Did a LoJack tracking device count as a theft deterrent in a financed car sale?

Plain-English summary

The California Attorney General concluded in 2007 that the described LoJack Stolen Vehicle Recovery and Early Warning systems counted as theft deterrent devices for disclosure in a conditional vehicle sale. The tracking systems sent signals that alerted police to a stolen car's location, and the early-warning version could also alert the owner. The AG treated them as vehicle alarm systems within the statutory category.

For a conditional sale contract that charged for such an item, the opinion said the seller had to make the required written disclosure before the buyer signed. The analysis linked that disclosure to the vehicle finance law's purpose of identifying extra items and charges in the sale.

Currency note

This opinion was issued in 2007. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did a tracking device count even though it did not physically stop a theft? A: Yes. The AG treated the device's warning and tracking signals as enough to place the described LoJack systems in the theft-deterrent category.

Q: Was the dealer required to disclose the tracking-system charge in writing? A: The opinion said the conditional-sale disclosure rules applied to the described systems when the contract included a charge for them.

Q: Did the AG analyze both LoJack recovery and early-warning systems? A: Yes. It concluded that each met the theft-deterrent definition, noting that the early-warning system also notified the owner.

Q: What transaction did the answer cover?
A: It concerned a vehicle purchased under a conditional sale contract, under the statutory disclosure requirements the opinion examined.

Background and statutory framework

The Rees-Levering vehicle sales law required pre-contract disclosure of specified add-on products and their prices. The AG read its theft-deterrent definition in light of the tracking devices' warning signals and the law's consumer-disclosure purpose.

Citations and references

The opinion discusses Civil Code sections 2981 and 2982.2.

Source

• Landing page: https://oag.ca.gov/opinions/yearly-index
• Original PDF: https://oag.ca.gov/system/files/opinions/pdfs/07-205.pdf

Original opinion text

TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
EDMUND G. BROWN JR.
Attorney General

OPINION
of
EDMUND G. BROWN JR.
Attorney General
TAYLOR S. CAREY
Deputy Attorney General

:
:
:
:
:
:
:
:
:
:
:

No. 07-205
November 8, 2007

THE HONORABLE PEDRO NAVA, MEMBER OF THE STATE
ASSEMBLY, has requested an opinion on the following question: Does a vehicle tracking device, such as the LoJack Stolen Vehicle Recovery System or the LoJack Early Warning System, constitute a “theft deterrent device” for purposes of requiring written disclosure when a vehicle is purchased under a conditional sale contract?

CONCLUSION
A vehicle tracking device, such as the LoJack Stolen Vehicle Recovery System or the LoJack Early Warning System, constitutes a “theft deterrent device” for purposes of requiring written disclosure when a vehicle is purchased under a conditional sale contract.

1

07-205

ANALYSIS
We are asked to determine whether a vehicle tracking device, such as the LoJack Stolen Vehicle Recovery System or the LoJack Early Warning System, constitutes a “theft deterrent device” within the meaning of Civil Code sections 2981 and 2982.2.1 Section 2981, subdivision (r), defines a “theft deterrent device” as follows: “Theft deterrent device” means the following devices installed by the seller after the motor vehicle is sold: (1) A vehicle alarm system. (2) A window etch product. (3) A body part marking product. (4) A steering lock. (5) A pedal or ignition lock. (6) A fuel or ignition kill switch. Section 2982.2 requires written disclosure by the seller to the buyer under a conditional sale contract as follows: (a) Prior to the execution of a conditional sale contract, the seller shall provide to a buyer, and obtain the buyer’s signature on, a written disclosure that sets forth the following information: (1)(A) A description and the price of each item sold if the contract includes a charge for the item. (B) Subparagraph (A) applies to each item in the following categories: (i) A service contract. (ii) An insurance product.

1

All subsequent references to the Civil Code are by section number only. 2

07-205

(iii) A debt cancellation agreement.
(iv) A theft deterrent device.
(v) A surface protection product.
(vi) A vehicle contract cancellation option agreement.
(2) The sum of all of the charges disclosed under subdivision (a), labeled “total.” (3) The amount that would be calculated under the contract as the regular installment payment if charges for the items disclosed pursuant to subdivision (a) are not included in the contract. The amount disclosed pursuant to this subdivision shall be labeled “Installment Payment EXCLUDING Listed Items.” (4) The amount that would be calculated under the contract as the regular installment payment if charges for the items disclosed under subdivision (a) are included in the contract. The amount disclosed pursuant to this subdivision shall be labeled “Installment Payment INCLUDING Listed Items.” (b) The disclosures required under this section shall be in at least 10-point type and shall be contained in a document that is separate from the conditional sale contract and a purchase order. We conclude that for purposes of these two statutes, a “theft deterrent device” includes a vehicle tracking device. Preliminarily, we note that sections 2981 and 2982.2 are part of the ReesLevering Motor Vehicle Sales and Finance Act (§§ 2981-2984.5; “Act”), which the Legislature enacted in 1961 to govern “the provisions of conditional sales contracts for the sale of motor vehicles.” (71 Ops.Cal.Atty.Gen.167, 168 (1988).) The Act is “designed to provide a more comprehensive protection for the unsophisticated motor vehicle consumer” (Hernandez v. Atlantic Finance Co. (1980) 105 Cal.App.3d 65, 69, fn. omitted), and to “protect purchasers of motor vehicles against excessive charges by requiring full disclosure of all items of cost” (Stasher v. Harger-Haldeman (1962) 58 Cal.2d 23, 29). In 2005, the Legislature amended the Act by, among other things, adding section 2982.2 to address the practice of “loan packing.” (Stats. 2005, ch. 128, § 4.) Loan 3

