car dealer ran an illegal report!!

Here ya go!

UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580

David Medine
Associate Director
Division of Credit Practices Direct Dial: 202-326-3224
Fax : 202-326-2558
E-mail: dmedine@ftc.gov

February 11, 1998

Karen Coffey, Chief Counsel
Texas Automobile Dealers Assn.
1108 Lavaca -- P. O. Box 1028
Austin, Texas 78767-1028

Re: Section 604 of the Fair Credit Reporting Act

Dear Ms. Coffey:

This responds to your letter dated August 29, 1997, asking the views of the Commission staff on a number of issues concerning application of the amended Fair Credit Reporting Act ("FCRA"), including (1) the propriety of an auto dealership obtaining a consumer report from a consumer reporting agency ("CRA") on an individual who visits the showroom, (2) the disclosure required to be provided to a job applicant or current employee before a consumer report may be obtained by the employer, and (3) the items required to be provided to the consumer before adverse action may be taken by the employer based on the report.

1. Section 604(a)(3)(F) permits CRAs to provide consumer reports to any party who has a "legitimate business need for the information in connection with a business transaction that is initiated by the consumer." You ask whether this provision allows a dealer to obtain a consumer report on a person who "comes to an automobile dealership and requests information" from a salesman about one or more automobiles. In our view it does not, because a request for general information about products and prices offered does not involve a business transaction initiated by the consumer.

More generally, you ask "when is the beginning of a business transaction" initiated by the consumer? In responding to this question, it is important to note that Section 604(a)(3)(F) limits this "business need" permissible purpose to transactions (i) that are "initiated" by the consumer and (ii) where the seller has a "legitimate business need" for the information. The staff's view is that an automobile dealer may obtain a report only in those circumstances in which the consumer clearly understands that he or she is initiating the purchase or lease of a vehicle and the seller has a legitimate business need for the consumer report information in order to complete the transaction.

For example, a consumer who asks a dealer questions about prices and financing is not necessarily indicating an intent to purchase or lease a vehicle from that particular dealer. Nor does the dealer have a "legitimate" business need for a consumer report in this situation. The consumer may simply be comparison shopping. In such a situation, the dealer must obtain written permission from the consumer before obtaining a consumer report. If the dealer would like to see a consumer's credit report before answering general questions about the availability of financing, this must be explained to the consumer and written permission must be obtained. In the same way, a request to "test drive" a vehicle does not indicate an intent to initiate the purchase or lease of the vehicle. Accordingly, if a consumer asks to test drive a vehicle, the dealer must obtain written permission from the consumer before obtaining a report.

Only in those circumstances where it is clear both to the consumer and to the dealer that the consumer is actually initiating the purchase or lease of a specific vehicle and, in addition, the dealer has a legitimate business need for consumer report information may the dealer obtain a report without written permission. In this regard, we note that obtaining information for negotiation purposes does not constitute a "legitimate" business need. The dealer must have a specific need for the information directly related to the completion of the transaction. For example, a dealer may obtain a report, if one is necessary, in order to arrange financing requested by the consumer.(1) The dealer may also obtain a report to check a consumer's creditworthiness when the consumer presents a personal check to pay for the vehicle. By contrast, a permissible purpose would not arise if a consumer intends to pay by cash.

2. Section 604(b)(2)(A) requires consumer report users, before procuring a report for employment purposes, to make a written disclosure to the consumer "in a document that consists solely of the disclosure" that a consumer report may be obtained for employment purposes. You ask whether a party that has secured an employee's authorization for the report in an employment application must also make the disclosure in a separate document. The answer is yes, because Section 604(b)(2)(A) specifically states that the document containing the required disclosure may not include other items.

You also ask what information may appear on the document and if "the FTC is suggesting that the document be of a certain size." It is our view that Congress intended that the disclosure not be encumbered with extraneous information. However, some additional information, such as a brief description of the nature of the consumer reports covered by the disclosure, may be included if the information does not confuse the consumer or detract from the mandated disclosure. We suggest no size requirement for the disclosure; a document that meets the "clear and conspicuous" standard set by the FCRA will be acceptable.

