By on February 26, 2017

behind the wheel

Finance companies have begun using ignition kill switches and tracking devices, which allow them to disable and then easily locate vehicles for repossession. Some of the devices even remind borrowers when they’ve missed a payment. According to PassTime, a company that sells such devices, somewhere between 35 and 70 percent of cars financed on subprime loans have some variant of the hardware installed.

Now the the Federal Trade Commission is looking into whether these automotive finance companies are illegally harassing consumers with poor credit by imposing the hardware onto their vehicles — potentially violating their privacy while also garnering unnecessary intimidation from banks. 

Currently under the consumer protection agency’s microscope are the Michigan-based Credit Acceptance Corp., and Arizona’s DriveTime Automotive. Bloomberg reported that the FTC has asked for information from both companies about the devices. DriveTime spokesman Chris Piper claimed his company doesn’t use kill switches but that most financed vehicles have a pre-installed GPS system.

For the FTC, the issue isn’t so much that the devices themselves are being illegally installed but that debt collectors might threaten using them to prematurely deactivate or repossess a vehicle before they have the legal grounds to do so. It’s a problem that has already arisen without the new devices. In 2014, Consumer Portfolio Services settled with the FTC for $5.5 million over allegations that it had been harassing delinquent customers by calling them and saying they were coming to repossess the vehicle long before those actions could be authorized.

Credit Acceptance has been issued five subpoenas or regulatory demands for information since 2014, including one from the Maryland attorney general requesting specific information over its repossession policies. The Department of Justice has also subpoenaed other lenders, including General Motors’s finance unit and the auto lender Santander Consumer USA.

Most companies have lowered their lending standards in recent years and and number of loans, and delinquencies, have increased as a result. According to the Federal Reserve Bank of New York, roughly 6 million people are over three months late on their car payments as of last December. That accounts for $1.16 trillion in outstanding payments, a 45 percent increase since the final quarter of 2008.

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42 Comments on “FTC Hunting for Abuse in Auto Lenders’ Implementation of Kill Switches...”

  • avatar

    LOL put “passtime kill switch” into search

    first page is YT vids and advice how to disconnect / disable

    the tech war continues

    although the general opinion is that the finance contract has pretty robust language where the borrower understands this system is installed and the consequences of same.

    • 0 avatar

      The FTC would save time by issuing “bus passes” to habitually delinquent “skips”.

      These devices are good consumers. For the “risky” car buyer, they’re a contingency for the loan to even happen, and or, having the car returned to them after a “repo”, and the loan/financing to be reinstated.

      For everyone else, possibly lower interest rates, especially if they have good credit and also agree to having these devices installed, and of course, agree to not tamper with them.

      • 0 avatar

        And if you live 50 miles from the nearest bus stop like I do?

        I’m surprised at you, Mike. I thought you more level headed than that.

        No, its not okay to borrow more than you can pay back, and that’s why I drive a car I paid cash for. Its not okay for lenders to illegally phuck with their victims…oops I mean customers, either.

        §hit happens. You miss work. Late on one payment. You shouldn’t get stranded at the preschool dropping little Jimmy off because you’re 34 days late, or have some jacka§§ call you 50 times a day at work, pissing your boss off. Credit union customers don’t deal with that. But poor people are supposed to because they’re poor?

        I’ve never done a BHPH. Only had one auto loan and it was from a credit union.

        But I’m not trying to support and feed 3 kids while being forced to live a great deal away from my McJob (and public transport) because of living costs/crime rates/etc.

        I might would do something like finance a formal rental penalty box at an outrageous percentage to ensure my family got where we needed to go reliably.

        Not sure if I could trust a 1996 Plymouth Voyager to do 60-70 miles a day during the normal work week. Or a 96 Aerostar lol or whatever old car *I* (with no family obligations) would drive that much without (much lol) worry.

        Having a 9 year old in the back seat throwing up and running a fever makes dealing with a 20+ year old well-used car a lot less fun than when you can afford (time wise) to get out and repair and replace things before they have an affect drivability and reliability.

