GPS Kill Switches Finally Getting Increased Scrutiny
The FTC has begun investigating the use of GPS tracking devices and kill switches by two auto lenders, according to both Bloomberg News and the New York Times. Perhaps this news will spark a much needed and overdue debate about GPS technology and car loans.
In 2014-Time flies when you’re having fun-I blogged about a Louisiana credit union and a growing group of other lenders that used GPS technology to locate and repossess vehicles with delinquent loans. The technology not only allows lenders to track vehicles but it also can be used to freeze a car in place. I predicted that this would become a big issue. Consumers would voice concern for their privacy and litigators would be anxious to prove that the technology had the effect of discriminating against low- income minority borrowers.
Like my prediction that the Falcons would beat the Patriots,I was wrong, at least so far. But now comes word that the FTC is generally looking at whether lenders using the devices are violating laws regulating collection practices. The FTC generally has the authority to ban unfair and deceptive practices. Presumably, it couldn’t use this power to ban the use of GPS technology, but it could punish lenders for inadequately disclosing the use of GPS to car borrowers.
It’s in the interest of both lenders and consumers for state legislatures to start hashing out the rules of the road with regard to the use of GPS by auto lenders. As the law stands right now the use of GPS is legal but as the FTC’s investigation demonstrates, its legality will increasingly be called into question. Anytime you combine a red hot lending market, which has many of the attributes of the sub-prime mortgage craze prior to 2008, with technology that will ultimately be disproportionately used against low-income borrowers, you have a lawsuit waiting to happen.
In contrast, legislatures could clearly delineate the boundaries for the acceptable use of GPS technology. Keeping in mind that the opinions I express are mine and mine alone, any measures to regulate the use of GPS in the lending process should include strict prohibitions against the storing and use of data by lenders; prominent consumer disclosure requirements and a ban on the use of kill switches. I can think of too many scenarios in which people end up hurt or humiliated after their vehicle stops in the middle of a busy intersection.