3. Finally, you ask two questions relating to Section 604(b)(3), which requires an employer "before taking any adverse action" based on a consumer report, to provide the consumer with a copy of the report and the summary of consumer FCRA rights prescribed by the Commission. First, you ask if a CRA is responsible for sending the required summary to employers. The answer is yes, because Section 604(b)(1)(B) imposes this duty on CRAs that provide reports for employment purposes. Second, you ask if there is any specific amount of time that must elapse from the time the required items are provided to the consumer and the employer's adverse employment action. The law is silent as to how long the employer must wait after making the Section 604(b)(3) pre-adverse action disclosure before actually taking adverse action; it states only that the specified items be provided before the adverse action is taken. Employers may wish to consult with their counsel in order to develop procedures that are appropriate, keeping in mind the clear purpose of the provision to allow consumers to discuss the report with employers before adverse action is taken.

The opinions set forth in this informal staff letter are not binding on the Commission.

Yours truly,

David Medine


--------------------------------------------------------------------------------

1. The dealer's "permissible purpose" here is provided by Section 604(a)(3)(A), which permits the use of consumer reports in connection with a credit transaction involving the consumer.

 

You are a "CASH TRANSACTION"...no loan from the dealer is needed...SO NO "PP"

 

Dealer did this to me. I brought in a copy of a recent report to see what amount I could get pre-approved for based on my cr info. He told me to fill out an application. I asked if it was for credit (read all the fine print and indeed it was a credit app). He said it was just for their records and that no cr would be pulled, since they already had a copy of it. I insisted I would only fill it out if there was NO cr pulled. I did not sign the app. Went back next day to shop around for a car and I saw my file on the finance guys desk. Lo and behold, there is a copy of my credit report sitting face up on his desk.

After heated discussions, a letter of complaint and some legal quotes, I ended up with a new miata for less than 10k.

So, hold your ground.

 

1. The dealer's "permissible purpose" here is provided by Section 604(a)(3)(A), which permits the use of consumer reports in connection with a credit transaction involving the consumer.
keepmine
===================
The only hitch here is it was a cash transaction not a credit one.


The END ************************* LB 59

 

Car dealers can also be held accountable by your AG and DOR. Call your state DOR office and get a dealer complaint form. Send a letter asking the dealer to rectify this situation or you will be mailing out the attached dealer complaint form and a letter to the AG in 5 days. Usually dealers settle rather than fight. It is not worth possible repercussions through the licensing board, which could effect their business dramatically. I can't stand dealers like this, they perpetuate all the negative things people think about the car industry. Keep pressure on the dealer. They will probably crack.

 

i grew up in the car business, and a lot of dealers will fish your credit around to everyone they can think of - pretty much a spam attack or fax blast of sorts. Unfortunately, the banks that they forwarded your info to most likely acted in good faith and did pull your report for legitimate business purposes. I'd go after the the dealer for damages, but then that doesn't do much for all the inq's. maybe a letter to the various banks explaining what the dealer did and seeing if they will show some concern for your situation? maybe send the letters via PFB..

 

***----->"CASH TRANSACTION"

No "FISHING" necessary...

 

also, for future reference here's what I did the last time i was shopping for finance (99): I provide the dealer with my own copy of my credit report, and tell them no one is to pull my reprt until they see the one I provided first. If based on that info they will finance me, then they I'll let them pull their own report.

keep in mind all those inq's you got dinged with in theory should just count as one..

 

my bad! there's another thread similar to this one! I posted to the wrong one!

 

"THEORY"

Many people here have been "SHOPPED" and SAY OTHER-WISE...

 

jamaicadeb HELP..any suggestions appreciated!!..JD
============================
sue the dealer and or make them remove the inquiry.
Surely you didn't buy anything there.

 

keep in mind all those inq's you got dinged with in theory should just count as one..
jason_l
===========
in that case there would be 1 not 5 or what ever on the report .



