We’ve experienced a run on issues related to GPS and starter interrupt devices lately, so we thought we’d give this subject some attention.

Is a device disclosure being provided? If so, who wrote it?

The existence of the installation of a GPS or starter interrupt device must be disclosed to the buyer of the vehicle. Most dealers add a document to the transaction closing package that accomplishes this and addresses how it will be used, privacy considerations, and other issues.

Many, if not all, of the prominent device providers have a standard document that satisfies the necessary criteria and can be programmed into the dealer’s DMS.

Sometimes, though, a dealer will want to take matters into their own hands and create their own document. This can have consequences.

In a recent self-made document we examined, it stated that “the device will be used to obtain location information in the event of default.” This language caused some heartburn, because most providers issue “parking reports” and other insights that show the location of the device is “pinged” more regularly.

It’s also common for the device location to be checked regularly to verify it is still working. Could a consumer argue that privacy was violated because the device was used in a manner that’s inconsistent with the contract? If so, is there a private right of action and damages available?

As with a lot of things in the law, the answer is “it depends,” as state laws can be different on this issue.

Why deal with this issue? Stick to the document the provider has taken the effort to have prepared.

Can I charge for installation?

Every once in a while, we will run across a dealer that is passing along the cost of the device, its installation, or both, to the buyer of the vehicle.

Proceed at your own risk!

Since the installation is mandatory, meaning the consumer isn’t being given a choice in the matter, charging for it may be illegal, plus the fact that the device is required for financing means it is a cost of credit and creates finance charge issues.

Instead, look at the investment being made in these devices, like the other costs of doing business like electricity, utilities, advertising etc.

Misrepresenting the device’s purpose

Every so often, we run across a dealer that markets the devices as a theft deterrent and states that the device will be used to determine location in the event it is stolen.

We have issues with this approach because if the devices are being hidden someplace on the vehicle, how exactly does that deter a thief? T

he device will also be used for a whole lot more than simply determining location in the event of a theft.

Several states have expressed similar concerns with this approach to labeling the device’s purpose, so again, lean on the device providers for a suitable document disclosure.

Conclusions

This week’s tip is pretty simple: There are lots of strong providers of GPS and SIDs in the industry. Lean on them for proper disclosures and information use of the devices and don’t create undue risk.

Steve Levine is an auto finance lawyer with over 30 years of experience protecting car dealers and finance companies. He is the Owner of Ignite Consulting Partners, which offers guidance on compliance, operations and best practices. He can be reached at [email protected]. He has authored two books on auto finance sales and compliance; Winning the Fight: A Guide to Protect Car Dealers, and Counterpunch: Compliance Strategies for Car Dealers. Both are available on Amazon. Follow Steve on Twitter @LawyerLevine for compliance and industry related content.