Better Than Repossession

A consumer alleges that a starter interrupt device shut down her car in traffic. The New York Times reports the allegation. Then other publications repeat the allegation, citing The New York Times.

Suddenly, electronic devices that can stop running cars are a “fact.” Regulators predict that cars will be stopped in the middle of railroad track crossings and start railing about these dangerous devices that can put consumers in peril. Bills prohibiting the devices proliferate. Regulators initiate investigations.

All of this without a shred of proof beyond the testimony of this one consumer. And without a single verified instance of a starter interrupt device being used by a creditor to stop a moving vehicle. And despite the very description of the device as a “starter interrupt device.”

When a vehicle is disabled by a starter interrupt device, it comes as no surprise to the consumer. The consumer is presumably aware that she has not made a required payment, but to be sure that she knows that a vehicle disablement is imminent, most devices warn of impending disablement well in advance of the event.

Creditors usually time the disablement of a vehicle for the wee hours of the morning, a time when it is very likely that the consumer is tucked in bed and asleep.

But legislators and regulators, prepped by materials from consumer advocates, ask the same tired old questions we have heard for years. “What about the mother with the sick child who leaves her house at two in the morning to rush the child to the hospital, only to find that her car’s starter has been disabled?” The question they don’t ask is, “What would the mother do if the car had been repossessed and towed?” Remember that the consumer is in default, and the finance company has the right to repossess the car for nonpayment.

With a starter interrupt device, the mother need only make a phone call to have a working vehicle. If the car has been towed, she likely cannot retrieve it until the next day, and then only after paying repossession and storage costs. Add to that having her credit report dinged by the repo.

A few years ago, a consumer think tank put out a paper alleging that vehicle repossessions had resulted in scores of deaths and other mayhem when consumers confronted repossession agents and contested the repossessions. The conclusion was the creditors’ actions and those of the repossession agents were to blame. The report was overblown and very misleading — many of the casualties were repossession agents attacked by car owners. But if there’s a shred of truth to the report, why wouldn’t consumer advocates support electronic disablement, which eliminates the opportunity for a repossession to escalate into violence?

There are arguments from creditors that the use of starter interrupt devices increases the number of consumers who can be financed, and that the presence of the devices results in fewer delinquencies and defaults, resulting in improved credit ratings for consumers. You’d think that legislators interested in the welfare of consumers would determine whether such arguments have merit before banning or limiting the devices.

Some consumers who buy cars on credit will default. Unless the law changes, creditors financing those cars can repossess the vehicles that serve as collateral when those defaults occur. Rather than putting the consumer through a vehicle repossession, with the attendant cost and trouble of redeeming the vehicle and suffering a damaged credit report, why not encourage creditors to use starter interrupt devices, especially if the use of the devices results in greater access to credit and improved credit histories?

Thomas B. Hudson is a partner in the firm of Hudson Cook LLP and the author of several widely read compliance manuals. Email him at [email protected].