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posted by on Friday February 24 2017, @06:17PM   Printer-friendly
from the you-just-can't-replace-Harry-Dean-Stanton dept.

The US Federal Trade Commission is investigating an auto lender that often requires subprime borrowers to have so-called GPS starter-interrupter devices enabled on purchased vehicles. The so-called kill switches, which can monitor a vehicle's constant whereabouts, also have the remote ability to shut a car off and to prevent a car from starting. This makes it easy for lenders to repossess the car for missed payments. But this modern-day version of the repo-man raises both safety and privacy concerns.

The Credit Acceptance Corp. of Michigan said in a Securities and Exchange Commission filing this month that it received a civil investigative demand from the FTC "seeking information on the Company's policies, practices and procedures in allowing car dealers to use GPS Starter Interrupters on consumer vehicles. We are cooperating with the inquiry and cannot predict the eventual scope, duration or outcome at this time. As a result, we are unable to estimate the reasonably possible loss or range of reasonably possible loss arising from this investigation."

The lender did not immediately respond for comment. There are more than two million of these devices affixed to vehicles on US roads. They are often hidden, and they are required for car buyers with not-so-rosy credit scores as a condition of acquiring a car loan.

The FTC isn't commenting on the probe, which may include other lenders. The investigation likely centers on whether buyers are given adequate notice that the vehicles they are purchasing can track their every move and whether this is an acceptable business practice.

Source: ArsTechnica


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  • (Score: 2, Informative) by Runaway1956 on Friday February 24 2017, @07:11PM

    by Runaway1956 (2926) Subscriber Badge on Friday February 24 2017, @07:11PM (#471271) Journal

    There's some semantic trickery in there. You "own" the car, for registration purposes, but for any other purposes, you are not the owner until it is paid off. The insurance company will pay off the lender if the car is wrecked. The lender can load your car up on a truck at any time, and take it back if you miss a payment. And, the law will support the repo man in a dispute, not you, the defaulting purchaser.

    The law varies across the nation, and there have been judgements which agree with your point of view, that the buyer is the "owner". But, there are hundreds of other judgements for each of those that awards ownership to the creditors when they demand it.

    Fail to make a payment, and the contract is broken. If the contract is broken, you own nothing.

    Home buyers have better protections than car buyers, but even home owners can be kicked out of a house, if they default on the mortgage. The bank gets an eviction notice, serves it, the law will enforce the eviction if necessary, and the bank has ownership.

    When people claim to own something which they have not paid off, they are playing semantic games. They don't own it, in the same way you own a paid off vehicle. The best policy is to pay cash for a vehicle. If you can't afford a $30.000 car, then maybe you should shop for a less expensive car - maybe in the 3,000, or 10,000 range.

    It always amazes me to see poor folk driving around in brand new cars. I've paid cash for used cars ever since I figured out just how expensive my one and only new car was. Cash up front, I drive it home, it's mine, no worries.

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  • (Score: 3, Insightful) by Grishnakh on Friday February 24 2017, @07:32PM

    by Grishnakh (2831) on Friday February 24 2017, @07:32PM (#471285)

    The problem is that, these days, you're not going to get a quality car in the sub-$10k range very easily. A lot of people blame Cash for Clunkers for gutting the used-car market, but in my experience, good cars retain their value extremely well now, and depreciate slowly and linearly, so the old adage about them losing 30% of their value upon driving off the lot is no longer true. So sure, you can go buy a 2-year-old car for less than a brand-new one, but it won't be very much less, and the loan terms are a lot better for new cars than used. And if you only can afford $5k in cash for a car, now you're looking at something with 200k miles or more which will need a lot of service soon (or be overdue), or you're looking at some shitty American car.

    • (Score: 3, Interesting) by Kromagv0 on Friday February 24 2017, @08:37PM

      by Kromagv0 (1825) on Friday February 24 2017, @08:37PM (#471307) Homepage

      The problem is that, these days, you're not going to get a quality car in the sub-$10k range very easily.