The END ************************* LB 59

 

Wow, the guy LIED to you at least a half-dozen times here in just a few sentences. You certainly don't want to buy from him.! You can bet the owner of the dealership elready knows what is happening and condones it - RUN, don't walk, to another dealership. In my experience about 1 in 4 won't try to pull this kind of crap on you.

There are many tricks that car dealers use to determine how deep in your pockets they can put their hand without getting their face slapped!

One of the most common is to ask to photocopy your driver's license and write down your social security number in order to let you take a test drive in their new car. While you are out driving, they are running a credit report on you to determine what kind of financing they can get you, and also how expensive of a vehicle they can sell you (the sell-up).

This practice is absolutely illegal and they can get fined big time, as well as be liable to you for damages. They MUST have your permission to run a credit check. Good for you for catching them, the only mistake you made was tearing up the "credit app" and walking out the door without it in your hand as evidence.

The best way to handle this nasty little trick of their is to go to a copy shop and make a photocopy of your drivers licence on one end of it. On the other end write the following statement: "It is strictly against the law to run a credit report on me without my written permission. You DO NOT have my permission to run a credit check and your dealership may be fined up to $5,000 per incidence if you do so." Do NOT write your SS number on it. Then make several copies of this to give the salesmen who ask to copy your DL when you test drive their car. This will solve that problem!!!

I recently purchased a new PT Cruiser and did all of my negotiations by fax, and follow up by phone. I found the exact car I wanted and made a deal over the phone for thousands of dollars off list. I already had financing arranged at my credit union and would be handing the dealer a cashiers check from them.

The salesman asked me for my Social Security number as part of the information to fill out the purchase contract. I asked him why in the world they would need a SS number to take my check. He told me the State government required it when they sold a car! (LOL!) I refused to give it to him because I knew what he was up to. I then faxed him a workwheet with my understanding of the final amount the car would cost me and included a statement similar to the above. Of course, he had forgotten to add the $250 "Documentation Fee" (additional, unwarranted dealer markup) which I refused to pay.

The salesman was a crook, only to be outdone by his credit manager who tried to corner me into buying hundreds of dollars of undercoating, dealer prep, paint treatment, and extended warranties when I picked up the car. I would have walked out the door, except that the car in question was the only one like it within 800 miles and I didn't want to wait. (Of course the fact that they accidentally sold me the car for a few hundred dollars LESS than I had OFFERED them made some difference too. LOLx2) Served the little buggers right!

I grew up in a new car dealership from the time I could ride a tricyle until after I graduated from college. My father was the salesmanager for 30+ years and I still have people tell me how well he treated them and how HONEST he was in his dealings with them. It makes me sick to see what the majority of the dealerships are doing today to seperate their customers from their money. Most of it is unethical and some is downright illegal. As long as the public lets them get away with it, they will keep getting away with it.

Well, off my soapbox now. I do hope the knowledge of the "Copy of your DL" trick and how to handle it will help some of the other board members when you shop for your next car. (Also, warn the salesman to NOT loose your car keys after they drive your trade-in to appraise it.........)

BKinUT

 

. As long as the public lets them get away with it, they will keep getting away with it.
BKinUT
===============
Just like we're letting them do with FICO.



The END ************************* LB 59

 

That's only too sad, I was car shopping a few months back and at least 2 of the the slimeball car dealers I went to tried the same thing on me.

My car got totaled (while parked, no less), so I'm shopping with my insurance money and paying cash for once, and one dealer straight up handed me the credit application and told me they had to have it "on file" before I could test drive his car.

I laid down some rubber leaving that dealership (of course, I was driving a rental maxima so I laid down rubber just about everywhere)

Another one I had everything finalized, and told the guy that I'd probably be bringing him my cashier's check on Monday, he pushed me and pushed me to fill out the credit app. He pushed me so hard that I never came back on Monday!

Since they had my address off my license, I was positive that at least one of these dealers would pull a CR. I was all ready to dispute it, too. I guess I lucked out in that none of them did, but they certainly would have had I not told them straight out not to pull my credit under any circumstances..>!