Randy Henrick, Esq
Randy Henrick, Esq., president of AutoDealerCompliance.net, Long Island, New York. He has specialized in auto consumer-protection laws and dealership compliance for more than 30 years.
Beware car dealers using the USA Patriot Act to trick you. How the trick works: You agree to buy a car, and you want to pay in full by cash or check or get financing from a source other than the dealer. But the dealer invokes the 2001 anti-terrorism law, falsely claiming that it requires a credit check. The dealer may then use the credit information as extra ammunition to convince you that you are better off getting a loan from the dealer. However, there is no circumstance under which the Patriot Act requires a car dealer to run a credit check on a customer.
What to do: Unless you hope to finance through the dealership, reject its attempt to run a credit check on you.
The dealer may push hard because acting as a middleman for car financing can be very lucrative for the dealer. If the dealer insists on running a credit check and you don’t want to simply walk, ask the dealer to show you where the Patriot Act says that a credit check is required. You also can threaten to file a complaint with the Federal Trade Commission or with your state attorney general. Don’t sign a permission statement or a credit application.
In reality, if you are buying a car, the dealer is required to run your name against a government terrorism watch list kept by the US Office of Foreign Asset Control in the Treasury Department. If you are paying more than $10,000 in cash or by check, federal law also requires the dealer to fill out IRS Form 8300, which helps law enforcement carry out anti-money laundering efforts. However, federal law prohibits the business from running a credit check unless you authorize it or complete a credit application.
