Sales booming in remote-kill devices for cars sold to poor credit-risks

Sales are booming for lo-jack style devices designed to remotely kill cars when their owners fall behind on payments. These cars are sold to people whose credit has been downchecked to "B," on lots where cars cost more, loan terms are worse, and they contain GPS units that make the car's location continuously available to the dealer, credit-company (and others) so that they can more easily repossess the cars.

Companies such as OnStar are beginning to make use of their remote controls for purposes other than theft prevention: for example, the company promises to throttle the engine of any car that they're told is involved in a police chase.

Presumably these remote-kill devices are no better or worse secured than, say, the tax-records of every British parent (repeatedly lost by the tax authority), or the computer systems of giant credit-reporting bureaus, or the networks of the 100+ embassies and foreign service offices penetrated by the GhostNet espionage ring.

Designing devices that are intended to be remotely disabled, against the owner's wishes, is like designing one of those science-fiction-movie spaceships with the inconveniently placed "self-destruct" button. I always wondered about those: wouldn't starship engineers turn out a better product if they designed it from the ground up never to explode?

And wouldn't these cars be more secure if they were designed never to be remotely controlled against the owner's wishes?

The devices, which are required by a growing number of subprime loan contracts, are the product of a revolution in telematics -- the blending of telecommunications and wireless technology.

The devices are usually controlled remotely by the dealer or lender and are linked to the vehicle's powertrain. They usually cut out the power several days after the payment is due. Before the deadline, the driver is treated to a concert of tones and flashing indicators signaling that the deadline is approaching. There are also warnings after the deadline has passed.

Their proponents call the devices a win-win for consumers and finance companies. They make it possible for dealers to sell cars to people who would have a hard time getting a loan otherwise. The buyers end up paying a somewhat lower interest rate because the risk to the lender is less.

The products also include global positioning, or GPS, to speed up the repossession of the vehicle, if necessary.

CNN article

• [Anonymous]

  If you want to get rid of these devices, then aren’t you hurting the people who otherwise wouldn’t be able to get a car loan, or would have to pay more for it?

  It’s a little hypocritical for well-off people to tell poor people that they don’t want to be tracked. If you had the choice of no car, or a car that tracks you, are you sure you’d choose the former?

• [Anonymous]

  #19 RedShirt77

  “I hate the logic that says that the Bank owns my house and car until the last dime is payed. It’s just BS.”

  It is BS to say that the bank owns your mortgaged house until you pay it off but it’s perfectly correct to say that a financed car doesn’t belong to you.

  Scenario: You want a house,
  Problem: except you haven’t got the money you need to buy a house.
  Solution: You go to a bank, they loan you the money you need to buy a house so that you can pay the owner of the house to transfer the title to your name.
  Bank’s agreement: The bank gives you a period of time (many years) to pay the debt back, so that you never need to hand over the full price of a house because that’s impossible for the vast majority of people.
  Your agreement: In return you agree to pay the loan back and if you fail you agree to put the house up as security. (Many banks also want insurance in case you -die-)

  You own the house because you’ve paid the agreed price for it. Of course you paid for it with someone else’s money that you have to pay back, that’s how debts work. But since you own the house you can give it to the bank to clear your debt to them. If you had the remaining value of the mortgage available to you in money you could just pay them. The problem is when banks get greedy (I know, right?) and increase their request for payments or interest rate to beyond what the customer can handle and/or get dogmatic about payment schedules. That’s a different issue though and you still own houses you’ve bought until you swap them with getting rid of the debt.

  Scenario: You want a car,
  Problem: except you haven’t got the money you need to buy a car.
  Solution: You go to a dealer and arrange a contract with their finance company to buy a car for you.
  Finance agreement: They give you the car and you settle their balance over a period of time. When the balance is settled the finance company agree to give you title.
  Your agreement: You agree to pay for the car in the installments the contract says

  You don’t own the car until you’ve paid the agreed price for it, the finance company does. We see this every day – if a bar of chocolate in a shop costs £1 and I pay 50p (or half of the instalments) of that, can I eat all of it? Can I eat any of it?

• [Anonymous]

  @ #5
  The lender owns the car. That would be a violation of your agreement.

