Car dealers running unauthorized credit checks

[ABC]

http://www.cbc.ca/consumer/story/2008/05/12/credit-cars.html?ref=rss

Car dealers running unauthorized credit checks: CBC News investigation
Put the brakes on the test drive until after negotiating a price, experts suggest
Last Updated: Monday, May 12, 2008 | 10:21 PM ET

CBC News

Handing over your driver's licence before taking a car out for a test drive may lower your bargaining power, a CBC News investigation has learned.

While some salespeople copy licences for security purposes, others use them to run credit checks on consumers, said consumer fraud consultant Duane Overholt.

"Absolutely, in the American market, Canadian market, people are having their credit pulled without their knowledge," said Overholt, who is based in Maryland.

Once salespeople confirm consumers' credit records, they can adjust pricing and financing in a bid to boost profits.

Under privacy legislation, dealers are required to ask permission before checking credit. But two credit agencies, Transunion and Equifax, told CBC News that they don't usually ask for verification. The agencies said when dealers call for credit checks, they assume the consumer has granted permission for the check to be completed.

George Iny, president of the Automobile Protection Association in Montreal, said insiders in the automobile industry have confirmed the practice.

"I think people will be stunned," Iny said. "When they tell you they know something is going on, it's because at a certain basic level, at least in some markets, it must be relatively prevalent."

The Canadian Automobile Dealers Association said it hasn't fielded any related complaints.
'To find out that they could be looking into my personal information to see if I'm a valuable customer, and that dictates what rates I would get, or price, or financing, is an invasion of my rights.'
—Consumer Tammy Hopkins

But consumer Tammy Hopkins, who recently handed over her licence eight times while testing new cars, said she was distressed to learn of the practice.

"To find out that they could be looking into my personal information to see if I'm a valuable customer, and that dictates what rates I would get, or price, or financing, is an invasion of my rights. I'm quite offended by that," she said.

Overholt said consumers should not give permission to a salesperson to run a credit check before negotiating a price.

"I would never test drive a vehicle until after I've discussed the price," he said. "Car dealers want you to fall in love with that automobile. I would pick the car I like, negotiate the price, then drive it."

[VivienM]

Their recommendation seems silly to me: sometimes, a 1-2 minute test drive will tell you that a vehicle isn't right for you. Should you really waste HOURS arguing about pricing with some sales dude, only to realize that you hate how the car feels on the road?

[bembem]

Simple solution.

Photocopy the DL w/the dealer. Fold the photocopy several times, write something on the outside, then tape it. Leave it with the receptionist and when you return, ask for that photocopy back.

No credit checks w/o your authorization.

[Asad_A203]

Simple solution.

Photocopy the DL w/the dealer. Fold the photocopy several times, write something on the outside, then tape it. Leave it with the receptionist and when you return, ask for that photocopy back.

No credit checks w/o your authorization.

Good Suggestion; but what if say you did end up stealing the car; and inside the piece of paper was a photocopy of another persons license or a fake license?

[The_Professor]

Good Suggestion; but what if say you did end up stealing the car; and inside the piece of paper was a photocopy of another persons license or a fake license?

That's why he suggested photocopying the DL with the dealer ;)

[AGR-1]

There is technology where a driver's license can be swiped similar to a credit card with the information captured, and remaining with the dealer.

[untaka]

Is there any way around this? I've test driven a lot of cars, will this affect my rating? Plus how would this change my negotiation power?

[Jeff-TheBiz]

I didn't read the article from the original post.

But I will say this, if a dealership does a credit check without the consent of the client they could lose their omvic license, their franchise agreement would be in question and they could be sued if the credit check has adverse affects on a person future purchase.

I can't imagine a dealership doing this, the risk is way too high.

In New dealerships, I know it is the Business Office that submits that info to the bank and they are not allowed to without a signed bill of sale and credit consent.

[VivienM]

I can't imagine a dealership doing this, the risk is way too high.

This is a widely-documented practice in the United States; the only thing new here is the claim that it happens in Canada too.

Honestly, there are stories about how Future Shop runs credit checks on everybody placing online orders. This is no weirder...

[thephenom]

I don't mind them running it, but they should at least give us a free copy of our credit report. :D

[boyoflondon]

I don't mind them running it, but they should at least give us a free copy of our credit report. :D


You might not mind if you have an established credit, mortgage and all the other jazz.

On the other hand, someone trying to keep their credit in tact in order to get a mortgage/loan/etc might get a nice blow when they get turned down due to too many hits on their credit.

[B0000rt]

How do they have an accurate credit check without my SIN or SSN?

