By David R. Missimer
Dealers often ask us how they’re to respond to someone requesting information about why the dealership ran their credit.
The nature of these requests is one of two motives:
The dealership may receive requests for information from a phone call, correspondence from the consumer, correspondence from an individual claiming to represent the consumer or law enforcement.
The response is conditioned on whether the request is for identity theft information, or concerns previous credit inquiries by the dealership.
Usually for most franchised dealers, our recommendation is simple and straightforward – reply as the dealership, as it is the “User” of the credit report and not a “Furnisher” of information under the Fair Credit Reporting Act (FCRA).
However, and to be clear, if the dealership finances transactions (BHPH) or reports information to consumer reporting agencies on particular consumers, the dealership then is a “Furnisher” under FCRA and has very different obligations to investigate and respond to claims from consumers.
This article addresses the requirements the “User” of a consumer report must respond to consumer inquiries.
The previous credit inquiry
Frequently consumers will question a credit inquiry from the dealership that shows on their credit report will be to demand it be removed, or that information be sent to them verifying the dealership had a permissible purpose of requesting the consumer report. The dealership’s only obligation is to verify it had a permissible purpose of running credit on the individual. This can be accomplished by locating the signed credit application in either the deal file or dead deal folder.
Once you confirm a signed credit application for the consumer, the only response required is to advise the individual that credit was run at their request and the dealership has a signed credit application on file. Do not send, email, or fax a copy of the application to the individual inquiring.
Once the dealership is satisfied that appropriate documentation exists for the credit request, nothing further is required. The only time a consumer should be provided a copy of their signed credit application is when you are 100% certain they are who they say they are, or in response to an identity theft claim.
Under FCRA, the User of a credit report must provide certain information to a victim of identity theft, law enforcement officials identified by the victim, or authorized individuals investigating the claimed identity theft on behalf of the victim. Before providing any information, however, the dealership must receive a written request for information, and verify both the identity of the individual claiming to be a victim of identity theft, and the theft itself.
A request for information from an Identity Theft Victim must:
Once an acceptable written request is received, the dealership must verify both the claim of identity theft and the identity of the person claiming their identity was stolen. To prove the claim of theft, the victim must provide a copy of a police report and a completed Identity Theft Affidavit.
To check the identity of the person making the theft claim one of the following, at a minimum, must be provided:
Once the victim has made the request, and both the existence of a theft claim and the claimant’s identity have been verified and only then, must the dealership turn over information concerning that transaction.
The next time a consumer contacts your dealership demanding you take action concerning their credit report don’t panic. Follow the above guidelines and respond accordingly.
The consumer may not be satisfied with your response to their prior credit inquiry, but can take no action against the dealership that ran the bureau for a permissible purpose. If that consumer believes another used his or her identification at your store, let them take the necessary steps to report it as identity theft.
The easiest identity theft scam in the world is to contact a creditor and demand they send a copy of the credit application.
For more information on this subject, contact the author or visit www.compliantnow.com.
David R. Missimer, firstname.lastname@example.org is General Counsel for Automotive Compliance Consultants Inc. He spent 28 years in private practice as a seasoned litigator and trial lawyer representing lenders, auto dealers and numerous other entities and individuals. He has worked with dealership compliance issues since 2003. He joined Automotive Compliance Consultants in 2003. He is a member of American Financial Services Association and National Automotive Finance Association as General Counsel of Automotive Compliance Consultants Inc.