Lund said the auto financing company has indicated that it will disclose to all consumers its use of GPS tracking devices on the vehicles it finances. But even if the company does include the disclosure in a financing contract, the chances of consumers actually noticing it are going to be small, he said.

"I said I had great concern and that I was not approving or blessing this program. But if the question was, 'does it violate any current consumer or credit laws I could not see that it does'," Lund said.

GPS devices are routinely used by companies to track the movement of commercial vehicles and some car rental companies have also been using them to track the whereabouts of their vehicles.

A growing number of car dealers too are believed to be using hidden GPS devices to to people with poor credit.

The rationale is that the devices would help the dealers quickly track down and repossess their vehicles in the event that a customer defaulted on payments.