PassTime’s Approach to Compliance with New York SB 2484
On October 2, 2018, Governor Cuomo signed NY SB 2484 (also found at 2018 Laws of New York Chapter 312). Effective immediately, NY SB 2482 restricts the use of starter interrupt devices in order to repossess a debtor’s vehicle.
Prior to using starter interrupt technology to disable a vehicle in order to repossess it, the law requires:
- The creditor and the consumer to agree, in the initial contract, on the method and timetable for remotely disabling the starter of the vehicle. Although the initial contract could mean the motor vehicle retail installment sale contract, arguably an addendum to the contract (the PASSTIME® SYSTEM DISCLOSURE STATEMENT AND AGREEMENT FOR INSTALLATION) satisfies the agreement requirement.
- The creditor must send the consumer a certified or registered notice to the consumer informing the consumer of the possibility of disabling the starter of the vehicle. The method and timetable set forth in the notice must be consistent with the agreements in the initial contract. The notice must be postmarked at least 10 days prior to the date of default, which is when the creditor obtains the right to remotely disable the vehicle. The notice must be sent to the address at which the consumer will be residing on the expected date of remote disabling.
PassTime Recommended Approach to NYSB 2484
After internal review and consultation with compliance counsel, PassTime believes the approach outlined below satisfies the requirements of the new law:
PassTime has revised the PASSTIME® SYSTEM DISCLOSURE STATEMENT AND AGREEMENT FOR INSTALLATION (Agreement) to explain the required notice, method and timetable for possible disablement. The new Disclosure is available in the Help Section of OASIS.
Disablement for Repossession:
The law requires notice prior to the use of disablement in order to repossess a vehicle. Although disablement could lead to a physical repossession, many creditors use the technology as a payment reminder or payment training system. In this instance, the creditor should not have to give the notice; however, because use of starter interrupt technology can lead to repossession, PassTime recommends that creditors provide the notice to all consumers whose vehicle contain starter interrupt technology.
Notice and Timing:
The notice must be sent certified or registered mail to the last known residence address of the consumer. PassTime recommends that creditors provide the notice within one to two days of contract origination, but no less than 10 days prior to the time the creditor obtains the right to disable the vehicle (first default). A creditor MAY NOT disable the starter of the vehicle before 10 days have passed since the date the notice was sent.
Because the notice must be sent to the address at which the consumer will be residing on the expected date of remote disabling, PassTime recommends that creditors send out another notice to the consumer upon receipt of a change of address by the consumer.
Content of Notice:
The notice must contain the method and timetable agreed upon by the creditor and consumer at contract origination. PassTime suggests that the creditor include in the notice the following:
- Information sufficient to identify the transaction;
- The payment schedule as set forth in the Contract;
- The events of default as set forth in the Contract;
- A statement similar to the following:
“If you default, we may disable the starter of your vehicle. We do not have to wait to disable your vehicle. If we do not immediately disable the starter of your vehicle upon default, we do not waive our right to disable the starter of your vehicle.
We are required by law to send you this notice of possible disablement by registered or certified mail. This notice does not mean you are in default. We apologize for any extra time or inconvenience getting this notice may cause you.”
- Although silent on the issue, PassTime recommends that lessors using starter interrupt technology comply with the law.
- This law does NOT affect the use of GPS-only devices in NY. Creditors using GPS-only do not have to provide notice of possible disablement.
Other Considerations of the Statute
The primary purpose of this technology is to establish communication between the creditor and the consumer so that the consumer makes a payment and remains in the vehicle, rather than to effectuate a repossession. That said, please note that the statute could be read to require a notice during each payment period after which the creditor intends to disable the starter of the vehicle. This possible reading results in a practice (sending many notices through the term of the contract) that is cost prohibitive, but could also be confusing and potentially alarming to the consumer receiving the notice. Because it is unclear if a notice must be sent multiple times during the term of the contract, a consumer might argue that his/her receipt of multiple notices is an abusive act or practice of harassment under collection practices laws.
For more information on NY SB 2484 and PassTime’s approach to compliance with the law, contact Corinne Kirkendall, VP of Compliance and Regulatory Affairs at (303) 962-4102 or firstname.lastname@example.org.