Starter Interrupters Expose Lenders to SCRA Risks
Law360John C. Redding, Sasha Leonhardt, Alex Dempsey
As the subprime auto loan market has grown over the past few years, so too have the number of starter interrupters in use. According to a recent New York Times story, these devices have been installed in approximately 2 million vehicles and are used in about one-quarter of all subprime auto loans. With the expanded prevalence of starter interrupters, however, creditors have also seen an uptick in concerns about their usage; borrowers have complained that their vehicles were disabled while driving on the freeway, while idling in a dangerous part of town, and when borrowers were current on their payments.
Although starter interrupters have been around since the 1990s, courts and regulators have not yet explored all of the legal implications surrounding this technology, and we are aware of no cases discussing the SCRA implications of utilizing a starter interrupter system. Although regulators have focused their SCRA activities primarily upon home mortgage loans, they have also focused on other types of consumer lending, including auto loans.