Car lenders use remote kill switch to disable vehicles when borrowers miss payments
on September 26, 2014 at 2:05 PM
A device that allows car lenders to remotely shut down vehicles is becoming an increasingly popular safeguard against subprime borrowers behind on payments, despite some labeling it as a “Big Brother” practice.
One of the device’s biggest fans is Lionel M. Vead Jr., who drinks out of a coffee cup that reads “The GPS Man” as he monitors the movements of roughly 880 subprime borrowers on a computerized map. As head of collections at First Castle Federal Credit Union in Covington, Louisiana, Vead told The New York Times that he can spot drivers who are behind on their payments and, with a simple click of a button, remotely disable their vehicles on his computer or cell phone.
“It gets their attention,” Vead said to the Times.
Vead, who’s been a debt collect for nearly 20 years, no longer has to hire a repo man to track down delinquent borrowers–a practice that sometimes took years. Instead the delinquent borrowers come to him when they discover that their car won’t start.
The New York Times recently detailed the surge in the device’s use. The amount of auto loans given to subprime borrowers–those with credit scores at or below 640–has spiked in the last five years, the Times reports. Almost a quarter of new auto loans last year were subprime.
But lenders, before handing off the keys of the car to a subprime lender, install a starter interrupt device in the vehicle so that, if necessary, they can remotely disable the ignition. The devices are also equipped with GPS technology, allowing lenders to track cars’ locations and movements. These devices are now outfitted in about 2 million vehicles.
The devices, though, have federal regulators and consumer lawyers claiming an invasion of privacy. Some criticized the practice as “Big Brother” and “the darker side of tech” on social media, CBS News reports. Others say the device is a stab at borrowers’ dignity and activating it can be dangerous. One borrower told the Times that her car shut off while she was driving on a freeway in Nevada.
“We can disable the ignition but not while you’re driving,” Melanie Boudreau, a spokesperson at IMETRIK, a Canadian maker of starter interrupt devices that run around $100 each, told Fortune. “We don’t want to kill you.”
Other borrowers told the Times that their disabled cars left them stranded in dangerous neighborhoods and prevented them from taking their children to school or doctor appointments.
When Las Vegas resident Mary Bolender tried to drive her 10-year-old asthmatic daughter, who was suffering from a 103.5-degree fever, to the emergency room back in March, her 2005 Chrysler van wouldn’t start. Bolender’s lender, C.A.G. Acceptance, remotely shut down her car because she owed $389. “I felt absolutely helpless,” Bolender, a single mother who stopped working to care for her daughter, told the Times.
Some question if these devices are even legal. Wolters Kluwer Financial Services warns dealers to “proceed with caution” because “courts have remained silent on the legality of payment assurance devices,” Fortune reports.
Thomas Hudson, a Maryland lawyer, wrote for F ?>