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Oct 1, 2014 ∞

Subprime auto lenders use technology to compel payment

Michael Corkery And Jessica Silver-Greenberg, reporting at the New York Times DealBook blog:

Ms. Bolender was three days behind on her monthly car payment. Her lender, C.A.G. Acceptance of Mesa, Ariz., remotely activated a device in her car’s dashboard that prevented her car from starting. Before she could get back on the road, she had to pay more than $389, money she did not have that morning in March.

This is as stark an illustration of the intersection of law and technology as I’ve linked to in a while. While the tech can be a blunt instrument in a world of nuance (some borrowers are doing their best, others are surely not), I don’t oppose it. Assuming everyone was aware of the terms of the loan, it’s a valid contract, etc.

But this sentence gave me pause:

Using the GPS technology on the devices, the lenders can also track the cars’ location and movements.

Again, there probably isn’t anything illegal about it, assuming a valid contract. But in a world of automated license plate scanning and associated geo-behavioral profiling, is a GPS device overkill?

I suppose the business model itself is unnerving. After all, if you need to use a GPS device to manage risk, maybe you shouldn’t be making the loan in the first place. Borrowers using subprime auto loans probably just can’t afford to get a car.

Some drivers volunteer for activity-tracking devices as a way of qualifying for reduced car insurance premiums. Such people can already afford insurance though, and allow their provider to track their behavior as an added savings.

Maybe it’s less the tech involved and more the word “subprime,” which to me invariably suggests a corporation taking advantage of someone who can’t actually afford what they’re getting, and will inevitably default.