topic Re: Can a car dealer do an HP without consent? in General Credit Topics

Can a car dealer do an HP without consent?

bourgogne — Wed, 22 Nov 2017 21:22:44 GMT

Long story. too long. To summarize, husband and wife have an existing joint car lease for which he is the primary on. he turned his own personal car in a different lease early and got a new vehicle at the same dealer for the same brand. He thought he would do her a favor and get her a new ride for which she did not want, same brand same dealer as the existing joint lease. They pulled her credit without her knowledge or consent. She terminated the deal the next day. This all relates to another issue but in this context, can the dealer do what they did, do a hp for new lease? Thank you

Re: Can a car dealer do an HP without consent?

Anonymous — Wed, 22 Nov 2017 21:56:42 GMT

A person does not need to give explicit consent in order for a prospective creditor to do a hard pull. The creditor just needs to have what is called "permissable purpose." Once the creditor has rational grounds for believing that a person is planning to buy something from them, and a credit pull would help the creditor or company assess risk, then they have a right to pull that person's credit.

Thus, for example, if a person calls Comcast and gives them his name and address, even if he is not ready to buy a service, Comcast might well pull the person's credit even if the person did not explicitly say "I authorize you to do that."

If you walked in to the dealer and said that you had a friend who wanted to buy a car (but that friend wasn't with you) then the car salesman would be most unlikely to pull his credit. This is a different situation though. The dealership could see the existing lease with the husband was a joint lease, that they two persons were a married couple, and that one of the two represented a desire to lease on behalf of the other. (Furthermore the dealer likely had both social security numbers.) Given all that it is unsurprising that they'd do a hard pull.

Hard pulls are hard to get removed. What the wife could do is ask if the dealer could recode it as soft. They may not know how to do it. A hard pull is really minor in the big scheme of things -- all scoring impact will vanish in 365 days. So she may just want to forget about it.

Re: Can a car dealer do an HP without consent?

bourgogne — Wed, 22 Nov 2017 22:20:49 GMT

thank you. as i said this relates to a long and complicated situation. I understand what you said and how it plays into the scenario. also found https://www.law.cornell.edu/uscode/text/15/1681b which was helpful. many thanks, I appreciate it

Re: Can a car dealer do an HP without consent?

RobertEG — Wed, 22 Nov 2017 22:22:43 GMT

For a discussion of when an auto dealer obtains permissible purpose, the FTC has specifically addressed the issue in a February 11, 1998 advisory opinion as follows:

"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.

FCRA 819 specifies that a party who knowingly and willfully obtains information from a consumer reporting agency under false pretenses shall be fined under Title 18, United States Code, imprisoned for not more than 2 years, or both."

Re: Can a car dealer do an HP without consent?

bourgogne — Wed, 22 Nov 2017 23:04:30 GMT

@RobertEG wrote:
For a discussion of when an auto dealer obtains permissible purpose, the FTC has specifically addressed the issue in a February 11, 1998 advisory opinion as follows:

"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.
FCRA 819 specifies that a party who knowingly and willfully obtains information from a consumer reporting agency under false pretenses shall be fined under Title 18, United States Code, imprisoned for not more than 2 years, or both."

Robert. I am stunned by the responses you do here. this is absolutely incredible and exactly what I was hoping for from you. It seems like a thank you is not adequate but I don't know how else to respond. you have my sincere gratitude. Thank you and I wish you a Happy Thanksgiving

Re: Can a car dealer do an HP without consent?

Anonymous — Thu, 23 Nov 2017 00:59:13 GMT

REG is the man.

Re: Can a car dealer do an HP without consent?

bourgogne — Thu, 23 Nov 2017 01:07:31 GMT

@Anonymous wrote:
REG is the man.

so are you, he just framed it a way that was very useful for what I am doing. i will post the entire saga after I get the result I am after

Re: Can a car dealer do an HP without consent?

marty56 — Thu, 23 Nov 2017 11:00:06 GMT

Would that include just going for a test drive?

Re: Can a car dealer do an HP without consent?

bourgogne — Thu, 23 Nov 2017 13:33:48 GMT

@marty56 wrote:
Would that include just going for a test drive?

nah, I would have 100s of hps lol. nice scores btw, want to trade?