News 8 Investigates
DALLAS -- What if you woke up one morning to find your car gone? That's exactly what's happening to many low-income car buyers.
But their cars aren't being stolen. They're being repossessed. And some say those doing the repossessing are using an invasive, dehumanizing technology that violates customers' privacy.
A WFAA investigation has found auto dealerships are installing an increasing number of GPS tracking devices inside vehicles. The trackers -- usually about the size of an old-school pager and often buried behind the dashboard -- allow tote-the-note dealers and subprime lenders to quickly locate and repo vehicles of buyers who are late on their payments.
But a review of dozens of complaints to the Better Business Bureau, the Texas Attorney General and various blogs, WFAA has found many customers who claim they were unaware that they have been tracked with GPS devices. And many allege they weren’t late on their payments when their vehicles were repossessed.
“I was searching the parking lot, thinking maybe I didn't park it here,” said Regina Reese, whose car was repossessed. "What scared me the most is every dime we had to last for the whole week was in that car.”
Shimberlyn Walker also knows the feeling. Her new car vanished while she was on a business trip to Arizona, leaving her stranded more than a thousand miles from home.
“I felt very abandoned,” Walker said.
Across the nation, consumer groups and government regulators have raised privacy and disclosure concerns about the GPS trackers. The Federal Trade Commission recently launching an investigation.
Texas law requires the seller to tell the buyer about a tracking device -- in writing.
However, when WFAA looked at Walker’s contract, it said the dealer can immediately “take possession of the car," but did not mention GPS tracking.
“A lot of folks don’t even know these things are on their cars,” said Chris Kukla, executive vice president for the Center for Responsible Lending. “They’re not really given a choice. They’re told 'If you want this loan, you’re going to have to have this device on your car.'”
“These devices track where you go. They track not only where you are, but they track where you’ve been,” Kukla said. “They track how long the car has been at that location. They track what the location was. So, it is a lot of information that people are giving up.”
An estimated 70 percent of vehicles purchased with subprime loans come equipped with GPS trackers, according to a major GPS manufacturer.
The Federal Reserve says subprime loans make up about a third of all auto loans. About 6 million subprime auto loan holders are late on their payments.
That’s why GPS installers like Carlos Collazo say small “buy here, pay here” lots need such devices.
“It's our guarantee that we're going to get paid,” Collazo said. “It works both ways, you work with us, we work with you.”
It’s somewhat of a cat and mouse game. While Collazo installs trackers, A.C. Grayer makes a living removing them on behalf of car owners strapped with subprime loans. Grayer, who serves Atlanta and Chicago, documents his quests to remove the devices on YouTube.
“I've seen them under the hood, under the dash,” Grayer said. “I've found them under the seat even.”
Consumer advocates say the devices maximize dealership profits.
“Thirty percent of the loans they make are going to fail," Kukla said. "So, we know this is really not about making sure that people are getting loans that they can stay in. This is about getting them in loans, and if they go bad – and they go bad a lot – making sure that it is easy and cheap for them to get the car back so they can sell it again.”
Bottom line: Kukla and others believe many lots aren’t in the business of selling cars. They’re in the business of repo-ing them.”
“It's extremely lucrative for them” said local attorney Doug Scott, who specializes in auto dealer fraud lawsuits.
Scott said many contracts consumers sign at small dealerships are set up to fail. They have some common features: big cash-only down payments, bi-weekly or even weekly payments, zero grace period for late payments and topped off with sky-high interest rates.
The contract terms increase the chances that a buyer will default, Scott said.
“I've got one case in which there was a $10,000 car,” he said. “She put a $9,000 down-payment and they repossessed. She did not get her $9,000 back. That's absurd!”
When the buyer went to get her car at the dealership, they demanded an additional $5,850, according to a lawsuit Scott filed on her behalf. When the buyer said she could not afford the additional fee, she alleged the dealership suggested she “go across the street to a strip club to work.”
Phylissia Clark with the local Better Business Bureau said buyers should never rush into a purchase, and always take their time to read details ni a contract. She said the BBB attempts to monitor the business activities of such car dealerships.
“If we notice a pattern of a particular type of complaint in the company file, we will reach out to the business,” Clark said. Sometimes the BBB sends in send in undercover shoppers to probe business practices.
One BBB complainant, Shebranda Washington, said she badly needed a car.
“I was working at the time,” Washington said. “And I had a baby.”
Washington made a $500 cash down payment. Two months later the vehicle broke down. She lost her cool.
"I said, 'I'm tired of y'all, I oughta let y'all have this ragly piece of s***,'" Washington told the dealership.
But that didn’t sit well.
“I went to sleep and woke up about 3 or 4 that morning and my car was gone,” Washington said. “Mind you, my car note wasn't due for another two weeks.”
The dealership, in its response to the BBB complaints: said Washington’s "excessive profanity" placed the company’s “collateral in jeopardy.” So, they repossessed the car.
Only a few weeks later, Washington’s sister had her vehicle repossessed, even though she also said she was not late on her payment.
“Went upstairs, took a shower, came out and the car was gone,” Camisha Brice said. “Ugh. Used and abused. Because I work so hard to make sure I can keep up with that car. This is my way to work. This is my way to pick up my kids. I need this car.”
The dealership did not respond to our requests for an on-camera interview.
Need help avoiding an auto loan disaster? You've come to the right place.
We've gathered some consumer resources to you get the best auto loan for you.
Start here at the the federal Consumer Financial Protection Bureau.
The Attorney General's consumer protection division offers this advice when shopping for a new or used car.
Here's some tips from attorney Doug Scott:
No huge down payments. "If you have a large amount of money to put on a car you should not be giving it these dealers. Pay it out over time. Because it's been my experience that some dealerships, once they get that large payment from you, they have an incentive to then repossess the vehicle as quickly as possible and then sell it on to someone else."
Beware of common excuses small dealers use to say you're in default. "Such as 'You have purchased the wrong type of insurance. Or, you wait until the next day to buy the insurance or two days and that's not quickly enough for them. Or, they require you to come in weekly to make payments on the vehicle. They want you to come in on a Friday to make your payments, you get hung up at work, you come in on Saturday to make your payments and they repossess your vehicle."
Oral agreements mean nothing. "I hear all the time from people who say, 'I called them up and we had this agreement that I'd make a payment on such-and-such date.' But the problem is the only thing that matters is what is written. So you can have all the oral agreements you want to. But when it comes down to it, the written agreement is all that matters.
Read. Your. Paperwork. "Pay very close attention to the contract you're signing. And on those contracts are those boxes that show you the interest rate you are agreeing to, and the amount of money you are paying. Do not trust the pre-negotiations that you are talking through with the salesman. Just because your salesman tells you one thing on the lot, it does not matter what that person said. It's what you sign at the very end that matters. And another thing -- make sure you leave the dealership with that paperwork."
Remember, you can always walk away. "You don't have to enter into the deal if you don't like the terms."