It’s not uncommon for a creditor to electronically disable a car if the owner falls behind on payments. This technology has been around for more than a decade and is quite effective.
But on the vast and remote Navajo Nation it’s a problem. And a recent lawsuit charges that Navajo law makes the practice illegal.
Deanna Begay had driven three hours from home to take care of her financial aid paperwork at Navajo Technical College. It was lunchtime when she got back in her new pickup truck and buckled her young son into his seat. She was going to buy some groceries before setting out on the long drive home. But when she turned the ignition key, nothing happened.
Begay tried starting the truck again and again, and prayed.
"I don’t know how many times I prayed," Begay said.
She called Tate’s Auto Center in Holbrook just outside the Navajo Nation where she bought the truck just a month before.
"(The salesman) asked me if I paid for my vehicle," Begay said. "I told him I called them Monday and said I’d pay Saturday because I don’t get paid ‘til Saturday. And here the day before (Credit Acceptance Corporation) did this to me."
Credit Acceptance Corporation (CAC) is a Michigan-based finance company that has approved more than 7 million sub-prime loans on cars. When Begay called earlier in the week requesting more time to pay, CAC gave her five more days, then disabled her ignition system.
All of this is legal and happens quite frequently. But Begay’s lawyer, Veronika Fabian, says it is illegal on the Indian reservation.
"The Navajo Nation has a law that it passed in 1968 that prohibits self-help repossession," Fabian said.
That’s repossessing a car without a court order or the owner’s consent at the time of repossession.
"Because of the remoteness of the Navajo Nation, it’s just dangerous," Fabian said. "I mean people could be stuck out in the middle of nowhere with no food or water. People drive a hundred miles to go to work. What if they stop to take a break and they can’t start their car again?"
Dozens of people have told Fabian similar stories: They drive far from home, their cars are shut off and they are stranded in the middle of nowhere with little or no warning. Begay’s lawsuit is the first to challenge the use of this technology on the reservation.
The practice has become an issue elsewhere as well. California is considering a law that would make it illegal for dealers to use starter interruption devices.
Rick Berry is the owner of Tate’s Auto Center. He says customers are warned about the consequences for not paying.
"There are multiple documents that the consumer signs acknowledging that they understand that," Berry said.
In fact, Deanna Begay signed a document that clearly states: “I understand that the dealer has equipped the vehicle with a vehicle starter interruption device."
The document further states: "I understand that I may not be able to start the vehicle if I am in default of my contract.”
Begay acknowledges signing the document, but does not remember what it stated.
"He just told me initial here, here and here and just sign it," she said.
The dealership says they carry these kinds of loans, with these kinds of disabling provisions, because otherwise many customers wouldn’t qualify for a loan. Berry says a CAC loan is for customers with the worst credit scores.
"We’re talking about consumers that have had past repossessions, presumably charge offs, where they haven’t paid at all and where they’ve made their payment late in many, many circumstances," Berry said.
The majority of the dealership's customers are Navajo – many with questionable credit scores. So he’s watching closely to see if this suit will make it impossible for him to offer this kind of financing in the future.
"In my mind, it wouldn’t be fair to take the Navajo people and not provide them the same financing if they lived off the reservation as if they lived on the reservation," Berry said.
The attorney representing CAC did not return repeated calls for comment.
