topic Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash! in General Credit Topics

Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

ozgirl — Wed, 03 Oct 2007 23:32:13 GMT

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.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

SmartCookie — Thu, 04 Oct 2007 00:28:21 GMT

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.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

opsrex — Thu, 04 Oct 2007 00:31:37 GMT

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.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

SmartCookie — Thu, 04 Oct 2007 00:38:47 GMT

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....

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

ozgirl — Thu, 04 Oct 2007 00:51:03 GMT

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?

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

SmartCookie — Thu, 04 Oct 2007 02:04:36 GMT

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.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:06:33 GMT

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?

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

fused — Thu, 04 Oct 2007 02:16:52 GMT

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!

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:23:27 GMT

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

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:22:17 GMT

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.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

MidnightVoice — Thu, 04 Oct 2007 02:23:12 GMT

uptomyneck wrote:

All of this is accomplished by running your credit.

But can be established better other ways. If my passport is good enough for the US government it should be good enough for the car dealer.

A government issued photo ID is all that is required to fly - that should be enough

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:26:38 GMT

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 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.

Message Edited by uptomyneck on 10-03-2007 10:20 PM

NONE of this is accomplished by running a credit check. It can be accomplished by cross referencing you with a public records data base (ie Lexis Nexis) and using whatever reporting means the Internal revenue Service utilizes (which is probably quarterly or monthly sales reports). The government doenst move that fast. Even now. There are no terorists databases in the CRAs that would be a separate entity though the government is always welcomed to subpeona those records under court order.

Under the FCRA NO can run your credit file without permissable purposes and permissable purposes in this case would be to acquie new credit.

Message Edited by Brammy on 10-03-2007 10:26 PM

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:38:08 GMT

All of it is accomplished through a credit check.

There's a difference between the databases car dealerships pull/send info to than a regular credit pull.

See Tuscani's post on auto scores vs. regular scores.

One of the services included by the CRAs to car dealerships is taking information and reporting it to the appropriate agencies. That way car dealerships have to submit one form to one database, not several.

You don't have to be applying for credit. Technically they need your signature on an application to run your credit. But if you don't sign the credit app they can't fufill their due diligence under federal law.

So, if you don't sign the app legally, they can't sell you the car. I've seen it happen. A customer got ticked off because he wanted to pay cash, no credit app. The general manager looked up and said, "Sorry dude, no credit app, no car. One car deal is not worth losing my franchise and getting tossed in jail."

Message Edited by uptomyneck on 10-03-2007 10:38 PM

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:31:09 GMT

uptomyneck wrote:

There's a difference between the databases car dealerships pull/send info to than a regular credit pull.

See Tuscani's post on auto scores vs. regular scores.

One of the services included by the CRAs to car dealerships is taking information and reporting it to the appropriate agencies.

Where do you get this? There is a difference in the types of scoring models that auto dealerships use, not the source and to quote your original post, it is only in the case of loan origination that they hava right to pull it. If there is no lon there is no PP BUT they may have to report under graham leachy but not through the CRAs

BTW ownership of vehicles is established though liscensing

Message Edited by Brammy on 10-03-2007 10:29 PM

Message Edited by Brammy on 10-03-2007 10:31 PM

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:39:59 GMT

GLB Act as applied to car sales defines them as a financial institution therefore title III of the USAPATRIOT Act applies to them. It doesn't necessarily mean you have to be applying for a loan in that transaction.

I worked in car sales for 3 years and had to sit through 4 hours of classes on this paperwork at every dealership I worked at (4 all together). As car salesman we were supposed to shut up and refer all the questions to the finance managers. But, we still had to know what was going so we didn't tell the customer something we weren't supposed to- like the credit app is up to the manager if you pay cash.

Message Edited by uptomyneck on 10-03-2007 10:39 PM

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:40:40 GMT

uptomyneck wrote:

I worked in car sales for 3 years and had to sit through 4 hours of classes on this paperwork at every dealership I worked at (4 all together). As car salesman we were supposed to shut up and refer all the questions to the finance managers. But, we still had to know what was going so we didn't tell the customer something we weren't supposed to- like the credit app is up to the manager if you pay cash.

Wha? There is no credit app if you pay CASH!!! A lot of customers walk in with a blank check from their own financial institutions which are the ONLY people who have a right to run their credt. What your dealership taught YOU was what they WANTED you to do because if the salesman gets the financing both the dealership and the salesman gets a cut.

Its an old trick to run the custy's credit and try to make them a deal they can't refuse. GMAB!!!!!

Very surprised that both you and your dealership haven't been writing out a lt of 1000.00 checks for each violation/

Message Edited by Brammy on 10-03-2007 10:40 PM

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:42:03 GMT

hey it just hit me (thanks brammy). i had financing lined up and the sales guy beged me to run my credit so he "could get me a better deal". i said no way take the check from wells fargo and i'll take the car, or i'll keep looking that's what the internet is for.

he took the check, i got my car.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:44:58 GMT

Dealerships-plural. Different parts of town, different companies, different manufactures, differerent corporate counsels giving the classes we were required to take before we went out on the floor.

Like I said, you may find a dealership that doesn't follow the letter of the law, but it is the law.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:48:04 GMT

uptomyneck wrote:
Dealerships-plural. Different parts of town, different companies, different manufactures, differerent corporate counsels giving the classes we were required to take before we went out on the floor.
Like I said, you may find a dealership that doesn't follow the letter of the law, but it is the law.

you know actually now that i think about it all i had was a photo copy of the check and a letter of credit from wells fargo, of course they called wells fargo and made sure everything was cool. my point being i drove off the lot with a brand new 2005 jeep liberty from a five star dealership with a copy of a check, and they didn't pull my credit.

Re: Car Dealer Said they LEGALLY have to do a Hard Inquiry Even if paying cash!

Anonymous — Thu, 04 Oct 2007 02:48:23 GMT

uptomyneck wrote:

Dealerships-plural. Different parts of town, different companies, different manufactures, differerent corporate counsels giving the classes we were required to take before we went out on the floor.

Like I said, you may find a dealership that doesn't follow the letter of the law, but it is the law.

You are still comparing apples to oranges. If I come in with no money and need you to get my financing, of course you run my credit. BUT YOU HAVE NO RIGHT TO SEE WHAT IS IN MY CREDIT FILE WITHOUT M PERMISSION. Of course car dealerships are the most upstanding of all businesses.

If my bank has already got my financing, NO you do't run my credit. Please that's what this board is for to prevent consumers from falling prey to this type of mess.