• [Teller]

  A wicked smart and shitty idea. One person behind in his/her payments rushing someone to the hospital will win a lawsuit. I PREDICT.

• [teight]

  Give it a few years, and every car will be required by law to have a remote kill device that law enforcement can use to disable vehicles during potentially deadly car chases, thus ending the beloved “Deadliest Car Chases” programs. =(

• [hooeezit]

  I wonder about the security of the communication channel between the car and the control center. I have built remote monitoring devices that are currently being used in industrial vehicles. Due to cost concerns, there is zero security on the device. It will take a hacker a few minutes to figure out the locks and gain full control.

  If I were a black-hat, I’d definitely go on a rampage disabling cars. With so much noise (i.e., cars getting disabled without the lending agency having any clue), at least the current breed of remote control devices will go down the tube. Any script-kiddie up for the challenge?

• [archanoid]

  @14 the idea isn’t to buy a “new” used car every six months.

  Buy a decent used $1000 car (if you know anything about cars you can get one that is mechanically sound but not necessarily aesthetically pleasing for under that or less).

  Say it lasts you six months before it dies (it will eventually, but should make it to a year mark anyway but we’ll go conservative and say six months).

  Every month you pay yourself a $250 car payment.

  In six months you have $1500. Spend it on another used car that will last you a year. At the end of that year, you have $3000. (You’re still paying yourself a car payment every month aren’t you?) Spend it on a better used car (still considering road-worthiness, not how cool the car looks or what it “says about you” or any of that crap). It’ll last you two years.

  Then you’ll have $6000. Trade up for a better used car that will last you three years. Keep paying yourself. Now you have $9000. Buy a used BMW, Infiniti, Honda, Audi, Volvo, etc. that will last you four or five years.

  Keep paying yourself. In five years, you’ll have $15,000. Continuing this pattern will get you to the point where you can buy a car that is at most two years old, low mileage, single owner, in excellent condition…for cash.

  The problem is discipline. Not many will continue to pay themselves a car payment every month but will skip a month when their favorite new shiny object becomes available.

  Personally, I drive a 1996 Honda Accord that has had way less than the suggested scheduled maintenance over the years. Frankly, I’ve taken very poor care of it over the years. Yet, it’s JUST NOW starting to have problems. In over 10 years, it has required less than $1000 in repairs. (Not including routine maintenance, new tires every so often, etc.)

  Don’t buy an old used Chrysler. It won’t last six months.

  And perhaps never being more apropos: YMMV.

• [cory]

  “Their proponents call the devices a win-win for consumers and finance companies. They make it possible for dealers to sell cars to people who would have a hard time getting a loan otherwise.”

  What a crock of shmit. People have always been able to get a car loan. If you buy a car in a low-income part of town, you’re probably buying a car that has been sold and repossessed multiple times for the dealer. They make plenty of money off broke people who can’t pay their loans back.

  This is just to make the repossession transaction a little more profitable for them, not less risky.

• [Gorbash]

  I’m sorry, but if you have bad credit, and a low paying job and you buy a new car and then can’t make the payments? The car company/bank has every right to shut off your car and take it back.

  And to have OnStar shut off cars in high speed pursuits? That just brilliant, why don’t all cars have this?Think of the savings to property damage, and no more loss of life to the people some junkie rams into when he loses control of the car. This is just common sense.

  Must be a slow news day…

• [Elvis Pelt]

  Never drive any car made after 1969.

• [Gutierrez]

  Good in theory, but I’d think actuve control while driving is a horrible idea. All it takes is one kid who’s not thinking shutting down a car or two on a open highway to cause some real problems. A kill switch allowing you to keep the car from turning back on after stopping is a more responsible design.

  But why not for saftey’s sake throttle all vehicles to the speed limit based on location? It’s all slippery slope, but this could be a huge mess if overused.

