For some low-income car buyers, a tracking device is a price they have to pay
When customers with poor credit buy a vehicle at some Oklahoma used car parks, they have to agree to an unusual condition: Let the dealer’s finance company attach a Global Positioning System device to the vehicle that tracks each of their locations.
If the buyer defaults on the loan, the lender can easily find the vehicle and repossess it. In some cases, the tracking system also allows the company to disable ignition if the buyer is late with payment.
Consumer advocates say the practice violates people’s privacy, adding that many shoppers in the subprime auto loan industry have low incomes and feel pressured to sign all documents in front of them — or they don’t understand what that they sign. Industry officials say the tracking devices are legal and fully disclosed, and allow dealerships to serve customers who otherwise couldn’t buy a car.
The use of tracking devices recently drew national attention when State Representative Mark McBride reported to authorities that he had found a GPS tracker attached to his pickup truck. McBride sued a private investigation firm over the device and other actions, seeking damages. He also presented House Bill 3260, which would prohibit the use of a GPS device to track anyone without their knowledge; exceptions are law enforcement and parents following a minor child. He accused the wind industry of hounding him, but industry officials denied any involvement.
While McBride’s experiment has a hint of intrigue, the used car tracking shows that the problem is not limited to the use of GPS trackers to spy on the movements of politicians. The availability and low cost of tracking devices show how easy it is to become an electronic spy. Even cell phones can be turned into tracking devices.
Trucking companies, private investigators, spouses, parents, and police are among those who have overtly or covertly placed GPS devices on other people’s vehicles to track their whereabouts. There is no law in Oklahoma that prohibits the practice, although, as with McBride, people can file a lawsuit alleging a privacy breach.
The issue of privacy can get complicated with many tracking devices used for convenience, business, or public safety.
The Federal Motor Carrier Safety Administration is phasing in a mandate that commercial truckers are using electronic recording of their driving hours, which has sparked protests from truckers. Companies offer GPS devices to consumers to track lost luggage or pets or stolen vehicles.
Controversy arises when the people being tracked have no knowledge or give their permission, or cannot opt out. The problem is compounded when vulnerable populations are involved. Should a husband who suspects his wife of cheating on him be allowed to install a GPS device on his car? What if she is a victim of domestic violence?
In the subprime auto loan industry, companies use electronic tracking to encourage customers to make payments on time and save money if the car needs to be repossessed.
But Mr. Kathi Rawls, a consumer protection attorney who practices in the Oklahoma City area and represents buyers in lawsuits against auto lenders, said the practice puts consumer privacy at risk.
She said the disclosure consumers get about tracking when purchasing the vehicle is inadequate.
“They’ll have the consumer sign a form along with 25 other forms,” Rawls said.
She also questioned the legality of using devices capable of disabling vehicles until buyers pay, saying it amounts to a virtual repossession, done without the legal protections of repossession. traditional, such as sending advance notice to borrowers.
“They practically take the car back at will,” she said.
In Nevada, lawmakers passed a law last year that tightened regulations on vehicle tracking systems, including those that disable vehicles remotely. Tracking data cannot be retained for more than 180 days. A vehicle cannot be deactivated until the consumer is in default and at least 30 days past due. The law also requires consumers to be notified 48 hours before a car becomes inoperable.
Last year it was revealed the Federal Trade Commission is investigating tracking technologies used in the subprime auto loan industry. No conclusions or decisions have been published.
The courts are also applying restrictions on the use of GPS devices by law enforcement. Earlier this month, the Arizona Supreme Court ruled that the police must obtain a warrant to place a tracking device on a vehicle. The ruling echoed a 2012 U.S. Supreme Court ruling decision.
Ira Rheingold, executive director of the National Association of Consumer Advocates, said car buyers often don’t realize the implications of what they’re signing.
“Consumers have absolutely no idea they’re giving up their privacy when they drive away with this new car,” he said.
Industry cites benefits
Trent Hickey, co-owner of Don Hickey Used Cars and Trucks in Oklahoma City, uses trackers for borrowers with bad credit, but does not use systems that disable vehicles.
He said being able to follow a car for repossession strikes the right balance.
“Some of these guys are just ruthless, and I think they’re a little too tough,” he said of lenders who use remote closings.
Hickey said what he was doing was enough: providing information about vehicle tracking units and how tampering with them can lead to a purchase contract default.
Hickey said the devices have advantages. For the dealer, this includes facilitating repossession and reducing the rate of loss. Buyers can get better cars, he said. Hickey also noted that he has used tracking to help customers recover stolen vehicles.
Hickey said he was called as a witness in an Oklahoma County murder case in which the police used a tracker by making an arrest.
Scott Sturges, owner of an Oklahoma City company that sells trackers to auto lenders, said the goal was to protect lenders’ assets.
“They’re not designed to track the customer or look up customer information,” he said.
Sturges said dealerships who work with “credit-distressed individuals” need some protection.
“These dealers are going out of their way to take that risk,” he said. “They’re trying to sell a car but trying to help the customer rebuild that credit.”
private eyes
Marvin Baker, president of the Oklahoma Private Investigators Association, said he recommends private investigators not put a tracer on a vehicle unless an owner signs a waiver.
He noted that there are practical limits to trackers on vehicles. For example, a private detective looking at the GPS position will not necessarily know who is driving the car.
Baker, a Tulsa-area private eye, said there are other legal considerations as well. For example, going onto someone’s property to put a device on a vehicle would be illegal trespassing, he said.
As for the case involving Rep. McBride, Baker said there were unknowns and he was not rendering judgment.
“Who ordered it?” said Baker. “Until I know exactly what’s going on, I don’t know if it’s right or wrong.”
Sample Tracker Agreement
A agreement between a customer and Oklahoma City auto lender Key Finance, affiliated with The key dealer in South Oklahoma City, authorized GPS tracking of a 2005 Nissan Sentra purchased on July 14, 2012. It is now an exhibit in a lawsuit in which the borrower, DJ Koon, alleges that the use of GPS monitoring was an invasion of privacy. In a court response, the lender pointed to language in the agreement that allows GPS monitoring. A lawyer for Key Finance declined to comment for the post.
Contact journalist Ben Botkin at [email protected] or (702) 418-6089.