Don’t Look Now, but the Virtual Repo Guy is Lurking

September 26, 2014
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Virtual Repo GuyWho, or what, is the “Virtual Repo Guy?” It isn’t a guy at all, per se … but it serves the same purpose as a real repo man. Today, there are more than two million cars that can be disabled remotely with the simply push of a cell phone button. This blog is written with much of its information coming from this New York Times article.

But let’s back up a little before we explain how this Virtual Repo Guy thing works. Subprime customers (defined as those with credit scores of 640 or lower) who are in the market for a vehicle are, for obvious reasons, a higher risk than those with good credit. The number of these loans are skyrocketing, and lenders are looking for ways to ensure the customer makes his/her payments.

How the Virtual Repo Guy Works

Enter the Virtual Repo Guy. A good number of today’s lenders are not letting subprime customers drive off the lot until their just-purchased vehicle is outfitted with a no-start device that lets the lender remotely disable the vehicle if the customer falls behind in their payment schedule. Believe it or not, these devices are being used in nearly a quarter of all subprime auto loans!

As more of the no-start devices make their way onto cars, the number of complaints from troubled borrowers also rises – just as you would imagine. Some say this invades their privacy; after all, no one wants “Big Brother” watching them all the time. Others say it takes away some of their dignity.

Here’s another thing: not only can vehicles equipped with these devices be disabled, they can also be tracked! This allows lenders – or whoever is in charge of the device – the ability to track the movements of their customers.

Those in favor of the devices defend themselves with the following two explanations: first, the borrowers consent to having them installed in their cars; and second, there is a good chance that millions of people may not ever have qualified for a loan were it not for the devices.

For the lenders, it’s a great thing. Not only can they disable the delinquent customer’s car, they don’t have to enlist the services of a repo man because they can always know exactly where the vehicle is located. Further, they argue that the GPS feature is intended to help lenders locate a car if there is a need for repossession – not to put a customer under surveillance.

Today, some drivers are fighting back against the Virtual Repo Guy. There are videos on the Internet that actually teach borrowers how to disable the no-start device.

Meanwhile, state and federal authorities are in discussion about how to regulate this new automotive technology. Attorneys for clients whose cars have been shut down argue that this process is essentially “electronic repossession.” But there are state laws on the books that typically prevent lenders from repossessing a car until the borrower is in default – which frequently means someone who is at least 30 days delinquent. Thus, the borrowers’ lawyers contend these laws are being violated when the cars are being shut down when their cars are being electronically repossessed only days after a missed payment.

There’s also the question of what happens when a device becomes defective – and if it might perhaps affect the safety of the borrower and others when the car is on the road.

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