchlist
For the first time ever, drivers will have access to a website that lists every licensed broker in the city, with a list of the violations issued to each. This new list will offer drivers better transparency into the broker market, encouraging good behavior and helping prevent brokers from taking advantage of drivers. It will help potential purchasers and sellers make informed decisions. The website, which will launch within 30 days, will be found on TLC’s website and will be consistently updated.
Report Recommendations
Other highlights of the report’s recommendations include:
· The formation of a new Business Practices Accountability Unit (BPAU) within the TLC that will monitor and routinely audit the practices of TLC-licensed businesses;
· Broker documents must make clear to both clients and TLC any Broker interests in TLC licenses and TLC-related businesses;
· Amend TLC Rules to require Brokers to make annual disclosure to TLC of all interests they have in any TLC license or TLC-associated business;
· Increase outreach and education to drivers who own medallions on their rights when working with brokers; and
· TLC and its agency partners, such as the DCWP, will establish a Driver’s Assistance Center, offering access to financial advocacy and mental health resources that will expand on the services currently offered through the NYC Department Consumer Affairs’ Office of Financial Empowerment. Credit/finance professionals would be available to analyze individuals’ financial needs and then advocate for them with lenders including banks and credit unions to modify outstanding loans to make them more affordable, including reduced loan amounts and reduced monthly payments.
Ongoing Investigations
Last week, the de Blasio Administration announced it arrested a Staten Island man accused of impersonating a City Marshal in order to repossess taxi cabs and medallions from unsuspecting taxi owners. The arrest of Anthony Medina is part of the actions taken by this Administration to protect medallion owners and was investigated as part of a 45-day review of taxi medallion brokers.
Further investigations stemming from this review are ongoing. These could lead to further action.
“This report is a comprehensive look at all the brokers licensed and active in the New York taxi medallion market, and details a broad investigation into allegations of abuses published in the media,” said Acting TLC Commissioner Bill Heinzen. “We will continue to find ways to serve our drivers and other licensees, including passing new rules to ensure greater transparency in the medallion purchasing process and creating a Driver Assistance Center to help drivers and potential medallion owners better understand their options and rights and helping existing owners try to right-size their debt. TLC will ensure that brokers are serving their clients’ interests and hold them fully accountable for violations of City law and the TLC’s rules.”
“We must hold accountable all the people responsible for this crisis, that has impacted hundreds of medallion owners,” said Council Member Ydanis Rodriguez, Chairman of the Transportation Committee. “When it comes to delivering justice to taxi medallion owners, I will continue working with my colleagues at the Council, Speaker Corey Johnson, and the Mayor to ensure we not only bring justice to the people that were wronged, but that we also help them out of this financial crisis that has bankrupted over 900 medallion owners.”
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