September 26, 2023

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Chicago Default Payment Kill Switch Lawsuit

A Chicago used car dealer and loan company used “kill switches” to disable cars when their drivers were late on payments, according to a lawsuit filed this week by a legal advocacy clinic.

Car owners Tracey Calhoun and Venancio Orozco lost their jobs in the spring of 2020. Soon after, they fell behind on their car payments, and soon found their vehicles had stopped working thanks to a “vehicle starter interrupter switch” installed by their car dealers and lender, Chicago–based Overland Bond & Investment and Car Credit Center, according to a counter-claim filed in response to a collections case filed by the lender.

The cars have remained parked in front of the owners’ respective homes for more than two years while Overland continues to pursue thousands of dollars through collections lawsuits, said Dan Schneider, an attorney for Legal Action Chicago, a nonprofit representing Calhoun and Orozco. Overland filed collections lawsuits against Orozco and Calhoun in 2021, court records show.

“They’ve used the kill switch to try to induce my clients to pay, without telling them that they would [shut their cars off permanently],” Schneider said. “And they’ve disabled the vehicle, which has hurt their ability to repay the amount or even to sell it to get the money to pay what they owe.”

Schneider is seeking class-action certification for all borrowers in the same bind as his clients, a group that likely numbers in the thousands, based on the number of collections actions Overland has filed in Cook County during the pandemic. Overland did not respond to questions from the Chicago Sun-Times.

Under state law, lenders have the option of suing borrowers for the unpaid amount or repossessing the vehicle, selling it in a timely fashion and seeking the balance owed on the loan, Schneider said. The lawsuit notes that both Orozco and Calhoun were made aware a kill switch had been installed when they bought the cars but did not know Overland would use it to permanently stall the vehicles.

Permanently stalling a vehicle amounts to repossessing it, without putting it up for sale as required by state law, and Overland has made no attempt to come and get the vehicles.

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