Managing a Parking Towing Program: Compliance, Contracts, and Complaints

Towing is the most consequential enforcement action available to parking operators. It resolves the immediate problem — an unauthorized vehicle in a space — but it also creates significant liability exposure, generates intense customer complaints, and operates under a web of state and local regulations that vary substantially across jurisdictions.

Operators who run towing programs carelessly face wrongful tow lawsuits, regulatory complaints, and reputational damage that persists long after the individual incidents are resolved. Operators who run them well maintain enforcement credibility while minimizing the financial and reputational cost of the program.

Why Towing Regulation Exists

Parking lot towing has a history of abuse that has prompted regulatory intervention in most states. Predatory towing — “bandit towing” in industry parlance — involves tow operators stationed near private lots who immediately tow vehicles the moment they park, sometimes regardless of actual unauthorized use, and then charge excessive fees for vehicle release.

In response, most states have enacted towing regulations that govern:

• What signage must be posted before a vehicle can be legally towed
• How much notice (if any) must be given before towing
• Maximum fees that can be charged for towing and storage
• Hours during which vehicle redemption must be available
• Documentation requirements for each tow
• What recourse vehicle owners have if they believe the tow was improper

Your towing program must comply with these state requirements. Using a towing company that is not familiar with your state’s specific requirements, or operating without compliant signage, can void the legal basis for a tow and expose you to liability for wrongful towing claims.

Towing Contract Essentials

Your relationship with a towing company should be governed by a written contract. Key terms:

Authorized tow conditions: The contract should specify exactly which circumstances authorize the towing company to remove a vehicle — without authorization, on your request only, or some combination. Most operators authorize immediate removal for vehicles blocking fire lanes, access ramps, or emergency exits, with notification-required processes for other violations.

Required documentation: The contract should require the towing company to photograph the violation before removal, record the date and time of removal, and provide you with a copy of the documentation for each tow. This documentation is your primary defense in a wrongful tow claim.

Fee schedules: Maximum fees should be stated in the contract, consistent with state maximums. Be cautious of towing companies that want flexibility to charge above state maximums — this is a compliance risk.

Vehicle release hours: Many states require that towing companies allow vehicle redemption during specific hours. Confirm your towing company’s release hours and that they comply with state requirements.

Insurance and indemnification: The towing company should carry commercial auto liability insurance and general liability insurance at defined minimum levels. Indemnification provisions should address what happens when a tow is challenged as wrongful.

Response time: For requested tows, what is the committed response time? For immediate-removal situations, how quickly can the towing company respond?

Signage Requirements

Towing authorization signage is the most frequently non-compliant element of parking towing programs. State requirements vary considerably, but common elements include:

• Minimum sign dimensions (often 17"×22" or larger)
• Required text elements (typically the towing company name and phone number, and a statement that unauthorized vehicles will be towed)
• Required placement locations (at each entrance to the lot, and in some states at each section)
• Sign height requirements
• Specific language requirements (some states specify exact required text)

Obtain the current requirements for your state before installing towing signage, and review them annually — towing regulations are actively revised in many states.

Several states — including California, Texas, Florida, and Illinois — have particularly detailed towing signage requirements. In California, for example, the towing company must be named on the sign, the sign must be at least 17"×22", and specific text is required by statute. Non-compliant signage in California can expose both the property owner and the towing company to significant liability.

Wrongful Tow Claims

Despite compliant signage and proper procedure, wrongful tow claims will occur. A customer who believes their vehicle was improperly towed will contact you, often angrily and sometimes with a legitimate case.

Your response process:

Investigate before responding: Review the documentation — photographs, tow slip, officer report if applicable. What did the towing company document? Was the vehicle actually in a restricted area? Was signage compliant?

If the tow was proper: Communicate clearly but empathetically. “I understand this is frustrating. Our records show your vehicle was parked in [specific restricted area] at [time]. Our signage at [location] indicates this area is tow-away. I’m unable to refund the towing fee, but here’s the contact information for the towing company if you’d like to discuss the storage fees directly.”

If the tow may have been improper: Involve your towing company and, if the potential liability is significant, your insurance carrier or legal counsel before making commitments. A tow that was improper due to a towing company error (they towed the wrong vehicle, they towed during a grace period) may give you recourse against the towing company.

Document everything: Your response, the customer’s claims, the documentation reviewed. If a wrongful tow claim proceeds to a formal complaint or litigation, this record is essential.

Managing Towing Frequency

Towing is a blunt instrument. Facilities with high towing rates often have underlying problems — inadequate signage, confusing lot layouts, poor wayfinding — that generate unauthorized parking in the first place. Addressing root causes is more effective than increasing tow rates.

Review your towing activity monthly. Which locations generate the most tows? What are the most common violation types? Are there times of day when towing frequency spikes? Patterns in this data often reveal design or communication problems:

• High towing at one entrance may indicate entry signage is insufficient
• High towing of permit zone violations may indicate permit zone signage is unclear
• Spikes during events may indicate your event parking communication isn’t reaching customers

Reducing unauthorized parking through better communication and design is preferable to maintaining a high-volume towing program. It’s less expensive, generates fewer complaints, and creates fewer liability events.

Communication After a Tow

Vehicle owners who find their vehicle gone are immediately distressed. At minimum, your facility should:

• Post the towing company’s contact information prominently at the location where a towed vehicle was parked and at the lot entrance
• Ensure that staff can provide towing company contact information immediately when a customer reports a missing vehicle
• Have a process for confirming whether a vehicle was towed from your facility vs. stolen — these present very differently and the first response to a customer should not assume one or the other

In some states, operators are required to notify local police within a specified time after each tow. Confirm whether this requirement applies in your jurisdiction and ensure your towing contract includes this as a requirement on the towing company.

FAQ

Can we authorize a towing company to patrol and tow without our direct instruction? In many states, yes — “patrol and tow” or “stalking” authorization is allowed. The signage requirements must specifically authorize this. Some states restrict patrol-and-tow to certain violation types or require that the property owner receive notification within a specified time after each tow. Check your state’s specific requirements before implementing patrol-and-tow authorization.

What’s the most common legal challenge to parking tows? Non-compliant signage is the most frequently successful basis for wrongful tow claims. If signage doesn’t meet state requirements — wrong size, missing required text, wrong placement — the tow lacks legal authorization in most states. This is why signage compliance review should be annual at minimum.

How do we handle a situation where the towing company made an error? Address the customer’s immediate situation first — facilitate release of the vehicle if it hasn’t been released. Then pursue the towing company for reimbursement of the incorrect tow fee. Your contract should address the process for disputed tows and the company’s responsibility when they make an error.

Are we liable for damage to vehicles that occur during towing? This depends on the specifics of the situation and your contract. Generally, the towing company carries primary liability for damage that occurs during the tow itself. Your indemnification provisions in the towing contract, and your general liability insurance, are the relevant instruments. For any tow where damage is claimed, photograph documentation is critical.