07-205

packing refers to a sales technique used by sellers to add significant charges to the cost of a vehicle purchased under a conditional sale contract. The 2005 legislation enacted Vehicle Code section 11713.89 (Stats. 2005, ch. 128, § 9) to specifically prohibit loan packing as follows: (a) It is unlawful and a violation of this code for the holder of any dealer’s license issued under this article to do any of the following: (1) Negotiate the terms of a vehicle sale or lease contract and then add charges to the contract for any goods or services without previously disclosing to the consumer the goods and services to be added and obtaining the consumer’s consent. (2)(A) Inflate the amount of an installment payment or down payment or extend the maturity of a sale or lease contract for the purpose of disguising the actual charges for goods or services to be added by the dealer to the contract. (B) For purposes of subparagraph (A), ‘goods or services’ means any type of good or service, including, but not limited to, insurance and service contracts. As for the vehicle tracking devices in question, we are told that the LoJack Stolen Vehicle Recovery System is an electronic tracking device that is installed in a vehicle in a hidden location. It is activated by the police after they receive a report from the owner that the vehicle has been stolen. The device transmits a radio frequency signal that enables the vehicle to be tracked and recovered. The LoJack Early Warning System is similar, but also allows the vehicle’s owner to receive a warning by telephone or email message whenever the vehicle is moved without permission. With this background in mind, we return to the language of section 2981, subdivision (r), which defines a “theft deterrent device” for purposes of the disclosure requirements of section 2982.2. To understand this provision, we apply well recognized principles of statutory construction. “When interpreting a statute, our primary task is to determine the Legislature’s intent. [Citation.]” (Freedom Newspapers, Inc. v. Orange County Employees Retirement System (1993) 6 Cal.4th 821, 826.) “In determining such intent, a court must look first to the words of the statute themselves, giving to the language its usual, ordinary import and according significance, if possible, to every word, phrase and sentence in pursuance of the legislative purpose.” (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386-1387.) “The words of the statute must be construed in context, keeping in mind the statutory purpose, and statutes or statutory sections 4

07-205

relating to the same subject must be harmonized, both internally and with each other, to the extent possible.” (Ibid.) Ultimately, “a practical construction is preferred.” (California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1147.) Applying these principles of construction, we find that the two LoJack products in question each qualify as “[a] vehicle alarm system.” (§ 2981, subd. (r)(1).) In this context, the word “alarm” commonly means “a sound or signal giving notice of danger or calling attention to some event or condition” or “a device that warns or signals by means of a noise (as a bell or siren) or visual effect (as a flashing light),” or “a notice, warning, or announcement calling attention to a circumstance or event.” (Webster’s 3d New Internat. Dict. (2002) p. 49.) After the theft of a LoJack equipped vehicle has been reported to the police and the system activated, the device notifies the police of the vehicle’s location. The device allows the police to track the vehicle based upon a specially coded radio signal that it emits. The LoJack Early Warning System also signals the vehicle’s owner by sending a telephone or email message that the vehicle has been stolen. Thus, these devices send a “signal . . . calling attention to some event or condition.” In these circumstances, the LoJack devices act similarly to two other theft deterrent devices specified in the statute – window etch products and body part marking products. (§ 2981, subd. (r)(2), (r)(3).) Each of these products facilitates the recovery of a vehicle that has been stolen, even though the device has not prevented the theft in the first instance. Finally, we note that vehicle tracking devices, such as the LoJack systems, serve as “theft deterrent devices” in the sense that they increase the chances of apprehending criminals who steal vehicles, thus helping to deter future vehicle thefts overall. When there is an increase in the unobservable precautions taken in a community, a thief’s risk of being caught also increases, thereby deterring criminal activity prospectively. (See Mikos, “Eggshell” Victims, Private Precautions, and the Societal Benefits of Shifting Crime (2006) 105 Mich. L.Rev. 307; Katyal, Criminal Law in Cyberspace (2001) 149 U.Pa. L.Rev. 1081; Ayres & Levitt, Measuring Positive Externalities from Unobservable Victim Precaution: An Empirical Analysis of Lojack (1998) 113 Q.J. Econ. 43.) Because these vehicle tracking devices constitute a “theft deterrent device,” written disclosures must be provided when a vehicle in which they are installed is purchased under a conditional sales contract. In so construing the language of sections 2981 and 2982.2, we promote the primary purpose of the Act: to protect buyers from abusive and unethical sales practices. (See Hernandez v. Atlantic Finance Co. of Los Angeles, supra, 105 Cal.App.3d at p. 69; Dixon Mobile Homes, Inc. v. Walters (1975) 48 Cal.App.3d 964, 972.) 5

07-205

We conclude that a vehicle tracking device, such as the LoJack Stolen Vehicle Recovery System or the LoJack Early Warning System, constitutes a “theft deterrent device” for purposes of requiring written disclosure when a vehicle is purchased under a conditional sale contract.

6

07-205