      That is a load of BS. My last 3 cars have all been sub $10k vehicles when purchases the most recent was $9k and purchased 3.5 years ago. Each was then driven for a minimum of 100,000 additional miles. The lowest mileage one had just over 100,000 additional miles on it when it was totaled by a high schooler who rear ended me. The highest mileage one I put just over 160,000 additional miles on when the automatic transmission went out. It probably would have lasted longer but that car was just too fun to abuse and get up on the converter in. My current one I've put 110,000 miles on since I got it and the only non regular scheduled maintenance I've done was when the expansion tank blew (damn cheap plastic pressurized BWM expansion tanks). If you need a vehicle right now it is harder to find a nice one as you have to pick from what is available right now but if you have the time to be a little choosy you can easily find a really nice one. However a good beater can still be found for under a grand but that does take a lot of looking and knowing what to look for.
       
      Cash for clunkers decimated the beater market so for someone like me who likes having a beater truck/SUV to actually do truck/SUV things with they are hard to find now. For nicer vehicles they were worth more as a used working vehicle instead of as things to be destroyed and crushed. Also with the advent of the internet finding inexpensive vehicles has moved from regular auto sites, dealerships, and news papers to places like craig's list so if you keep looking at the other places you will find very few sub $10k cars.

      --
      T-Shirts and bumper stickers [zazzle.com] to offend someone
    • (Score: 1) by anubi on Saturday February 25 2017, @03:49AM

      by anubi (2828) on Saturday February 25 2017, @03:49AM (#471414) Journal

      I, too, thought that "Cash for Clunkers" program was a real assault on the lower level classes. Make an overpriced market for the well-to-to to pawn off their slightly aged stuff, paid for by the folks paying tax. Privatize the benefits. Socialize the cost.

      I would have thought a lot of Congressmen would have lost their jobs over that one at the next election. AFAIK, that kind of chicanery is grounds for immediate impeachment.

      I feel a lot of people were a lot like me and that old van I bought. I don't drive it enough to make its fuel costs all that visible. I am retired. And use it for trips to Home Depot and grocery stores. It takes me a week to put on the miles I used to put on every day - it I even do that much. But I need different things now.

      When I was commuting, I needed small, maneuverable, fast, good MPG, something that would get me to work every day. Now, I need a stuff-hauler. And I don't really care that it is averaging about 15MPG. ( city stop-and-go at just about its worst ).

      Its still cheaper and more convenient than calling Ubers.

      I get about two weeks use for $20 worth of fuel. A month if I decide to do without "fun" driving. And probably go a year between fuelings if I went "bare essentials".

      A lot of people wanted those big old behemoths for that family trip to go see grandma on Christmas.

      And we poured sodium silicate in them just so the other people could not have them.
       

      --
      "Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
  • (Score: 3, Informative) by Zz9zZ on Friday February 24 2017, @09:19PM

    by Zz9zZ (1348) on Friday February 24 2017, @09:19PM (#471321)

    I would argue that your version is the semantic trickery. I get where you're coming from, the lender can repossess your property if you default on the loan, but that does not mean you don't own it. As some have already pointed out, the vehicle/home is collateral for the loan and not some weird quasi-ownership thing.

    All of that is besides the point anyway, according to TFS: "The investigation likely centers on whether buyers are given adequate notice that the vehicles they are purchasing can track their every move and whether this is an acceptable business practice." So whether the practice is legal or not is the debate.

    My opinion is that they should be able to get the GPS coordinates, but there should be some method of making sure that can only be done after the grace period is over for a payment default. The idea that a user car dealer can literally track the customers is extremely distasteful. Alternatively, all GPS tracking could go through the local police department, all GPS requests would be recorded, and when the request is issued it should also be logged in the vehicle and available to the owner. None of that is technically all that difficult, but you would need to legislate such requirements if you want a chance of making used car dealers go along with it.

    --
    ~Tilting at windmills~
  • (Score: 2) by urza9814 on Friday February 24 2017, @10:49PM

    by urza9814 (3954) on Friday February 24 2017, @10:49PM (#471353) Journal

    If I buy a car, there is no way in HELL I'm taking a loan from the dealer. That's just *asking* to get ripped off. So I get a loan from my credit union and buy the car. So who would you say owns that car? The dealer, even though they've been paid in full? Or the credit union, even though they've never touched or even seen the thing -- and in this case, when they don't even operate in the state where the vehicle was sold and used?

