Mayor de Blasio announced in July the findings of a 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 is planning to publish proposed rules to enact these and other recommendations detailed in the report.
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 confusing and not easily understandable to potential purchasers. Documents were not routinely 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 a medallion purchase, some brokers fail to adequately explain the terms of these loans to their clients. The investigation found many surveyed drivers 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 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
To help eliminate potential conflicts of interest, the City will mandate disclosure of broker-provided purchase and loan agreements. 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. 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
Drivers will soon 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 resource will be found on TLC’s website and will be consistently updated.
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.
