Creditors use new devices to put squeeze on debtors

Subprime loans aren’t just for homes: A quarter of people who took out auto loans last year are considered subprime, meaning they have bad credit scores, typically lower than 640. And like defaulting homeowners, life’s not getting easier for them. In a recent report, The New York Times revealed that many borrowers with low credit ratings have to endure more than just sky-high interest rates if they want to drive a car off the lot. Now they must also allow the repo man to ride with them at all times.

This repo man isn’t a flesh-and-blood person occupying one of the car’s seats, though. He’s a technological extension of the lender — called a starter interrupt device —installed in the vehicles of subprime borrowers. The device allows lenders to track and monitor the location of the vehicle — both in real time and over time — and provides them with the ability to remotely shut off vehicles if, say, the borrower falls behind on payments (sometimes by just a few days) or drives outside an approved area.

There is no escaping debt collectors who can, with the push of a button on their smartphones, disable your car until you cough up payment. As one collector told the Times, “I have disabled a car while I was shopping at Walmart.” The Times provided a number of stories from people who had their cars surprisingly stop working because lenders switched them off for one reason or another. They range from startling — one woman was temporarily stranded at a gas station with her children — to mind-boggling: Another woman’s car shut off while she was driving, “sending her careening across a three-lane Las Vegas highway.”

The danger the starter interrupter poses to borrowers and other drivers is problematic in its own right. But these technologies of control are more than just instruments of aggressive lenders that want to ensure they get the expected return on their investment; they are also a natural product of our terribly exploitative financial system, which is always churning out innovative ways to squeeze the socioeconomically disadvantaged.

The political climate has clearly shifted in favor of creditors, which can demand near absolute certainty that they can extract payment from debtors. As starter-disabling devices proliferate, that certainty is becoming more important than your certainty that the car in front of you isn’t going to suddenly decelerate and veer off the road. Or that a once mobile vehicle idling at a stoplight won’t become an immobile hunk of metal blocking the road.

The goal is to cut out those spots of inefficiency where the disadvantaged might have been able to momentarily enjoy a brief respite from the usual struggles of life — whether it’s floating a check for a few days or having some wiggle room with a loan payment’s due date. We know, abstractly, that wealth is the shadow side of debt. The car starter interrupter heightens the tension, making the lender’s life more secure by making the borrower’s life more precarious.

Naturally, this is not how the lenders would frame their ever-expanding powers. As the Times reports, “Lenders and manufacturers of the technology say borrowers consent to having these devices installed in their cars. And without them, they say, millions of Americans might not qualify for a car loan at all.” So everything is rosy, because borrowers give their consent as a term of the loan and in exchange they get access to a vehicle — granted at an exorbitant cost when you factor in principal plus interest.

The basic rationalization here is the logic of unintended consequences. Reformers may help current subprime borrowers by limiting digital repossession strategies, lenders say, but future ones will be hurt, because lenders will charge more to make up for defaults they could have avoided if only they could disable cars remotely. Ordinarily, an abuser who argues, “If you limit my options now, I’ll just be more brutal in the future,” wouldn’t be persuasive. But somehow, among a prominent subset of free-market economists, it’s a winner.

Let’s take that unintended-consequences logic seriously, in the other direction. What happens if remote monitoring and disabling become a deeply rooted practice in car lending? And what if the repossessed cars are worth less than the value of the loan on them? Should we allow further contingency planning for lenders — say, automatic garnishment of wages? Electric shock devices implanted in the skin for gentle reminders to pay your bill and not drive outside the approved area? These might really cheapen the cost of credit.

Those possibilities will, of course, be dismissed as a slippery slope — even though a new gadget called the Pavlok wristband already offers worrywarts the chance to be shocked if they miss deadlines. And the auto lenders’ defenders will treat their predictions of rising credit costs due to regulation as infallible science — even though mortgage rates appear to be affected little, if at all, by certain state laws declaring mortgage debt nonrecourse.

So it’s hard not think of the libertarian tough-love stance here as a rhetorical veneer, rationalizing and exacerbating an exploitative system that strips away privacy, autonomy and dignity. An early version of these devices was used to help pet owners track and manage their animals, and its origins speak volumes about the power dynamics implicit in its deployment. Paternalism propels tracking of people as well as pets. Lenders and collectors cynically marshal the language of fairness, equality and opportunity to cast these technologies — which ensnare and control those who are already marginalized — as necessary tradeoffs if (poor) people want to gain the privilege of freedom (i.e., a vehicle).

If only the starter interrupter were an isolated case, then all we would need to do is resist its spread and regulate its use. Problem solved. Alas, things are not so easy.

The device is beneficial to us in at least one way, though: It’s a stark representation of the near future, in which such technologies of control continue to proliferate and become the norm. And not just among poor people, who have been harnessed with intrusive systems of surveillance and control for a long time.

Back in 1990, French philosopher Gilles Deleuze saw the writing on the wall, saying in an interview with Antonio Negri, “We’re moving toward control societies that no longer operate by confining people but through continuous control and instant communication.” This transition to control societies — in which people are entangled in a web of systems that continuously keep track of and analyze their actions and have the power to grant or deny freedoms of, say, movement or access — corresponds with the rise of computerization.

The examples of technologies that fit the trend Deleuze describes are varied and increasing. There are biometrics, such as facial recognition, that create new capacities to monitor, monetize and manipulate people; insurance companies that take advantage of the Internet of Things (objects embedded with sensors and networked) to more intrusively surveil and discriminate against clients; and everyday appliances receiving smart upgrades that come with effective abilities for social engineering. The starter interrupt device is simply a more in-your-face example. And the same logic might soon be applied to people’s homes. Electronic locks are starting to be used in apartments and houses, thus opening the opportunity to remotely or automatically lock out delinquent debtors until they pay up.

Our transition toward living in societies of control is well underway. The consequences raise fundamental issues of justice. No one proposed putting starter interrupters on the cars of CEOs of bailed-out banks, lest they fail to repay government largesse. And such degrading, invasive tactics are sure to creep up the social ladder to burden middle class or prime borrowers after they’ve been accepted as standard solutions in subprime contexts.

A first step toward fighting against these types of devices would be to regulate their use by putting strong restrictions on the reasons for their installment, the type of data that may be collected, how that data is stored, who may view the data and when vehicles may be remotely shut off. While regulating individual technologies is important for curbing their effects, it can’t be the endpoint. We should be careful to not let reform become a rationalization for technologies of control. Merely fighting to make the process of imposing swift, brutal punishments more fair has a tendency to normalize the punishments. Rather, we must always keep in mind that the real problem is the system itself and its expansive powers for exploitation. Without focusing on ways to restrain and undermine these systems, we are likely to just see the continual development of perhaps even more inhumane innovations or strategies for imposing control over and extracting value from people.