        Like this past week when I parked the Taurus for a few days while I took my time replacing the front springs, struts, stabilizer bar links and one subframe bushing (others were good). Drives 110% better, and quieter. Jack B will be glad to know it no longer chunks over bumps. At 5 or 55 or 75 MPH lol.

        I couldn’t do that if I had to pick up/drop off kids a dozen times, and work two part time McJobs in between.

        Yeah its easy to sit back and judge someone who pays $389 a month for a used Mirage. But if I had a family (as in children of my own) and needed to support them, I would. I’d do what I have to do.

        And I wouldn’t live in a high crime area just to phuck with stinkin busses and having vagrants touch my daughters leg “by accident” while his buddy shoots up in the back seat before I signed for the Mirage. I’d keep my nice little clean rental house in a safer area I can afford.

        My best friend tried it. He went to take his kids out of their apartment to go down to meet the school bus, and across the corridor sat their neighbor, passed out by his door, meth pipe on his lap. And it was a nice looking place! Less than 10 year old complex at the time.

        No phucking thank you. Make my Mirage green and a stick if you can find it (highly unlikely lol).

        He’s lucky. His mom is alone now and has a 5 bedroom house out in the country about 20 miles. Since his dad passed, he now drives his 2005 Ford Five Hundred (6spd lol no CVT) they bought new when I lived there.

        • 0 avatar

          Yep some BHPH or their financial co’s repo, ignition “lockout”, harass after just 30 days late. Read your contract. Most aren’t like that. Buy from somewhere else.

          I’ve repo’s cars, it’s not my favourite, but if I didn’t, someone else would. If they’re cool, I always let them get their personal belongings out, thoroughly explained the process, and above all, treated them with respect.

          But I always manage to pay my bills, within 30 days “delinquent”. Avoiding your finance co can’t make things better.

          But don’t think finance companies don’t try friendly reminders, messages, texts, e-mails and mail old fashion “letters”, long before they get *nasty*. They do.

          If you moved, changed your cellphone/home number, changed jobs, don’t open e-mails, without updating your info with your finance co and then accidentally miss a car payment or two, who you really gonna blame?

          Yes I feel sorry for those in a bad position (temporary or not), with kids, with dogs, even cats (they can’t always afford).

          I’ve been lucky enough to pay cash for every car/truck I’ve owned and would like to think I wouldn’t get myself in a bad financial position, but folks have to get smarter with *money*.

          No matter the McJob, I’ve never spent anywhere near what I was taking in (income). Yes I’ve drove some piles of crap, learned to “fix” them (along side the road at times), often with bailing wire, zip-ties, duct tape, jumper wire, you name it.

          But it’s real hard to feel sorry for the “Skip”, late on their 15 year old, 22″ wheeled, Land Rover, or Mercedes, or BMW (the trail of 5 different colors of leaking fluids gives them away), when they could’ve bought a nice 12 year old Corolla for a lot less a week.

    • 0 avatar

      Reading some of the sales literature for these systems, one item they sell is a “false GPS”, a box with a weight in it and a red LED. It is designed to be easily found, whereas the real module is buried up in the dash wiring harness…..

      • 0 avatar

        The false or “dummy” GPS tracker would be for habitual delinquents, not new to the game. But it’s still just a matter of time before they figure it out, and take apart the whole car to find all trackers.

  • avatar

    So… $21,000 over four years for $3,000 cars wasn’t enough, we need lojack too?

  • avatar

    I’m still trying to figure out what car is being shown in the photo…..

  • avatar

    Something about this sounded familiar. Deceased Detroit Lions running back and long time Detroit area car dealer Mel Farr used kill switch devices on cars sold on weekly payments. Farr owned an equity stake in the company that made the devices and Jesse Jackson was on the board of the company (Farr would later use Jackson to try and pressure banks into loaning him millions when he ran into a solvency issue). Farr eventually lost his Ford franchise (which he got when he realized, while playing football, that the man who signed his paychecks was named Ford and that Ford Motor Co. had just started up a minority dealership program), along with the other stores in his dealer group, and tried to reestablish himself with a Kia shop, but that folded too.