[bionicbadger]

Just quote them PIPEDA law:

The law requires organizations supply an individual with a product or a service even if they refuse consent for the collection, use or disclosure of your personal information unless that information is essential to the transaction

You can show them your license so they know its valid and you have one, but they don't need the personal information on it. If they are concerned about theft have a sales guy go on the test drive with you.

[AGR-1]

Many dealers process customer information for credit purposes through "credit portals" that can simultaneously transmit the information to several financial intitutions/lenders.

When a prospect enters a showroom to road test a vehicle for security and insurance purposes the dealer requires a record of who was using the car. This implies gathering and keeping personal information.

Many individuals want to road test a vehicle for 30 minutes by themselves with no chaperon from the dealer.

[Jeff-TheBiz]

You can show them your license so they know its valid and you have one, but they don't need the personal information on it. If they are concerned about theft have a sales guy go on the test drive with you.

Actually a dealer needs it for insurance reasons while you are driving their car.

As for this happening in the States... Yeah, that I can imagine.

In the states your interest rate is very dependant on your credit rating so I can see how it would be used as a selling tool by the dealer, but it doesn't make it right.

[sillysimms]

How do they have an accurate credit check without my SIN or SSN?

It is not necessary for a credit check. I never give my SIN number to anyone, unless legally required, including when applying for a mortgage or a credit card. They check with me that it is the right one, but they have ALWAYS pulled the right file. Name, birthdate, address etc. The SIN is optional and you shouldn't provide it for a credit check.

[henry495]

The solution about haggling the price and then test drive the vehicle will not work for me.

I rather test drive at one dealership and then buy/haggle with another dealership. This should not be a problem in the GTA with lots of competition, unless the dealerships share the credit check information which I doubt.

[Drew_W]

This is a widely-documented practice in the United States; the only thing new here is the claim that it happens in Canada too.

Honestly, there are stories about how Future Shop runs credit checks on everybody placing online orders. This is no weirder...

Future Shop does a soft check to ensure your credit card matches your address/telephone number on your credit file. It's a a security thing, and as it's not a hard hit, something to not be concerned about.

[VivienM]

Future Shop does a soft check to ensure your credit card matches your address/telephone number on your credit file. It's a a security thing, and as it's not a hard hit, something to not be concerned about.

And these car dealer checks would be hard hits?

[movieman]

Actually a dealer needs it for insurance reasons while you are driving their car.

Maybe in Toronto, but here in Saskatchewan we've test-driven numerous cars in the last few months and only Subaru asked for a copy of a driving licence; I assumed they wanted the name and address to contact us to follow up on the test drive, but they never did.

[VivienM]

Maybe in Toronto, but here in Saskatchewan we've test-driven numerous cars in the last few months and only Subaru asked for a copy of a driving licence; I assumed they wanted the name and address to contact us to follow up on the test drive, but they never did.

In urban Ontario (Toronto or Ottawa, at least), they typically ask for a driver's licence as a routine matter, AND the sales guy insists on tagging along.

In other places, I think they're a lot more relaxed...

[VivienM]

Hmmm.

Do I want to give TransUnion/Equifax $25 to test this theory out?

I had to give my licence to hmm... 5 or 6 dealers recently? So it should show up on my credit file if they did credit checks...

[sillysimms]

Hmmm.

Do I want to give TransUnion/Equifax $25 to test this theory out?

I had to give my licence to hmm... 5 or 6 dealers recently? So it should show up on my credit file if they did credit checks...

If you do want to be sure, why not just request your credit report free by mail rather than pay for immediate access?

[VivienM]

If you do want to be sure, why not just request your credit report free by mail rather than pay for immediate access?

Mostly because if you request it by mail, they don't give you the all-important FICO score...

[Jucius Maximus]

Mostly because if you request it by mail, they don't give you the all-important FICO score...

You don't need the credit score to determine who was pulling your credit report. The reports have a list on them with the names of who requested it.

[VivienM]

Hmmm.

Do I want to give TransUnion/Equifax $25 to test this theory out?

I had to give my licence to hmm... 5 or 6 dealers recently? So it should show up on my credit file if they did credit checks...

So I did eventually give Equifax my $25 (for another reason).

No credit checks from any car dealers or affiliates. So either they all use TransUnion, or they don't do slimy tricks like Americans...

[RobDek]

In urban Ontario (Toronto or Ottawa, at least), they typically ask for a driver's licence as a routine matter, AND the sales guy insists on tagging along.

In other places, I think they're a lot more relaxed...

It's much more relaxed in rural Canada for sure. We recently purchased a Honda in Amherst, NS...no DL for test drive and after we arrived at a mutual agreement on price...they were willing to let us take the car home and send a cheque the next business day. Very refreshing to see!!!