Once upon a time, if you fell behind on your car loan, the repo guy came out in the middle of the night and took your collateral-on-wheels back. These days, there are small GPS devices that can remotely disable the ignition until the borrower pays up. However, one auto lender is currently facing a federal investigation for its use of this technology.
A Michgan-based lender is now facing federal investigation over how it uses and deploys those devices, Ars Technica reports.
The company, Credit Acceptance Corp., said in a financial filing this month that the FTC was seeking information on its “policies, practices, and procedures in allowing car dealers to use GPS starter interrupters on consumer vehicles.”
The FTC would not comment on the probe, Ars reports, but the likely focus of the investigation is on whether or not the existence of the devices was disclosed to buyers, whether or not the ability of those devices to track everywhere buyers go was adequately disclosed, and perhaps even whether doing so is acceptable at all.
Starter-interrupter devices can be prone to abuse. For example in 2010 a disgruntled employee remotely disabled more than 100 cars sold by his former employer after being laid off. Or in 2014, when Nevada customers filed a lawsuit against a lender who was disabling their cars before the agreed-upon payment default deadline had passed.
As of 2014 there were around 2 million of these remote-disabling devices installed in vehicles around the country. Their use continues to rise, because subprime auto loans and auto loan default rates are both increasing, too.