    While I haven’t found anything that links Farr to Credit Acceptance Corp, that company is owned by a guy named Donald Foss, who shared some investment deals with Farr.

  • avatar

    Most subprimes that do this do not stipulate it as a condition of the loan, rather suggest it as a means to obtain a larger dealer check. Those that do require it because the customer has chronic repossessions among other derogatory credit issues.

    On one hand, if I were a BHPH, if I don’t trust you enough to make regular payments, I’m going to sell you a car on installments in the first place.

    On the other hand, I get why finance companies do this and there is an absolute reason why you’re required to have this thing installed in your 28.95% loan collateral – YOU DO NOT LIKE TO PAY PEOPLE WHAT YOU OWE THEM.

    And I really have zero regard or sympathy for these hard luck poor me stories that populate the evening news on occasion about some habitual deadbeat getting their car repossessed. One most recent included the phrase, “Ms. _____, a single mother of three, awoke one morning to find her BMW sport utility…” and that’s where I rolled my eyes and changed the channel.

    • 0 avatar

      Well, true…there are lots of folks who end up defaulting on “premium” cars. But there’s no shortage of folks who end up defaulting on Grand Ams, Focuses or other cheap rides too.

      The issue here really boils down to the facts that a) “poor folks have poor ways,” and that b) better access to public transit would be tremendously helpful to those poor folks.

      • 0 avatar

        I see too many ‘poor’ people with a steady supply of cigarettes, beer, and tattoos to believe that is purely circumstantial and not a choice.

        • 0 avatar
          Firestorm 500

          They have the latest smartphones, too.

          • 0 avatar
            April S

            Can you back up that statement with any actual examples?

          • 0 avatar

            April, are you seriously claiming to have never met any of the now ubiquitous tatted-up, 400 lb. meat planets with their own army of debt collectors trailing after and those little low-riser footies that advanced diabetics use for socks?

            ‘Round hyar, they not only have the latest phones and other gadgets but also guns, guns, guns and all their Action Accessories!

            There are four particularly egregious examples among my hourly employees and I don’t want to be in the building when Legal finally greenlights terminating one of their stinky, indolent asses and he decides to come back and teach us all a lesson.

            Rural white peoples be some bad news nowadays, girlfriend.

          • 0 avatar

            Seriously, April? Being in the used car business as long as I have, I can rattle off dozens upon dozens of examples.

            I feel more sympathy for the car at this point than most of the people.

            “Look at that Altima. Would’ve made someone a nice family sedan. Look how beat up it is, stereo wiring dangling from the trunk, poorly-tinted windows bubbling in the sun, cigarillo burns throughout the cabin, the moist dank of weed and poor bathing embedded into the upholstery.”

        • 0 avatar

          Nothing says class like a neck tat.

          • 0 avatar

            “Nothing says class like a neck tat.”

            Amen. Uniquely trash.

            It’s as if something they’re trying to hide is crawling up & out of their shirts.

        • 0 avatar

          Don’t get me wrong, flybrian, I see ’em too. But there are plenty of folks who are simply down on their luck, versus making bad luck for themselves. Just sayin’.

      • 0 avatar

        You can finance a 12 year old Grand Am???

      • 0 avatar

        Cheaper cars would be better for most people who cannot afford the current ones. Not “public transportation.” No cash for clunkers, no mandatory insurance, no cost increasing “safety” features that they see no benefit from anyway, seeing as they can’t afford them. The Model T was a huge, huge improvement for all those who previously could not afford a car. A Model T functional equivalent would be no less an improvement today, for those who cannot afford one.

        • 0 avatar

          The Model T apparently cost $850 when it debuted in 1908, which is ~$23k in 2017 dollars.

