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Regular Contributor
ozgirl
Posts: 122
Registered: ‎09-01-2007
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Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

In April, we bought a car from a local dealership. When we started the paperwork for the purchase we told the salesperson we were paying cash and that we did not want our credit run! He told us--no worries--this is just a formality. Well, guess what, they ran our credit and now I have an inquiry from Credco. Today, I called the dealership and spoke with the Finance Manager. She told me that LEGALLY they cannot sell you a car without running your credit. I can understand them being wary of accepting large personal checks etc...but if that were the case I would have got a bank check or transferred the money electronically. According to the manager, by running your credit they are also verifying your identity on some database to make certain you are not a terrorist etc. LOL! I suppose the CRAs now keep data on your political and religious leanings --just in case they run out of other things to ding you on. I suppose paying cash is now going to be a negative! My question is: Was the manager correct? If I am going to pay cash what is the problem? Certainly, they would not run a credit report on me at other retailers if I was paying cash for an item. I know the IRS gets a report for any cash transaction in excess of $9999.99. Also, the manager had no idea how to go about removing the inquiry. So before I go off and write a complaint letter to the owner of the dealership, I wanted to check out the accuracy of the information I received.
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SmartCookie
Posts: 2,010
Registered: ‎07-01-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Hopefully you will get more responses.  I am just going to be the "Muzak" till then.
 
They can either recode it to soft or remove it... use her name when to use when you dispute the INQ with the CBRs.
 
Law requiring them to do a hard INQ?  Policy maybe, not law far as I know.  They can validate your SSN for identity reasons with a soft pull.  You did not apply for credit... no hard INQ IMHO.
 
If the manager seems ok with removing it and does not know how... don't push it even if you are right and take it higher... you might come across someone with a chip on their shoulder.  
 
Dispute it on the CBRs entirely, saying you were told no hard pull until after you took ownership.  Put down her name and contact number.  If that doesn't remove it go for a non authorized INQ letter.  Yanno... regardless of what the law is and isn't... they lied to you. 
EQ 787 EX 781 TU 737 11/17/07 *** I am not an attorney. If I was, I might not clip coupons. If you want legal advice, consult an attorney. If you want my personal opinion, feel free to consider my posts***
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opsrex
Posts: 41
Registered: ‎05-21-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Section 314 of the Patriot Act requires that financial institutions take steps to deter money laundering. Even though it is a cash transaction, a hard pull would satisfy the requirements as far as the lender is concerned in that they took the necessary steps to comply with the requirements of section 314. That is my interpretation anyway. A civil liberties attorney may disagree.
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SmartCookie
Posts: 2,010
Registered: ‎07-01-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!



opsrex wrote:
Section 314 of the Patriot Act requires that financial institutions take steps to deter money laundering. Even though it is a cash transaction, a hard pull would satisfy the requirements as far as the lender is concerned in that they took the necessary steps to comply with the requirements of section 314. That is my interpretation anyway. A civil liberties attorney may disagree.

I'll have to read up on that, thanks for pinning the law to look at!  Now I guess the question is would a soft pull satisfy that... which I would say I would accept if it were me.  Shame they didn't tell her that before they ran it!  Off to read....
EQ 787 EX 781 TU 737 11/17/07 *** I am not an attorney. If I was, I might not clip coupons. If you want legal advice, consult an attorney. If you want my personal opinion, feel free to consider my posts***
Regular Contributor
ozgirl
Posts: 122
Registered: ‎09-01-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

I understand that a financial institution would have to do a verification--but this was a cash transaction from the start--a point that was made clear to the salesperson. Would this still apply?
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SmartCookie
Posts: 2,010
Registered: ‎07-01-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!



ozgirl wrote:
I understand that a financial institution would have to do a verification--but this was a cash transaction from the start--a point that was made clear to the salesperson. Would this still apply?