• [Summer]

  I’m waiting for this scenario to play out:

  Joe and Jane are in a troubled marriage. Joe is, among other things, a vindictive, abusive a**hole. After several years of marriage and the birth of two children, Jane finally gets up the nerve to leave him, and takes the kids. Being now a single mother, Jane isn’t exactly awash in cash, and what’s worse, Joe often neglects his child-support payments. Needing a car in order to get the the two jobs that permit her to support herself and the children, Jane purchases one of these automobiles with the kill-switch installed. A few months later, she gets downsized from one of her jobs and falls behind on the car payment because Joe still has not paid his child support. Meanwhile, Joe, being the a**hole that he is, has become convinced that Jane is seeing someone else, and in his abuser’s desire to control her, despite the fact that they are divorced, is now stalking her. One night, as Jane – often the last person out of her workplace after closing it up at night – is getting into her car, Joe shows up and threatens her with physical violence. Unfortunately, this is also the night when the remote killswitch has been thrown, and Jane’s car won’t start. Unable to get away, Jane falls victim to her ex-husband’s attacks and is either killed, or severely injured. Lawsuits ensue, as does much media attention.

• [archanoid]

  As a followup to my post where I said “Don’t buy an old used Chrysler. It won’t last six months…”

  I’d like to add that this is just my opinion. It is not based on any facts that I am aware of. Chrysler automobiles may be paragons of reliability and an old used Chrysler may last you 20 years. Or it may fall apart before you drive it home.

  How the hell should I know either way?

  There…don’t sue me, Chrysler.

• [Anonymous]

  I’m tempted to quote Prophet Mohammed and statements about “Pigs that devour usury” and their need to be beheaded.

  My problem with this is that the only way this type of scheme makes financial sense is if these people are the ‘check cashing’ places of the auto industry. “Sub-Prime” is a keyword for “Predatory Lending” or the old fashioned term, “Usury”.

  Even back in the days when you could openly marry a 9 year old, kill your neighbor in a declared duel and smoke whatever weed your body could stand, the crime of Usury was punished by beheading. And about every major religious figure has proscribed damnation for it. That includes Isa (Jesus) who said the rich elite “have already received their portion”.

  Usury is destructive to a society for it disrupts the money supply, eventually leading to collapse and either a brutal restructuring or a revolution. There are some good YouTube videos on the “Corrupt Banking system” that outline the problem. Money does not magically “Grow” sitting in a bank vault, and the method the banker uses to get rich steals from society. In the past, the banks collapsed, sometimes taking societies with them briefly. Now, thanks to the Usurers learning the error of their ways things are getting worse because an almost infinite amount of fake money is printed -but- the Usurers are wise to their own game and so demand greater and greater portions.

  I say it is far past time a Jubilee be declared and strong action be brought against those that buy, sell and feed off of the labors of others.

• [GregLondon]

  This will continue for a few more years and then on 1 April 2012, the Grimlock Virus will shut down ever single automobile everywhere in the world at 5 pm.

  It will take several days to clear the roads.

• [RevEng]

  It’s an obvious use of the technology, and yet nobody expects that their friendly “How may I help you?” OnStar could one day become Big Brother/SkyNet, killing the engine, calling the cops, and giving them GPS coordinates to find you at.

  The security implications cut both ways. On the one hand, Joe Random Hacker can find out where you are, kill your engine, and unlock your doors — it’s a stalker’s/theif’s dream come true. One the other hand, Poor Mr. Fix-it can just disable the device entirely (probably with a simple snip of an antenna wire) and remove the smarmy loanshark’s insurance piece from the picture.

  There are two questionable uses demonstrated here: contract conditions and police interference. For the contract conditions, one could argue that people shouldn’t sign contracts with those conditions in place. Of course, when such conditions become common place (like today’s EULAs), consumers won’t have a choice, and for many people, whether or not to have a vehicle isn’t a choice. Still, you sign a legal contract, you get what you paid for.

  On the other hand are the police. The police don’t have any right to be shutting down your car remotely, or to be asking OnStar to do it for you. In fact, OnStar shutting down your car without your permission would be itself a breach of contract (and potentially lethal if done while driving). However, our friend the license agreement almost definitely absolves them of this — no guarantees of service, no liability for anything, and they may do whatever they want with your car whenever they feel like it. There is probably even an explicit clause for cooperating with law enforcement.

  So once again, almost every abuse that can be perpetrated is legal because of the Draconian licenses that we sign for all of our purchases. Most reasonable persons would find these terms unconscionable, but the legal system has repeatedly ruled that 50 pg. shrink-wrapped, click-through licenses are both conscionable and reasonable — not surprising that the judges think being entangled in legalese is normal and reasonable.

