topic Re: Dealership have permissible purpose for credit pull? in General Credit Topics

Dealership have permissible purpose for credit pull?

MissSilence — Sun, 25 Mar 2012 12:17:20 GMT

In March 2011 I went to a Texas car dealership filled out a credit app and purchased a used car which was financed thru a big well known bank.

In February 2012 one afternoon I got a phone call from the salesman that sold me that car saying I just wanted to call you about your recent credit app to buy a car. I asked who he was and why he was calling me because I had not filled out any apps. He told me his name and where he worked I then recognized him as he has a very distinctive name. He then starts in with ohhhh I see you made this app last year I just ran across it...My bad. Well hows that car working out for you, you know we have some really nice cars on the lot right now you should come take a look. I told him I wasn't interested in buying another car I was happy with the one I had gotten. He then says well don't you have an older car too? Yes I do its 5 yrs old with less than 40k miles on it I have no desire to replace it. He still continued to push for me to come see his cars. I then told him I was not was not wanting to purchase a car, I am not going to come look at any cars do not be pulling my credit. I then hung up on him.

Yesterday I pulled all my reports like I do every spring and guess what there is a hard inquiry from this dealership dated 2/21/12 for a car loan.

Did this dealership have a valid reason to pull my credit this February?

Personally I don't buy his excuse that oh I just ran across your app (that is basically a year old) I seriously doubt he has paperwork that old laying around on his desk. I think he was just trying to sell another car.

Re: Dealership have permissible purpose for credit pull?

pizzadude — Sun, 25 Mar 2012 15:11:55 GMT

MissSilence wrote:
In March 2011 I went to a Texas car dealership filled out a credit app and purchased a used car which was financed thru a big well known bank.

In February 2012 one afternoon I got a phone call from the salesman that sold me that car saying I just wanted to call you about your recent credit app to buy a car. I asked who he was and why he was calling me because I had not filled out any apps. He told me his name and where he worked I then recognized him as he has a very distinctive name. He then starts in with ohhhh I see you made this app last year I just ran across it...My bad. Well hows that car working out for you, you know we have some really nice cars on the lot right now you should come take a look. I told him I wasn't interested in buying another car I was happy with the one I had gotten. He then says well don't you have an older car too? Yes I do its 5 yrs old with less than 40k miles on it I have no desire to replace it. He still continued to push for me to come see his cars. I then told him I was not was not wanting to purchase a car, I am not going to come look at any cars do not be pulling my credit. I then hung up on him.

Yesterday I pulled all my reports like I do every spring and guess what there is a hard inquiry from this dealership dated 2/21/12 for a car loan.

Did this dealership have a valid reason to pull my credit this February?
Personally I don't buy his excuse that oh I just ran across your app (that is basically a year old) I seriously doubt he has paperwork that old laying around on his desk. I think he was just trying to sell another car.

I would say that they absolutely did not have permissible purpose to do this. If you really want to push it send them a FCRA non~PP letter demanding that they remove the inquiry from your reports.

It is absurd to tell someone that they "just found your app" a year later. Obviously they are trying to sell cars and hitting up previous customers is one way to do it, but pulling your credit a year later is ridiculous.

Re: Dealership have permissible purpose for credit pull?

RobertEG — Sun, 25 Mar 2012 21:02:09 GMT

Absolutely NO permissible purpose! The permissible purpose is always attached to a business transaction initiated by the consumer.

For a better understanding of when an auto dealer obtains permissible purpose, the FTC has specifically addressed the issue of automobile dealers accessing a consumer's credit report in a february 11, 1998 advisory opinion:

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.