topic Re: Dealership pulled credit after being told not to. Help! in Rebuilding Your Credit

Dealership pulled credit after being told not to. Help!

mcharman — Wed, 24 Aug 2011 13:03:44 GMT

Hello, I recently went to a car dealership with my dad because he was purchasing a new car where I live. He had already secured financing through his local credit union and told the dealership this. He just had to take the car for a couple of days to have the credit union look it over before releasing the check. The dealership agreed to this and asked my dad (in my presence) if he wanted them to try to go through their banks to see if they could get a better interest rate. My dad explained that he had a really good rate through the credit union, so he didn't want to go through them.

They had him fill out a little paperwork, which appeared to be a partial application for credit, but they expressly stated that they would not pull his credit. He even said (in my presence) that he did not want them to pull his credit as he already had a loan secured. He finished the paperwork, but didn't sign anything. He then told the salesman that he wanted him to write on the application that he does not give them permission to pull his credit (I witnessed this too). The salesman said "sure, we won't pull it. We just have you fill out this paperwork since you're taking the car with you before paying...in case you disappear and don't bring it back." I'm not sure if the salesman actually wrote that on the paperwork.

My dad did sign one form a few minutes later, but he got a copy of that form and it doesn't say anything about giving them permission to pull his credit. It is just insurance related.

Anyway that was a couple of weeks ago. He has since gotten the check from the credit union and gave it to the dealership. Yesterday, my dad got a letter in the mail from the dealership saying something like "We're sorry you chose not to purchase a car with us." Included with the letter was a copy of his credit report.

I'm furious, because he expressly stated he didn't want them to pull his credit, yet they did it anyway.

Is there anything we can do to 1) have the inquiry removed from his credit report, and 2) "punish" the dealership for going against my dad's express wishes?

Sorry for the long story. Any advice would be greatly appreciated!

Re: Dealership pulled credit after being told not to. Help!

mocha82 — Wed, 24 Aug 2011 14:00:26 GMT

The problem is that that the car salesman isn't the same person who would process the application. He probably handed it off to someone else for processing and either your dad's request was not communicated to the second party or that person did it anyway. I would speak to someone at the dealership first to get it in writing possibly so that he can forward to the CRAs and they will take care of it.

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Wed, 24 Aug 2011 14:55:06 GMT

There is a separate issue in that dealerships will pull credit reports even for a cash sale. Check out this link for a tad more info.

Looks like you received a form letter that did not quite match the circumstances - and maybe some info got lost between staff members regarding the transaction - however (as it has been explained to me) they would still have to pull a credit report for the sale itself even if financing was not through them.

The fact that they have to pull is frustrating, and the mismatched form letter makes for some major irritation, but they are seemingly entitled to (and even required to) pull credit once for the transaction itself.

Re: Dealership pulled credit after being told not to. Help!

ALHondaGuy — Wed, 24 Aug 2011 15:36:04 GMT

Having to pull credit for a cash deal is absolutely untrue.

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Wed, 24 Aug 2011 16:03:00 GMT

Thanks ALHondaGuy,

My personal experience is that my dealer required it, citing federal regulations.

Can you respond to these quotes and links from the other thread? Perhaps that would clarify things for everyone.

__________________________________________________________

I was told that even if I want to pay cash for a new car at a dealership, they still need to do a credit check on me, is this true????

yes.

Under the Patriot Act and other Federal Laws, a Dealership is considered a banking institution and MUST establish identity for all of their customers they do business with. In addition,

1- A dealership may Need your SSN for titling and registration.

2- A dealership will need it for cash transactions greater then $9,999.99.

Under the USA Patriot Act, Auto Dealerships were specifically defined as Financial institutions, and were then forced to maintain a rigorous customer identification program.

A credit application is the easiest way for a dealership to utilize a Customer Identification Program- as mandated by law.

http://www.privacyrights.org/fs/fs31-CIP.htm

A HUGE MISCONCEPTION IS:

The establishment of "customer identity" procedures is to establish that the customer is who he says he is. You are correct to think that a credit report rarely has information that makes that easier. That is not the point of the laws.