• [Summer]

  Elvis Pelt, #35: You mean don’t trust any car under 40?

• [Brainspore]

  Some day pacemakers will be fitted with these devices to make sure you pay your medical bills.

  Though I really don’t have that much sympathy for people who buy new cars they can’t afford when there are so many used ones out there.

• [Anonymous]

  The problem is I have one of those cars and the dealer threatens to turn the car off after only about 7 days late. With a traditional loan the people are more reasonable. I asked the collections manager for a couple of extra days to pay. The answer is no cause I can just remotely cut your car off. If they had to physically come out there and reposses, they’d more willing to work with you.

• [Anonymous]

  Dealers of this type have a distinct business model — sell car to shlub who can’t pay, at exorbitant interest rates — collect for a while, then the first time there’s a late or short payment, no matter how minor, repossess car so you can resell it tomorrow.

  Now you have every penny he ever paid you, and the car besides. Win! Bonus points for deliberately imposing check-cashing ‘administrative delays’!

  Also:
  When governments print more money to cover banking-industry shortfalls, EVERYONE loses buying power. Luckily for the bankers, they knew it was coming and planned accordingly. Seriously, people, EVERY DECADE! The bankers make people without loans poorer.

• [Anonymous]

  What if they deactivate your car in a BAD AREA?

• [RevEng]

  @#9: That’s a rather myopic view of the potential victims of this technology. Not everybody with a B credit rating is a deadbeat who buys things they can’t afford — many of them were well-to-do before they lost their job. You’ll be seeing a lot more of that with the worldwide economic crisis.

  Also, buying a new car on credit vs. a used car with cash isn’t necessarily a bad idea — especially if you are poor. While the new car may have a large price tag, you can be reasonably assured that all it will require is the monthly payments — a new car shouldn’t need regular maintenance. Compare that to a used car, which may need several hundred dollars of maintenance every year, and is more likely to require unexpected fixes over a thousand dollars — a poor person can’t afford unexpected $1000 bills.

  The problem isn’t the couple of reasonable examples that you have given, but rather the untold potential for abuse. Security in these types of devices is typically poor or non-existant, while the threat of attacking one of these systems is huge. Could you imagine the hayday a car theif would have unlocking every car on the block remotely? Or the mayhem (and potential loss of life) wrought by shutting down cars as they drove along a freeway? What about a rapist or murderer using those GPS coordinates to track their next victim? With great power comes great responsibility.

• [Anonymous]

  #37 Firstly, you’re good as quoting the Prophet (peace be upon him) and using YouTube videos as a reference source? In the same post? My mind has boggled.

  Secondly, in the old fashioned sense “usury” (coming from the Latin meaning “interest”) meant “loaning money with interest”. It’s a nitpick but actually you mean the new meaning which has been applied to it.

  Money doesn’t grow sitting in a bank vault. It grows because you can loan it out to other people who need it and charge interest. It’s really that simple. Usury is a sin and, funnily enough, the centre of a modern economy.

  You believe it’s time for a jubilee to be declared so all slaves should be freed and all debts should be waived. I’m not the cynical type but… you wouldn’t happen to owe money would you?

• [Anonymous]

  Do you suppose this will lead to “pay as you go” car leasing? Pay per mile, and when you reach your quota, the car will not run until you buy more miles. Could be useful for urban car owners who do not drive on a regular basis.

  Yes, I know this is essentially what Zipcar and the like are for, but this way you could still have your own personal vehicle.

• [Anonymous]

  #4 I wouldn’t want to pay title, taxes, and plates every 6 months, especially in my state (Maryland), ouch!

• [David Bruce Murray]

  The idea of a car dealer (new or used) being able to remotely shut off a car I’m driving is pretty disturbing.

  What if they just want me to bring it in so they can profit from a fake repair?

  The temptation would always be there for them to remotely tamper with the car. Even worse, they could program the engine to just skip, so it’s not so obvious that they’re deliberately disabling the car.

  I know the potential is also there for services like OnStar to save lives and relieve inconvenience when keys are locked in the vehicle, etc. I have some mixed feelings about whether this is good or bad overall.

