Starter Interrupt Nightmare

Many lenders, particularly lower down the credit scale, have embraced starter-interruption devices as a godsend. There can't be a greater motivation to pay a loan than the threat of an "interrupted" car.

Well, the starter-interruption devices didn't exactly work as planned down in Austin, Texas, recently -- and the episode should jolt manufacturers of these devices to improve their products.

What happened was a former employee of a Texas buy-here-pay-here called Texas Auto Center hacked into the starter-interruption system and proceed to lock down all the cars the dealership had outfitted with interrupt devices in late February. Reportedly, the former employee, Omar Ramos-Lopez, disabled or triggered the horns of more than 100 cars around Austin. Texas Auto Center had outfitted about 1,100 cars in all. Police arrested Ramos-Lopez last Tuesday.

Ramos-Lopez apparently gained access to a former dealership colleague's account on the starter-interruption system, called Webtech Plus, which is operated by Cleveland-based Pay Technologies. If that can happen, the system's security must be called into question. I understand why starter-interruption systems are such a boon to lenders, but that benefit evaporates immediately when such incidents occur. Right now, this is a one-off. Let's hope there is no repeat security breach.

Tags: bhph, loss-mitigation, pay-technologies, security, starter-interrupt, subprime, technology, texas, texas-auto-center

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Comment by Russell Crosby on March 18, 2010 at 11:10am: That is why is important to change passwords and logins when employees that may have access to that information leave the dealership.
http://www.autobulk.com

Comment by Rob Hagen on March 18, 2010 at 11:19am: Also good to have a policy form signed by all employees.

Comment by Ken Owensby on March 18, 2010 at 11:34am: I understand the value of disabling the car if the borrower doesn't pay, but why would the system set off the horn? Makes one question the thought procress behind the development of that feature.

Comment by David Tebeau on March 18, 2010 at 11:48am: This was certainly nothing more than a one off from an obviously disgruntled employee who is probably sitting in a cell somewhere thinking about it today. The starter interrupt devices are only as good as the organizations that develop and service them. There are some clear industry leaders out there including Passtime in Denver, who was our vendor at ACC. They are a first class opertation with a superior product and a very experienced support group.
With the vast population that has experienced credit challenges in the past 24 months, these devices give lenders the opportunity to offer loans in this segment by lowering their credit risk. It enables dealers to sell more cars to customers that traditionally could not be financed and opens a new customer segment for the dealer. Let's face it, every car counts today and who can afford to let a customer with cash walk because you can't get them financed. For the consumer it also brings about the opportunity to improve their credit score.
I would like to invite Florida Dealers to contact me direct if you have any interest in setting up a program in this segment. Thanks and have a fantastic day!

Comment by Rory Noske on March 18, 2010 at 1:25pm: I must agree with David when he states that starter interrupt devices are only as good as the company that develops and services them. Passtime has a track record in the industry, I leave it to their customers to report whether their product and service is first class. I think it should be pointed out that "holders in due course" of finance contracts can and do easily exclude any and all former dealership users from accessing customer accounts and either disabling starters or setting off payment due warnings. This means finance companies avoid this kind of exposure, though BHPH dealerships are obviously at risk.

Comment by Jack Tracey on March 18, 2010 at 4:13pm: About 18 months ago a group of the starter interrupt / GPS manufacturers and distributors, telecommunication companies, and some of the finance companies who use the devices joined together to form a trade association to address issues like this on an industry level. The organization is called the Payment Assurance Technology Association (PATA) and their web site can be found at www.PATAssociation.com. It was felt that this emerging industry needed an independent organization to set performance standards so that it could grow without unnecessary concerns of the users. The association has developed standards that members must adhere to. The organization is formulating standards to protect finance companies that use the devices from situations like this and the problem of the seller of the device not paying the telecommunication bill and having all their devices become inoperable. If you’re interested in more information about the Association please contact me.

Jack Tracey
Executive Director
PATA
410-865-5431