The administration of New York City Mayor Bill de Blasio released a report yesterday highlighting the findings of a 45-day investigation into the practices and policies of taxi medallion brokers. A joint investigation by the Taxi & Limousine Commission, Department of Consumer and Worker Protection, and the Department of Finance was ordered by the mayor following allegations of misconduct by medallion brokers, which are supposed to assist buyers with buying and selling medallions.
The TLC will soon publish its proposed rules to enact recommendations detailed in the report.
Among other findings, the report found:
In many cases the required documentation and disclosures brokers provided 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 percent of taxi drivers are immigrants.
Although brokers frequently helped drivers negotiate a loan for the medallion purchase, brokers failed 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, as required.
For current drivers, the largest single issue they face is an unaffordable level of debt. The average median debt owed by surveyed drivers is approximately $500,000 – well above the prices medallions regularly sell for today on the secondary market, and well above the average purchase price of $340,000.
Fifty-one percent of surveyed drivers stated they struggle to pay their monthly bills and 26 percent stated they are considering bankruptcy. However, only 15 percent of surveyed drivers indicated their lender has lowered the monthly payments or reduced the loan principal.
Credit union loans taken over by NCUA are often the most difficult for drivers to refinance in order to lower their monthly payments.
The report laid out a number of recommendations, including the creation of a Driver Assistance Center, additional mandates on transparency for loans facilitated by brokers, and the development of a broker watch list containing violations by medallion brokers.
The report did not make note of technological disruptors in the industry, namely Uber and Lyft, which drastically altered the landscape of the for-hire car industry in New York City.
To view the full report, click here.