December 1, 2023

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CFPB Eyes Starter Interrupters, Is GPS Next?

Excerpt From Fall 2022 Supervisory Highlights 

2.1.4 Unfairly engaging devices that interfered with driving

When consumers enter into auto finance agreements, lenders sometimes require consumers to
have technologies that interfere with driving (sometimes called starter interrupt devices)
installed in their vehicles. These devices, when activated by servicers, either beep or prevent a
vehicle from starting.

Examiners found that, in certain instances, servicers engaged in unfair acts or practices by
activating these devices in consumers’ vehicles when consumers were not past due on payment,
contrary to relevant contracts and disclosures. Servicers inappropriately activated the devices
due to errors with their internal systems. In these instances, servicers caused injury in one of
two ways. First, in some instances they activated the devices and prevented consumers from
starting their vehicles, causing substantial injury by unexpectedly depriving these consumers of
their vehicles. Second, in some instances servicers caused the devices to sound late payment
warning beeps despite consumers being current, often for several days. The devices sounded
these beeps each time the consumer started the car. This caused, or was likely to cause,
substantial injury to consumers because they may have ceased using the vehicle because they
understood from the beeps that servicers might disable the vehicle. Additionally, the warning
beeps were likely to harass consumers and risk harming consumers’ reputations by
communicating to others, the consumers’ purported delinquencies. Consumers could not
reasonably avoid these injuries because they had no control over servicers’ activation of the
devices. The harm outweighed any countervailing benefits to consumers or competition.
In response to these findings, servicers proposed implementing changes to address the

Read the entire Supervisory Highlights report here

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