  On the kill switch installed by a used car dealer, though, there should be a law requiring that the dealer remove the device once the car is paid in full.

• [Anonymous]

  Well, the self-destruct system on the Enterprise was usually used to scuttle the vessel before it could be taken over by enemy forces, so it was pretty useful in that regard. It’s not like people haven’t scuttled naval vessels for the same reason.

• [Halloween Jack]

  Wow, all these people (assuming that the Anonymice aren’t the same person) who are posting on BB without seeming to understand the relation that this new gadget has to DRM: it’s only going to punish those people who agree to play along with it.

  If this gets more popular, I guarantee that you will see the following happen:

  1) Once cops can remotely turn off your car, they will charge you to turn it back on, regardless of whether or not you’re guilty of speeding or whatever premise they had for deactivating the car in the first place. (See “towing fees” for precedent.) Appealing this will cost quite a bit more in attorney’s fees and lost work time than the reactivation fee, and if you decide to appeal anyway, the judge will blame you for clogging up his already overbooked court schedule.

  2) Cheap used car places will use cheap remote deactivation switches that can be defeated with a couple of lengths of wire and alligator clips.

  3) Rachel Maddow will do a news segment on someone who lost their job because GM was slow on reactivating their car after they used OnStar to turn it off. No more bailouts for GM.

  4) Extremely short-sighted car dealers will add a surcharge for these systems to new car prices, and an even larger surcharge to have it removed. They, too, will go out of business.

  5) A few states will try to make these mandatory for cars licensed in their states; one state–probably one that also has a number of speed-trap towns–will try to make them mandatory for any car going through their state, and will repeal the law within two years, although not fast enough to save what’s left of their tourist industry.

• [RedShirt77]

  I hate the logic that says that the Bank owns my house and car until the last dime is payed. It’s just BS. In every other way ownership and responsibility are on the individual. The bank doesn’t ensure the car or the house. They hardly ever mow the lawn. The Car and house are collateral on the loans. If I buy a US bond can I strap a GPS unit on a tank for as long as I hold the dept? Can a Bank rep walk into your beadroom at any time and see what you are up to? No and they shouldn’t be allowed to check in on what your car is doing every minute of every day.

• [Anonymous]

  Could we have a link for the quoted article?

  • [Antinous / Moderator]

    Fixed.

• [coliver]

  Well…put yourself in the car company’s shoes. I know, I know, all big companies are evil etc., but seriously. The more money they have to waste tracking down people who won’t pay for their cars, the more overhead they have and the more cars cost us. Don’t want them to track down the deadbeats? Then the (basically stolen) cars are overhead and we still all pay more.

  I got a call years ago from someone at Saturn who was trying to track down my loser XBF. Seems he had bought a new car and then never made a single payment on it, and promptly moved to a new apartment. I told the lady quite honestly that if I knew where he was I’d tell her.

  I agree that it would be much safer to have the switch set so that a targeted car can’t be turned on, rather than being turned off while running. But I kinda understand where they’re coming from.

• [The Unusual Suspect]

  SPOCK: Reliant’s prefix number is one-six-three-zero-nine.

  SAAVIK: I don’t understand -

  KIRK: You have got to learn WHY things work on a starship.

  SPOCK: Each ship has its own combination code…

  KIRK: … to prevent an enemy to do what we’re attempting; using our console to order Reliant to lower her shields…

  SPOCK: Assuming he hasn’t changed the combination. He’s quite intelligent…

• [Anonymous]

  What is the source? There’s no link below the quoted text.

• [Anonymous]

  i had bought a car and was a few payments behind , i talked to the dealer because the car had problems, i called one day i think i needed a starter , the car was killed, i was out of town for the holidays, i went to get it towed and fixed , come to find out that the dealer was there towing my car away, it wasnt in my contract to have this device installed, now he has the car back and is trying to sell in within 30 days of getting it back, this is bull, now he says he will sale me another car if he can put a kill device in with a 25 mile limit , i work out of town, this is bull

• [IWood]

  THE OPERATIVE: We locked on to Serenity’s pulse beacon the moment you hit atmo. I can speak a word and send a missile to that exact location inside of three minutes.