    It seems that you are not very clear on the concepts of lending and ownership. When you take out a loan and buy a car, the car is paid for. The loan is not. The car may be collateral for the loan, or something else could be, but that's not really relevant. You still own the car. What they own (at best) is a contract where you've agreed to give the car back if you can't pay.

    Now, what's the difference between them owning the car and them owning a contract where you have to give the car back? One means criminal charges, the other means a civil contract dispute. It's illegal to put someone in prison in the US solely for owing money, but it's certainly not illegal to imprison someone for stealing a car. So it's a VERY important distinction. People who intentionally attempt to pervert this distinction are trying to change the very definition of the law in order to allow them to punish customers for their own mistakes. Loans require interest payments precisely because there is some risk that the money won't be repaid. If they consistently give loans to people who can't pay them back, it's their own fault when the loans default and the lender goes under.

    As for "How will these poor people get cars if they can't be exploited by auto lenders?" -- Well, if these companies intend to recover the car, then it isn't a sale but a RENTAL. Or maybe a lease. So that's the business these lenders actually want to be in, but I suspect they've found it more profitable to outright lie about their business model instead. Because who is going to take a rental when the big company with all their financial knowledge lies to you and says their fancy analysis shows that you CAN actually afford to buy one?

  • (Score: 2) by AthanasiusKircher on Friday February 24 2017, @10:53PM

    by AthanasiusKircher (5291) on Friday February 24 2017, @10:53PM (#471354) Journal

    When people claim to own something which they have not paid off, they are playing semantic games.

    By this logic, almost no one owns anything. If you fail to pay property taxes, the state can often seize your property or force its sale to pay the taxes. If you fail to fulfill contract X, Y, Z, of any type that causes you to owe money to someone, your assets and property can be seized. If you fail to pay income taxes, the IRS can do similarly.

    We all live with legal encumbrances on our assets, some voluntary (like loans and contracts), some involuntarily (like taxes). But it's pretty rare for anyone to "own" anything valuable that is not subject to legal seizure if you default SOMEWHERE.

    • (Score: 2, Insightful) by anubi on Saturday February 25 2017, @05:46AM

      by anubi (2828) on Saturday February 25 2017, @05:46AM (#471430) Journal

      By this logic, almost no one owns anything. If you fail to pay property taxes, the state can often seize your property or force its sale to pay the taxes.

      It is my belief that this kind of indebted "ownership" is the cornerstone of psychology to get the little guy to pay the costs of running government and remit the fruit of their labors to the banking class.

      The banker pulls the money out of thin air to originate a loan. Where did he get the money? Fractional "reserve" banking. He had a dollar on deposit, so he can loan out nine, keeping that dollar as "reserve". Where did the nine come from? Was it even income? Is it taxed every year its held as "property"?

      Now, the borrower uses this loan to buy a house. Surprise.... its now Property... and tax is to be paid?

      So, we set up the illusion that the borrower "owns" the house and must pay property tax, despite the fact the bank actually owns the house.

      Everyone but the bloke who took the loan wins.

      The banker wins... he's getting paid usury on that he has the charter to print up out of thin air.

      Government wins... they get the privilege of tax assessment on that which was purchased with this funny money.

      The bloke who took the loan now has the monkey on his back to work to pay it off... he is not chartered to simply print the debt back away.

      Its all just a clever ploy to force the serfs into slavery to the ones who have gathered together to game the system.... taking advantage of the fact the serfs are so busy they don't see how they are being had.

      --
      "Prove all things; hold fast that which is good." [KJV: I Thessalonians 5:21]
  • (Score: 0) by Anonymous Coward on Saturday February 25 2017, @03:44AM

    by Anonymous Coward on Saturday February 25 2017, @03:44AM (#471413)

    If you don't pay property taxes, the government will auction off your house.

    It's almost the same for a car, except they might first need to catch you driving it after the registration expires.

    By this standard, only a handful of people in the world own anything. They happen to own Saudi Arabia, North Korea, Swaziland, and Vatican City.