I can't find anything that I can interpret to fit this situation at all.  Right, it's not a financial institution.  I thin it might be something more IRS related and again, you were paying cash same as if you bought a piece of jewelry... maybe above 10,000 they needed to report it to the IRS and thereby needed to validate your SSN and identity.  Still no reason for a hard INQ, and I think it is even a different database at SSA, not CBRs. 
 
I can find no reason that they can't 'legally' recode to soft.  Fine if they said after the fact that they needed to pull, they did!  So now that they have what they want let them fix how it occured as they did not even have implied PP unless it was buried in fine print.
 
I would completely go ahead and dispute to see if it gets removed, proceed with other ways it is not. 
EQ 787 EX 781 TU 737 11/17/07 *** I am not an attorney. If I was, I might not clip coupons. If you want legal advice, consult an attorney. If you want my personal opinion, feel free to consider my posts***
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Brammy
Posts: 5,436
Registered: ‎03-10-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

That is a crock of bull.  NO ONE has a right to pull your credit unless you are applying for new credit. Contact the ftc at www.ftc.gov for clarification.  They have to have DL and proof of insurance but not a credit profile!!!  What?  Do terrorists have bad credit or something?
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fused
Posts: 16,355
Registered: ‎03-12-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!



Brammy wrote:
That is a crock of bull.  NO ONE has a right to pull your credit unless you are applying for new credit. Contact the ftc at www.ftc.gov for clarification.  They have to have DL and proof of insurance but not a credit profile!!!  What?  Do terrorists have bad credit or something?


I agree! As for terrorists, I can't imagine one them even having a credit score!:smileyhappy:
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uptomyneck
Posts: 51
Registered: ‎06-07-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

[ Edited ]
Gramm-Leach-Bliley Financial Services Modernization Act, Pub. L. No. 106-102, 113 Stat. 1338
As it pertains to car sales defines dealerships as financial institutions because they are originating loans. 
 
Title III of the USAPATRIOT ACT aka the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 requires all financial institutions to verify the identity of an individual opening and account with their institutions.
 
They are also required to verify your identity and cross check it with the Office of Foreing Assests Controls' list of Specially Designated Nationals (who are prohibited from conducting financial transactions in the United States)
 
I can't site the statute, I think it was the RICO act, but certain large cash transactions (including car sales) have to be reported to the Internal Revenue Service.
 
All of this is accomplished by running your credit.  Car dealerships don't have a choice.  You might find a disreputable business that won't run your credit, but if they don't they are liable and can be personally prosecuted under federal law.
 
I never worked in the finance office and I still had to go to 4 hour class on it.  I (salesman) was basically told to keep my mouth shut and refer any questions to the (licensed and trained more than me) finance manager.  The finance manager should have been able to cite chapter and verse and have written information available to show you.



 



Message Edited by uptomyneck on 10-03-2007 10:23 PM
Senior Contributor
imducky
Posts: 3,432
Registered: ‎08-27-2007
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Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!



uptomyneck wrote:
Gramm-Leach-Bliley Financial Services Modernization Act, Pub. L. No. 106-102, 113 Stat. 1338
As it pertains to car sales defines dealerships as financial institutions because they are originating loans. 
 
Title III of the USAPATRIOT ACT aka the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001 requires all financial institutions to verify the identity of an individual opening and account with their institutions.
 
They are also required to verify your identity and cross check it with the Office of Foreing Assests Controls' list of Specially designated Nationals (who are prohibited from conducting large transactions in the United States)
 
I can't site the statute, I think it was the RICO act, but certain large cash transactions (including car sales) have to be reported to the Internal Revenue Service.
 
All of this is accomplished by running your credit.  Car dealerships don't have a choice.  You might find a disreputable business that won't run your credit, but if they don't they are liable and can be personally prosecuted under federal law.
 


there was no loan being originated, yes the dealer would need to report the transaction. however cra's don't dump (at least i don't think so) into gov databases for review are they? if not, then why "verify" identity by pulling a hard? not an attorney, nor do i play one on tv (to tie into another thread about generatioal references), but seems i can verify my identiy just fine w/o running around with a credit report in my pocket.

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