Are you the one putting your business at risk? Yes, really – it might be you. Despite the record sales you’ve brought in – despite the cost saving measures you’ve put in place – despite the efficiency of the organizational procedures you’ve implemented. If you’re the person putting GPS tracking devices on the vehicles you’re selling – without disclosing it to the consumer – then you might be putting your business at risk.
The use of GPS devices to help mitigate the risk for creditors in the subprime auto finance industry has been around for a long time. Yet, even after all this time, there are GPS providers – and dealers or creditors – who STILL operate without obtaining written disclosure from the consumer when using this type of technology.
Let’s not kids ourselves. It is not the technology that’s the problem. It’s your choice not to disclose the use of that technology or failure to comply with state and federal regulations that is the problem. This decision could make you a threat to your own business.
Why should you be disclosing?
Well, depending upon your state, it might be illegal not to. Several states including California, New Jersey and Nevada have recently passed laws REQUIRING disclosure of GPS devices to the consumer. The laws vary by state on exactly what must be disclosed and exactly how it must be disclosed, but disclosure itself is not an option.
Even if it is not specifically illegal not to disclose in the states you are doing business, by choosing not to disclose the use of GPS devices to your customers, you are still exposing your business to some serious liability.
With Right-to-Cure laws, Consumer Protection Acts, Consumer Privacy Acts, not disclosing the use of the device could open you up to legal issues such as fines or even civil action.
Tom Hudson, partner at law firm Hudson Cook LLP encourages dealers to disclose the use of devices, stating, “Every state that has legalized devices by statute has also required a dealer or finance company to disclose that a vehicle has been equipped with a device. Further, more than one state has fined dealers for failing to disclose the devices for engaging in an unfair, deceptive or abusive act or practice. You’d have to be brain dead not to disclose the presence of the device.”
What might happen if you don’t disclose?
Of course, the CFPB could take notice of your position not to disclose. If you think you’re too small to get the attention of the CFPB, I wouldn’t count on it. Just look at Y King S Corp., which does business as Herbies Auto Sales, in Colorado. Last year, the company was ordered to pay $700,000 in redress to consumers for what the CFPB called violations in the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. Would the CFPB consider failing to disclose the use of GPS technology a violation as well?
It is fair to say that having a customer sign a written disclosure about the existence of a device, how it operates, and how it will be used by the creditor, helps reduce the liability of your company that could prevent a lawsuit or other type of consumer complaint.
So, if your GPS provider is saying you don’t need to disclose – maybe you should ask them if they are also offering to cover your legal fees or a potential fine from the CFPB or a class-action lawsuit for invasion of privacy down the road.
PassTime, an industry leading GPS provider offers technology that is compliant with state and federal regulations. Additionally, the company employs a certified compliance officer and offers advice and recommendations along with free webinars with the Hudson Cook law firm to its customers.
Does your provider do that?