The reality is that the customer identification protocols are to make sure that the person/customer is not on a "Banned" or watch list (including the OFAC-Office of Foreign Asset Control's SDN-Specially Designated National list). That the institution is actually doing business with someone that they are legally allowed to.

Customer Identification Programs were introduced via the USA Patriot Act. The NIADA tried to get an exemption for car dealerships but it did not go through.

http://www.fincen.gov/statutes_regs/frn/comment_letters/old_comment_files/stockampamlvs.pdf

The NADA also chimed in

http://www.fincen.gov/statutes_regs/frn/comment_letters/old_comment_files/metreyamlvs.pdf

A nice summary of requirements is here:

http://www.m-s-lawyers.com/CM/Publications/PatriotActImpacts.asp

A NIADA summary of how/why and what dealerships must do to remain compliant with federal law is here:

http://www.niada.com/PDFs/Publications/USAPatriotAct.pdf

Information about Customer Identification Programs (CIPs) is available here:

http://www.privacyrights.org/fs/fs31-CIP.htm#2

Please understand that it is MANDATED that EVERY CUSTOMER the dealership sells a car to be checked against OFAC, and that a dealership maintains records of not just the person and the transaction bit also that the records were checked. Not checking on one Customer is a minimum $50,000 fine.

http://www.ofaciq.com/Resources/131.pdf

___________________________________

Thanks!

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Wed, 24 Aug 2011 18:12:37 GMT

If you really want to put the thumbscrews to the dealership, consider the following journey of a fellow motorist who was in your same situation.

Edited to remove a prohibited link.

MarineVietVet, myFICO moderator

Re: Dealership pulled credit after being told not to. Help!

MissMia75 — Wed, 24 Aug 2011 20:22:54 GMT

It was true in my case, my credit was most certainly pulled when I paid cash for an SUV in 2006.

@ALHondaGuy wrote:
Having to pull credit for a cash deal is absolutely untrue.

Re: Dealership pulled credit after being told not to. Help!

mcharman — Wed, 24 Aug 2011 20:41:24 GMT

Thanks everyone for the comments/information.

What I'm still unclear on is whether or not the dealership had a valid reason to pull the credit report (proof of identity, titling, etc), wouldn't they still need to get permission from my dad to do so? I mean it didn't sign anything giving them permission to pull the credit, they said they weren't going to and he plainly stated twice that he was not giving them permission to. It seems wrong that they still did it, even if they had a reason to other than to secure financing (which they didn't explain if that was the case).

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Wed, 24 Aug 2011 20:56:13 GMT

If it's only to verify identity, why can't they just pull a soft?

Re: Dealership pulled credit after being told not to. Help!

ALHondaGuy — Wed, 24 Aug 2011 22:31:16 GMT

The ONLY time I've ever pulled credit during a cash deal was if the customer was wanting to pay with a personal check, instead of certified funds. Even then, I'm not entirely sure it's a permissible pull, but I would have the customer sign a credit app anyway.

Stangg,

With the system we use, it doesn't differentiate between a hard and soft pull, it just pulls.

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Wed, 24 Aug 2011 23:00:42 GMT

@ALHondaGuy wrote:
The ONLY time I've ever pulled credit during a cash deal was if the customer was wanting to pay with a personal check, instead of certified funds. Even then, I'm not entirely sure it's a permissible pull, but I would have the customer sign a credit app anyway.

Stangg,

With the system we use, it doesn't differentiate between a hard and soft pull, it just pulls.

Interesting. I guess the vast majority of deals would be finance deals and that would require a hard pull, so you have little use for softs. Still, a soft would verify enough to comply with the Patriot Act, so that's something you should have the ability to do. Now I undersatnd why, though.

