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The application, initially filed two years ago but published last week by the United States Patent and Trademark Office, involves a series of computer interactions that would initiate a “multi-step repossession procedure” in the case of delinquency. Banks could send drivers or leaseholders multiple warnings about missed payments before the vehicle is eventually locked or made to cooperate with repossession processes initiated by the financial institutions.
“When an acknowledgment is not received within a reasonable period of time, the first computer may disable a functionality of a component of the vehicle or may place the vehicle in a lockout condition,” the patent application said, referencing the computer controlled by the lending agency. “The lockout condition may be lifted momentarily in case of an emergency to allow the vehicle to travel to a medical facility.”
The technology could theoretically be implemented in several vehicle classes, including both electric and internal combustion vehicles. In the event of missed payments, the technology could also begin to deactivate vehicle features such as the air conditioning system, remote key fobs, and automated locks to “cause an additional level of discomfort to a driver and occupants of the vehicle” and encourage payment submissions. The technology could alternatively activate chimes, beepers, or radios to “emit an incessant and unpleasant sound every time the owner is present in the vehicle.”
With more unheeded car payment warnings, the driver could also be subjected to a “geofence” outside of which systems needed to drive the car would be deactivated. The system could also lock the vehicle outside of work hours to avoid “adversely affecting a livelihood of the owner of the vehicle,” thereby “hampering the owner’s ability to make payments.”
Lack of action from the driver could result in the vehicle calling for a tow truck company; semi-autonomous vehicles could move themselves to a location “more convenient” for the tow truck operators, while fully autonomous vehicles could be moved “from the premises of the owner” to the premises of a repossession agency or lending institution without a tow truck.
Vehicles with high mileage could be directed to automatically drive themselves to a junkyard if repossession costs are substantially high. In another situation, a vehicle could call the police if the driver attempts to “foil a repossession procedure” and block the vehicle’s path.
The patent application comes as more consumers default on their automotive loans due to economic turmoil and inflationary pressures. The number of debtors delinquent by more than 60 days increased 26.7% year-over-year as of December 2022, according to a report from Cox Automotive. Some 1.84% of loans were severely delinquent, marking the highest rate since the aftermath of the financial crisis.
Over the past two years, inflation has prompted consumers to use more debt while financing their transactions. Higher economy-wide interest rates induced by the Federal Reserve are meanwhile translating to record car payments: average annual percentage rates on new financed vehicles increased from 5.7% in the third quarter of 2022 to 6.5% in the fourth quarter of 2022, according to data from the car review website Edmunds, while the rate for used financed vehicles increased from 9% to 10%.
Despite the higher amounts of indebtedness and resultant delinquency levels, financial institutions have previously carried out abuses by repossessing vehicles. Wells Fargo agreed to a $3.7 billion settlement with the Consumer Financial Protection Bureau last year after the bank illegally assessed fees on various loans and wrongly repossessed cars.