Prohibits auto lenders from remotely disabling a vehicle without first giving notice of the disabling to the debtor

Title of bill

An act to amend the uniform commercial code and the general business law, in relation to prohibiting auto lenders from remotely disabling a vehicle without first giving notice of the disabling to the borrower

Purpose

The bill prohibits auto lenders from remotely disabling a vehicle without first giving notice of the lender's ability to disable the vehicle ten days in advance of obtaining that right.

Summary of provisions

Section one of this bill amends Section 9-102(a) of the Uniform Commercial Code by adding new paragraph 60-a defining a "payment assurance device" as any device installed in a vehicle that can remotely disable that vehicle.

Section two of this bill amends Section 601 of the General Business Law by renumbering subdivision 10 as subdivision 11 and adding a new subdivision 10. This new subdivision prohibits auto lenders from remotely disabling vehicles without having first provided notice to the debtor in accordance with the method required by the contract between the debtor and the lender. This notice is to be postmarked no fewer than ten days prior to the date on which the lender obtains the right to remotely disable the vehicle.

Section three of this bill states that this act shall take effect immediately.

Justification

Auto lenders are currently allowed to install devices in cars that serve both as GPS tracking devices as well as remote ignition disablers. This allows these lenders to track their cars and, if the borrower is delinquent on payments, remotely disable the car. This presents a serious safety issue for those who borrow these cars.

The purpose of these devices is to make the repossession process more efficacious by tracking the vehicles location. However, the added step of remotely disabling a vehicle is unnecessary since these lenders can already track the cars. This disabling device is important to have in vehicles for theft situations, but should be used for lending purposes only after the lender has made significant efforts to make the borrower aware.

We have seen instances where these devices have led to severe safety risks. In 2014, a woman in Las Vegas needed to drive her ten year old son to the emergency room because he had an asthma attack and a 103.5 degree fever, but was not able to because her lender disabled her car in the driveway over a $389 delinquent charge.

These lenders assure drivers that these devices will not be used while the vehicle is in motion, but there have been cases where vehicles have been disabled even on busy interstates. In 2012, a woman almost crashed because her car was remotely deactivated on a three-lane highway.

Sometimes, individuals have had their vehicles disabled in dangerous neighborhoods, and there is the possibility that individuals could have their vehicles disabled while on vacations or long trips, leaving them stranded far away from their homes, families and jobs.

This bill would provide that lenders give borrowers an additional written notice before they acquire the right to remotely disable a vehicle. This will be a minor requirement that would prevent these potential risks to borrowers' safety.

Legislative history

2015: S.5269 - Referred to Judiciary

Fiscal implications

None

Effective date

This act shall take effect immediately.