The New Jersey Legislature has passed a bill that imposes disclosures and restrictions on the use of starter-interrupt devices, which auto lenders sometimes require be installed in vehicles when they approve loans to consumers with poor credit.
“There currently is no regulation in New Jersey regarding these types of devices,” Assemblyman Paul Moriarty, a co-sponsor of the bill, told Automotive News today.
“These devices are akin to having a predatory debt collector riding in the car with the borrower, ready to strike at the slightest mistake,” Moriarty said in a press release last month, after the New Jersey Senate passed the bill.
Gov. Chris Christie has until approximately Feb. 9 to sign, veto or conditionally veto the bill, said Jim Appleton, president of the New Jersey Coalition of Automotive Retailers. “If he does nothing, it becomes law automatically,” Appleton said.
The new rules probably wouldn’t affect NJCAR members very much, Appleton said. “It is rare that New Jersey new-car dealers do business with lending sources that use interrupt devices, and even those dealers who do, can certainly live with notifying customers about the device and requiring the lenders to abide by some reasonable rules about how and when they disable covered vehicles,” he said in an email.
Moriarty and other co-sponsors said in the press release that the starter-interrupt devices are a “safety” issue, suggesting that they can be used to disable a moving car -- something the industry stoutly denies.
“It’s incredibly unsafe. We need this bill to protect consumers,” Moriarty said in the release.
Another co-sponsor, Assemblyman Craig Coughlin, said, “This bill would protect consumers who purchase cars that come installed with payment assurance devices by preventing dealers from shutting cars off while they are being operated.”
Auto lenders and the manufacturers of starter-interrupt devices adamantly deny that the devices can be used to disable a moving car. Starter-interrupt devices are designed to prevent a car from being restarted once it’s been shut off, they say. Starter-interrupt devices equipped with GPS also aid in repossessions.
From the lenders’ point of view, starter-interrupt devices reduce risk and costs sufficiently to allow them to extend loans to customers who otherwise couldn’t get approved.
Nevertheless, a September 2014 article in the New York Times told of a frantic mother who couldn’t get her child to the emergency room because she couldn’t start her car. The article also cited a woman in Nevada who said her car was shut off while she was driving -- again, even though makers of starter-interrupters insist that the latter is impossible.
The New Jersey law would require that consumers receive written notice at delivery if a starter-interrupt device is installed. It also forbids lenders to activate the device until the customer is at least seven days late with a payment. Consumers also must have at least 72 hours notice before their car is disabled. In addition, consumers must be given up to 48 hours of access to the car in an emergency.
Also, the bill says lenders or their agents may not “remotely disable the motor vehicle while it is being operated.”