  Mal pulls out a small device with clipped wires sticking out of it, and tosses it to THE OPERATIVE

  MAL: You do that, you’d best make peace with your dear and fluffy lord.

  THE OPERATIVE: Pulse beacon.

  MAL: Advice from an old tracker: you want to find someone, use your eyes.

• [Anonymous]

  Cory,

  I think the point you’re trying to make is that remotely controlling a car owned by someone else is cause for privacy concern. I agree.

  But those who finance a car aren’t car owners until they pay off the loan. The financing company owns the car in the meanwhile.

  As a result, I think this is a pretty good way to reduce risk (and cost) on both sides.

  PS – promise I’m not a shill for the auto financing industry!

• [SKR]

  It isn’t much of a stretch to argue that this isn’t against the will of the owner. The owner in this case would be the bank that holds the loan. Until the loan is paid off, the person using the vehicle doesn’t truly own it. I’m not sure I really buy that argument, but at least the entity loaning the money has a place to obtain concessions from the leasee.

  Now with regards to a throttle limiter for any car involved in a police chase, I agree that use seems excessive. Unless I can pay much much less if my car is so crippled.

• [mwschmeer]

  Remote kill devices favor the loaning institutions; what recourse does the loan holder have to make sure the bank fulfills its contracted obligations to the loanee: not raise rates, change the loan terms, etc.? Can we put a remote kill device on ATMs so if a bank screws with our loan terms we can stop them from earning money?

  But seriously, these loaning agencies are essentially saying that the consequences of defaulting on a loan are no longer enough to stop people from fulfilling their contracted obligations. So, they have to threaten the very people they are making money off of (in the form of interest on the loan) with the very real possibility of being placed in a life-threatening situation should some script-kiddie with badass blackbox skills decides to get all homicidal on a Saturday afternoon.

  The real issue for me is that this all comes down to trust. In exchange for loaning you the money to purchase a car, the loaning agency (be it a bank, credit union, or GMAC-like financial company) essentially is trusting that you will pay back the loan because you have a legally-enforceable contract, and the penalties of not paying back the loan are, supposedly, a significant enough deterrent to prevent loan default.

  By embracing these devices, loan agencies are admitting that the legal ramifications of defaulting on a loan–lowered credit scores, less access to credit, nasty note in the permanent file, etc.–don’t work for some customers. They can not longer trust their customers. Well, here’s an idea, STOP LOANING MONEY TO PEOPLE WHO CAN’T REPAY IT! Jesus, you’d think a deflated housing bubble, economic recession, billion dollar bank bailouts, and mortgaging future tax revenues in a nearly trillion dollar stimulus package would teach people to return to some basic banking prinicples beyond “Pay at 3%, loan at 6%”.

• [Anonymous]

  This sounds like one shocking motorway disaster away from a complete ban but this is sort of the logical result, the people sign a contract saying “I’ll own this car after the last payment” but then don’t make the last payment.

  It’s not as if you can just let everyone keep the cars. They belong to someone else. You can (try to) take the cars, charge the poor people admin fees and leave them without transport or you can leave them without transport and collect the car at your leisure for less expense.

  I completely agree with everyone who argues that you should make it so that the car can’t be turned on rather than stopped dead when it’s potentially on a motorway (don’t some cars lose brakes and power steering when the engine’s turned off?) when it’s activated but that might lead to partial re-enactments of the movie “Speed”.

  Ironically – the recaptcha for this message was “mortgage minimal”

• [angusm]

  “A repo man spends his life getting into intense situations. Just the other day I had to remotely disable six vehicles before 9:30am. I hadn’t even had coffee yet.”

• [archanoid]

  In the next story: cottage industry pops up around disabling GPS units and remote control technology in automobiles.

  Buy used, folks…and buy old. No worries if your car only cost 1000 USD.

  Also, you can pay yourself $200 for six months and you’ve got enough for your next upgrade car, plus you can sell the one you bought at $1000 six months go for $800 and now you can afford a $2000 car.

  Rinse and repeat. Before you know it, you’re driving around in a $10,000 five year old BMW you paid cash for.

• [Guysmiley]

  Snip-snip goes the antenna wire.