Dear Consumer Ed:
I went to a dealership to buy a car, and the business manager was pressuring me to let him check my credit to get better financing terms than my credit union was offering. I refused because I am happy with my credit union financing. I got the buyer's order to take to my credit union to get the check to make the purchase, but the dealer told me that once they had the check and before I drove the car off the lot, I would have to give them my Social Security number. They gave me a blank credit application to put it on. They said they needed it to verify my identity, and if they did not check they could lose their license. I told them that if my credit union was giving me a check to purchase the car, that should be assurance enough that I am who I say I am. I have already given them my Georgia driver’s license. Is this legal?
Consumer Ed says:
Car dealerships must fulfill a number of requirements in order to avoid penalties; however, looking for identity “red flags” after the customer has retained financing from a third-party is not one of them. What the car dealership must do is file a Notice of Security Interest with the State of Georgia within 20 days of your purchase to inform the State about the financing involved with this sale. This notice requires minimal information about the purchaser of the vehicle, all of which can be found on your driver’s license. Accessing a credit report in connection with a credit transaction involving the consumer is permitted under the Fair Credit Reporting Act; however, because you had already obtained credit from another source and didn’t apply for credit through the dealership (in fact, specifically expressed your wish not to do so), the dealer wouldn’t have had a legitimate reason to run your credit history.
Based on your description of your interaction with the car dealership’s business manager, this dealership might be in violation of the Georgia Fair Business Practices Act (“FBPA”). The FBPA prohibits unfair and deceptive acts or practices in the marketplace. For example, if the business manager says that he needs your social security number for a “required” background check, but it turns out that this background check is a pretext for finding and offering you alternative financing through the dealership, this act might be considered unfair and deceptive.
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