Selected by CIO Review as one of the Top 20 Most Promising Automotive Tech Solution Providers in 2014.
-Mark Behnke, RVP Automotive Solutions
In light of the recent BHPH bill regulations taking place in California, I decided to do some research on the effects GPS vehicle tracking could possibly have on an “all knowing” consumer. i.e. a <subprime credit> consumer being made aware that there was a GPS vehicle tracking device placed in their vehicle…during the sale and before the vehicle was driven off the lot. Why not? People are so quick to rush to the assumption that full disclosure may be a bad thing with a negative impact. One reason for this assumption is over the past decade, one of the largest obstacles GPS vehicle tracking providers have had to overcome to achieve wide scale acceptance was legal compliance. In most cases, the first step to legal compliance comes in device disclosure. In 2011 the NABD compiled a device survey of sorts and the results of the survey confirm the importance of disclosure, as more than 90% of respondents indicated they disclose the device to the borrower.
Disclosing the use of a GPS vehicle tracking device not only protects the financer’s liability but, according to the survey, also has a psychological impact on the borrower. One objection to disclosing the use of the device to the borrower was the fear the prospective customer would go elsewhere to purchase a vehicle? This fear is warranted and would be a natural reaction any dealer would have, but I feel it is important to point out that the study clearly shows that only approximately 1% of those surveyed found that their customers actually objected to having the devices installed as a condition of the installment contract, which further evidences that these devices have gained more widespread acceptance over the last decade.
One of the single best ways to succeed when utilizing GPS vehicle tracking devices is to disclose the device to the customer. Disclosing the device is a positive way to get “buy-in” from the customer, and to reduce the likelihood they will become delinquent. In many cases, written disclosures are provided to the borrower. Such disclosures make the customer aware of how the device operates and of their responsibility aka ‘Payment Reminder.”
They also provide the financer a release of liability from a legal standpoint. Additional benefits of disclosure include a psychological deterrent to the customer who knows the device is installed on their vehicle. Let’s think for a minute, even with good standing credit and a rating of 650, if YOU knew there was a GPS vehicle tracking device with Starter Disable on your vehicle, would you think twice about missing a payment? Yes. It’s all part of the natural psyche and how the mind operates. With negative behavior comes a consequence….. The use of GPS vehicle tracking as a ‘payment reminder” is no different than experiments that took place with Pavlov and his salivating dogs. We are all creatures of habit and whether it is to check the mail or make a car payment…a triggered response will create action.
It is important to point out that there are some states (a very small number, but it does exist nonetheless) where the use of GPS vehicle tracking devices is prohibited without consumer consent. With that said, I’d recommend all dealers to know their exact states rules thoroughly and encourage everyone to seek the advice of knowledgeable legal counsel before implementing any GPS vehicle tracking devices whatsoever.