What are your Repossession Agents Doing?

As if you don’t have enough to worry about with the CFPB looking at auto consumer credit servicing activities and alleged unfair acts or practices (UDAPs) related to collecting incorrectly calculated deficiency balances and representations on deficiency balance notices, now comes word of a new practice by repossession agents that could land them and you, by extension, in hot water.

I’m hearing more and more about a very disturbing practice in the repossession services industry. I understand that some repossession agents are placing global positioning system (GPS) trackers on vehicles out for repossession, without the knowledge or consent of the car’s owner.  Do you know if your repo agents are engaged in this practice?

Here’s how I understand it typically works: A repossession agent locates a vehicle out for repossession, but their tow truck is not immediately available to “pop” the car. So, the repossession agent places a GPS unit on the car so he/she can track it for later repo. Later in the day or night the tow truck driver uses the GPS tracker to locate the car and repossesses it.

I’m told these situations normally arise out of the use of license plate recognition (LPR) technology that allows a driver to electronically scan a car’s license plate. If you’re not familiar with LPR, it is a scanning technology that uses optical character recognition (OCR) to automatically read license plate characters and compare them to a database of license plates (in this case, a database of vehicles out for repo). The LPR system uses a car-mounted camera and integrated software to automatically scan license plates and determine whether a vehicle is out for repo.

GPS units allow a recovery agent to use more cars with LPR technology installed on them with fewer tow trucks; LPR technology costs less than a shiny new, or probably even slightly used, tow truck. This also means that repossession agents will use these GPS devices more often, since a tow truck could take hours to get to a vehicle.

Let’s take a look at how one state law may impact the use of a GPS device. Texas law permits an electronic tracking device to be installed on a vehicle subject to the prior consent of the buyer or lessor of the vehicle. Under the Texas Penal Code, a person commits a Class A misdemeanor by knowingly installing an electronic or mechanical tracking device on a motor vehicle owned or leased by another person. However, a person installing the electronic tracking device is not subject to criminal penalties if the person obtained the effective consent of the owner or lessee of the motor vehicle before the electronic or mechanical tracking device was installed.

If the repossession agent or employee doesn’t get the owner’s or lessee’s consent before the GPS device is installed on the vehicle, the agent or employee would be at risk of violating the law and being charged with a misdemeanor if the GPS installation was without the owner’s or lessor’s consent.

What if the state has an “anti-stalker” statute that provides the installation of a tracking device on a car without the owner or driver’s consent would be considered the offense of stalking? How’d you like your repo agent to be accused of (and possibly found guilty of) stalking?

The repossession company may also be in violation of its agreement with the secured party/creditor (e.g., in which they’ve represented and warranted they will comply with federal and state law when providing their repossession services).

Finally, let me turn to the “dark side” and put my consumer plaintiff’s hat on for a minute. If my client had her car repossessed and I learned that the repossession agent placed a GPS device on my client’s car without her knowledge or consent in order to track the vehicle, you can bet I’m filing suit against the repossession company, repossession agent and you, the secured party/creditor, for violating my client’s privacy by installing the device on her car without her knowledge or permission.

Maybe I decide I want to sweeten the pot a bit, I would like a shiny new boat for the lake this summer. So, I file my lawsuit as a class action suit on behalf of all other similarly situated persons against the repossession company, repossession agent and the secured party/creditor for violating my clients’ privacy and committing acts or practices that were unfair, deceptive or violative of public policy. With many state statutes providing statutory damages, attorneys’ fees and costs and the possibility of treble damages, why wouldn’t I file this action as a class action?

It’s 10 p.m. – do you know that your repossession agents aren’t engaging in this practice and installing these GPS devices on the assigned cars without the buyer’s knowledge or consent?

The NAF Legal Committee will continue to keep you informed about legal and regulatory changes of interest to the subprime auto finance industry.

Eric Johnson
Eric L. Johnson is a partner in the Oklahoma City, OK office of Hudson Cook, LLP. Eric can be reached at (405) 602-3812 or [email protected] This article is provided for informational purposes and is not intended nor should it be taken as legal advice. ©Copyright 2018 Eric L. Johnson. All rights reserved. Single print publication rights National Automotive Finance Association.