1. Guy's mom pays off his car loan
2. Dealer says we installed a remote immobilizer to protect our loan
3. Dealer demands $200 to remove the device since the loan is paid off now
4. Guy understandably refuses
5. Dealer immobilizes car
I think this sort of behavior should mean the end of your dealership. I cannot quantify/identify the actual wrongdoing here but I'm pretty sure there is something illegal.