News
Comment

Setting the record straight about the credit process

A recent radio news story alleged that new-car dealers in Canada are conducting unauthorized credit checks on potential customers.

A recent radio news story alleged that new-car dealers in Canada are conducting unauthorized credit checks on potential customers.

I’d like to set the record straight on a number of issues that were raised.

The story claims salespeople at dealerships in the U.S. and Canada are routinely running credit card checks on unsuspecting customers and are using that information to their advantage when negotiating purchases.

One U.S. buyer said she handed over her driver’s licence on eight separate occasions while test-driving vehicles. The story implies that some of those dealerships might have pulled credit information without her approval.

Let’s be clear: salespeople at registered new-car dealerships do not run credit checks on potential customers, nor do dealerships condone the activity. Unauthorized credit checks are not permitted under any circumstances.

The story also states that salespeople are required to make a photocopy of a potential buyer’s driver’s licence. That’s true, and it’s for security and insurance reasons; dealers need to know who is taking their vehicles out on test drives.

A photocopied driver’s licence is used as security in case a buyer fails to return from a test drive. A photocopy is kept on file at the dealership, and policies are in place to ensure that information remains private.

Are salespeople at U.S. dealerships running credit checks without seeking permission from customers? I can’t speak for the U.S., but I can reassure consumers on this side of the border that it’s not happening at the 350 dealerships represented by the Toronto Automobile Dealers Association.

If this type of devious activity is as prevalent as the story suggests, why hasn’t the Canadian Automobile Dealers Association fielded any complaints about it? Why are there no complaints on record with the Ontario Motor Vehicle Industry Council?

In the retail car business, the only ones authorized to conduct credit checks are banks and finance companies, and they do so with customers’ full awareness and approval.

A standard procedure is followed when a customer wants to finance a vehicle through a dealership. The customer provides personal information to a business manager, who forwards the information to a financial institution.

The financial institution submits the customer’s information to a credit bureau to determine his or her creditworthiness. Details of the report are privileged and private.

If a credit check is pulled on a customer without his or her knowledge or consent, that’s against the law. Anyone who suspects a credit check has been pulled on them, against their wishes, is urged to contact a credit bureau, such as Equifax or TransUnion.

A credit bureau will provide details about all credit checks about an individual. If there is inaccurate information on file, it should be addressed right away.

New-car dealerships operate on principles of trust, fairness and integrity. Our businesses are transparent; they are more scrutinized and monitored than any other industry in Canada.

Why would salespeople (and dealerships) betray that trust by pulling a stunt like this? Dealerships take privacy issues very seriously, and running credit checks without seeking permission is unlawful.

If a registered dealership in the GTA is running unauthorized credit checks, I’d be very distressed about it. Under current privacy legislation, dealerships are not allowed to obtain that information.

If the news organization that published this story had dug a little deeper, it would have realized that there is no substance to the allegation whatsoever.

This column represents the views of TADA. Email: president@tada.ca or visit www.tada.ca.

Bob Attrell, president of the Toronto Automobile Dealers’ Association, is a new-car dealer in the GTA.

    Avatar
    Wheels.ca
    Show Comments