Relates to prohibiting the installation of a starter interrupt device on certain motor vehicles

BILL NUMBER:S1547A

Title of bill

An act to amend the general business law, in relation to the prohibition of the installation of starter interrupt devices on certain new and used motor vehicles

Purpose or general idea of bill

To prohibit the use of starter interrupt devices by lenders as a condi- tion of qualifying for an auto loan.

Summary of specific provisions

Section one amends the general business law by adding section a new article 11-C which prohibits the use of starter interrupt devices by dealers or lenders on new or used motor vehicles, provides for an exemption for certain rental car companies, establishes a fine of up to $5,000 for knowing violation, assigns promulgation of rules and regu- lations necessary to implement this provision to the Commissioner of the Department of Motor Vehicles in conjunction with the Attorney General and places enforcement of this provision with the Attorney General.

Section two sets the effective date.

Justification

A recent explosion in the Subprime auto lending market has some of the same banks and financial institutions responsible for the catastrophic collapse of the mortgage industry in 2008, and consequently the U.S. and global economies, cashing in big once again. And while these high-risk, high-interest loans are on automobiles and not homes, unfortunately, the victims are often low-income consumers still trying to recover from the recent economic recession.

In its recently published investigation into lenders' unscrupulous prac- tices within the booming subprime auto lending market, The New York Times found that "roughly 25 percent of all new auto loans made last year were subprime (interest rates on some of the loans exceeded 29 percent) and the volume of subprime auto loans reached more than $145 billion in the first three months of this year."

A growing number of these predatory lenders are now equipping cars with a starter interrupt device as a condition of the loan. This new technol- ogy allows lenders to remotely disable the ignition in order to prevent a car from starting within minutes of a payment being late. This reck- less practice can threaten public safety and result in serious conse- quences. Instances of parents being unable to rush seriously ill chil- dren to the hospital due to lenders activating the devices are becoming increasingly more common.

This legislation specifically bans the practice of installing a "starter interrupt" device as a condition for new or used car purchases, to reme- dy this gap in the law and further protect consumers. The ban on "start- er interrupt" devices does not apply to ignition interlock devices which have been mandated by court order to prevent driving under the influence or reporting attempted driving under the influence, nor any aftermarket consumer installed or manufacturer installed remote disabling device used for the sole purpose of theft prevention. GPS tracking devices which are separate from and independent of starter interrupt devices shall be exempt from this prohibition.

Prior legislative history

This is a new bill.

Fiscal implications

None

Effective date

This act shall take effect on the one hundred eightieth day after it shall have become a law.