          That’ll get you a well equipped Fusion, which is incomparably better than the Model T in any aspect you care to name.

          • 0 avatar

            “Fusion, which is incomparably better than the Model T in any aspect you care to name.”

            Let’s just cut across the bean field an’ git to the still quicker!


            The sam hill’s keepin’ him? There ain’t even two foot o’ snow.

          • 0 avatar

            Model T prices fell sharply once Ford got the production system to max efficiency though. By the mid-1920s a touring version was $295, or the 2017 equivalent of $4100, and a “Runabout” was $265 ($3600).



          • 0 avatar

            Well done. That’s why Henry Ford was so important on the global stage.

        • 0 avatar

          You are OK with uninsured drivers?

  • avatar
    Jeff S

    I wouldn’t be surprised if in the future the manufacturers include this on every vehicle. Maybe you wouldn’t need it since most new vehicles can be hacked.

  • avatar

    It’s a game of cat-N-mouse for sure. For a while repo agents were tracking the delinquent’s “cellphone pings”, at least “RepoNut” (on youtube) utilized the technology. He wouldn’t give too many details, but it was short-lived, probably thanks to the ACLU or something.

    Before that, RepoNut used the “plate scanners” cops use, along with a “commercially based” database, but that was banned eventually too (in Utah).

  • avatar
    George B

    I’ve helped with hardware development for various tracking devices. Tracking cars and trucks is relatively easy because they spend a lot of time outside with good signal levels from GPS satellites and plenty of power is available from the car battery. A couple of these devices also had access to the OBDII port, but that’s not necessary to simply find a vehicle. I haven’t worked on any device designed to remotely disable a car. The new LTE Cat M1 standard should make tracking devices less expensive and more power efficient.

  • avatar

    Another article I read about these a few years back talked about how some dealers neglected to disable the kill switches after the loans were paid off, resulting in some buyers having their cars shut down mistakenly, not to mention electrical problems related to hacking up the wiring during installation.

  • avatar

    What disturbs me the most is seeing finance companies and lots hitting people with good credit with bad loans just because they can.

    I had a buddy at work who got hit with a bad loan. We looked up his credit score and history, and there was no reason beyond shear greed and chicanery for his interest rates and payments. He qualified for multiple discounts and incentives that they just didn’t bother applying. They didn’t even bother trying to stretch out the loan terms to make it “look” like a good loan. They jacked up his rates to sky high on a 66 month term on a new T&C. He managed to refinance with better terms, but it was shocking to see.

    Basically he walked in, negotiated good terms, went home with his van. A week later they called back, said financing had fallen through, but they had found a new finance company that was close to his original figures. He came back sign a few extra papers to finalize. They rigged the new papers without all his discounts and previously agreed to terms, and trusted that he wouldn’t catch all the changes, wouldn’t remember everything he previously fought for. When he noticed a a few things were off they hit him with, “these are the changes the new finance company insisted on,”. Finally they trusted that’d he’d just sign the papers instead of trying to turn in a van that he’d already been driving for two weeks, that had already picked up about 1000 miles and a couple kid-spills and small scratches.

    This is becoming a very common thing; people driving off in a new car, only to be called in a week or two later and told that the financing had fallen through, had to be modified.

    If I ever buy a new car, I’m going to leave it parked in front of the dealership door until ALL paperwork is signed and finalized. If they so much as look at me wrong, “Here’s your car back, shrinkwrap and all. Piss off and die.”

    • 0 avatar

      A NYC Toyota dealer did exactly that to my mom. She bought an MR2 post divorce (Mom’s Baby Ferrari, we called it-red, too) and the dealer called her in a week with that exact story. Not realizing that he wasn’t dealing with a bubblehead, they were surprised that that was her response. “Oh, if there are any changes, I don’t agree to them, I don’t want to cause you any trouble, so you can send someone to pickup the car today. I’ll leave the keys with the doorman”.

      They didn’t call back.

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