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Wed, 24 Aug 2011 23:42:51 GMT

I believe the dealer pulled your father's credit to ensure he could be financed in the event financing fell threw with the credit union. Also, your father left the dealer with their car. So the dealership was kind enough to let your father leave with their car and your upset about a credit report? See it from their perspective. They had no real proof your dad had financing. Would you give someone keys to your house based on an assumption that they had secured a mortgage without any proof? Most dealerships will not allow you to leave with their property without you filling out a credit application with them. That is absolutely insane.

Re: Dealership pulled credit after being told not to. Help!

Booner72 — Thu, 25 Aug 2011 00:17:42 GMT

I have to agree with this post! They were only protecting their asset - a brand new car worth thousands of dollars. Credit reports show a lot about a person.

Re: Dealership pulled credit after being told not to. Help!

GregB — Thu, 25 Aug 2011 00:36:47 GMT

Oneeika is exactly correct. No sane dealership would have let someone leave with a car without properly completed finance application. If the OP's father had not returned they would have simply completed the application and the person would have had to pay the dealership's financing company.

The credit app for a car paid in cash is a separate issue, previously beat to death here. I did a search for it but it seems that it has been too long and doesn't come up in search. Dealerships are required to confirm a buyers identitiy and most have decided that the proper way to do that is via credit pull. The larger the dealership or the more dealerships owned by one company, the more likely they seem to be to do that. I know this was common 7 years ago in three different companies that own hundreds of dealerships each. I have never heard of any professionally run dealership that did not make that very clear to their customers BEFORE running the credit app.

Another point: A new creditor CAN'T do a soft inquiry directly. A soft inquiry is normally an Account Review inquiry, which can't be done if the customer doesn't have an account. Promotional soft inquiries don't give you the data needed and normally can't be done by someone like a dealership anyway.

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Thu, 25 Aug 2011 01:40:08 GMT

I am a sales consultant for a large dealership on the east coast, and there are requirements at the state and federal level, as well as my dealerships policy. It has already been stated that we are not letting you leave in our vehicle based on your word. Were your salesman messed up was explaining to you that even though you have already secured financing, we need to pull credit to verify that you are not a criminal, and that your credit score goes along with what your word.

I apologize for his lack of explaination, I explain to all my cash paying clients that I am running credit, every so often the first timer will question why, but my repeat clients do not ask, it is just part of the process.

Re: Dealership pulled credit after being told not to. Help!

Booner72 — Thu, 25 Aug 2011 04:02:57 GMT

@Anonymous wrote:
I am a sales consultant for a large dealership on the east coast, and there are requirements at the state and federal level, as well as my dealerships policy. It has already been stated that we are not letting you leave in our vehicle based on your word. Were your salesman messed up was explaining to you that even though you have already secured financing, we need to pull credit to verify that you are not a criminal, and that your credit score goes along with what your word.

I apologize for his lack of explaination, I explain to all my cash paying clients that I am running credit, every so often the first timer will question why, but my repeat clients do not ask, it is just part of the process.

Can you please expand on this statement? A criminal in the sense that a person doesn't pay their bills so that would be ethically criminal? Because to my knowledge, having felonies or even misdemeanor convictions do not report on credit reports.

Thanks.

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Thu, 25 Aug 2011 16:18:52 GMT

@Booner72 wrote:
@Anonymous wrote:
I am a sales consultant for a large dealership on the east coast, and there are requirements at the state and federal level, as well as my dealerships policy. It has already been stated that we are not letting you leave in our vehicle based on your word. Were your salesman messed up was explaining to you that even though you have already secured financing, we need to pull credit to verify that you are not a criminal, and that your credit score goes along with what your word.

I apologize for his lack of explaination, I explain to all my cash paying clients that I am running credit, every so often the first timer will question why, but my repeat clients do not ask, it is just part of the process.
Can you please expand on this statement? A criminal in the sense that a person doesn't pay their bills so that would be ethically criminal? Because to my knowledge, having felonies or even misdemeanor convictions do not report on credit reports.

Thanks.

They have the option to report arrest convictions on your credit reports.

Re: Dealership pulled credit after being told not to. Help!

Anonymous — Thu, 25 Aug 2011 20:43:48 GMT

@GregB wrote:
@Anonymous is exactly correct. No sane dealership would have let someone leave with a car without properly completed finance application. If the OP's father had not returned they would have simply completed the application and the person would have had to pay the dealership's financing company.

The credit app for a car paid in cash is a separate issue, previously beat to death here. I did a search for it but it seems that it has been too long and doesn't come up in search. Dealerships are required to confirm a buyers identitiy and most have decided that the proper way to do that is via credit pull. The larger the dealership or the more dealerships owned by one company, the more likely they seem to be to do that. I know this was common 7 years ago in three different companies that own hundreds of dealerships each. I have never heard of any professionally run dealership that did not make that very clear to their customers BEFORE running the credit app.

Another point: A new creditor CAN'T do a soft inquiry directly. A soft inquiry is normally an Account Review inquiry, which can't be done if the customer doesn't have an account. Promotional soft inquiries don't give you the data needed and normally can't be done by someone like a dealership anyway.

Crap, I keep forgetting this. Sorry.

Re: Dealership pulled credit after being told not to. Help!

Booner72 — Thu, 25 Aug 2011 23:01:31 GMT

@Anonymous wrote:
@Booner72 wrote:
@Anonymous wrote:
I am a sales consultant for a large dealership on the east coast, and there are requirements at the state and federal level, as well as my dealerships policy. It has already been stated that we are not letting you leave in our vehicle based on your word. Were your salesman messed up was explaining to you that even though you have already secured financing, we need to pull credit to verify that you are not a criminal, and that your credit score goes along with what your word.

I apologize for his lack of explaination, I explain to all my cash paying clients that I am running credit, every so often the first timer will question why, but my repeat clients do not ask, it is just part of the process.
Can you please expand on this statement? A criminal in the sense that a person doesn't pay their bills so that would be ethically criminal? Because to my knowledge, having felonies or even misdemeanor convictions do not report on credit reports.

Thanks.
They have the option to report arrest convictions on your credit reports.

Really? Who are "they?" The arresting agency? The court of conviction? I work in corrections and that is why I'm so curious - never heard of arrest convictions on a credit report before. I thought that was in a separate law enforcement data system (LEDS).

Re: Dealership pulled credit after being told not to. Help!

mcharman — Fri, 26 Aug 2011 16:14:30 GMT

"So the dealership was kind enough to let your father leave with their car and your upset about a credit report? See it from their perspective. They had no real proof your dad had financing. Would you give someone keys to your house based on an assumption that they had secured a mortgage without any proof? Most dealerships will not allow you to leave with their property without you filling out a credit application with them. That is absolutely insane."

Do I have a problem with the fact that the dealership would want to pull a credit report as proof of financing since my father was taking the car? NO

Do I have a problem with the fact that my dad expressly asked twice for them not to pull his credit, they told him they wouldn't and he never signed giving them permission to...yet they still pulled it? YES

I understand why the dealership wouldn't want to let my father leave without some type of proof/deposit that he would pay. That's why I was surprised when he told me that he had already talked to them on the phone about it and they told him they would let him take the car...without mentioning that it would be contingent on him authorizing a pull. If they wanted to pull his credit as some type of assurance of financing as a condition of him taking the car, they should of told him that was his option, at which point he could have either authorized the pull, or sought another alternative.

Yet, they didn't do that and he didn't authorize the inquiry which they decided to do anyway. It may also be worth noting that my father was trading in his current vehicle, which they valued at nearly half the price of the new vehicle (trade-in value mind you), and he left that vehicle, with key, at the dealership that day. So, perhaps they originally thought that would serve as deposit enough for them and then later changed their mind. Who knows? We sure don't, because they didn't tell us anything.

So, yes, I do think this is an issue, I am upset about this pull of his credit report, and I do think the dealership is in the wrong.