Car dealers can use your drivers license to access your credit report

Considering all the time we spend fretting about protecting our Social Security numbers, this may come as a shock: Your SSN isn’t necessary for a car salesperson to surreptitiously peek at your credit report. He or she has the technological ability to unlock your file using only the information on your driver’s license.

“An auto dealership checking a consumer’s credit through TransUnion is not required to have the individual’s social security number (SSN) in order to submit the request,” says Steven Katz, a TU spokesman. Does the dealer need your permission to do that? “The dealer does not need ‘permission’; rather, it needs only certify a permissible purpose (such as extension of credit),” says Katz.

Equifax told us the same thing about the ability to get your credit report without your SSN, but stressed that anyone who pulls your file must get your permission to do so.

Experian did not respond to our query.

TransUnion prefers to get the SSN, because it more reliably helps locate your exact credit file, but it’s not absolutely necessary. The credit report access keys on the license are your name, address, and date of birth, all of which are essentially public information. The driver’s license number itself is not relevant, since the credit bureaus don’t use that as an identifier.

Car dealers commonly ask for and photocopy your driver’s license before they’ll let you take one of their cars out for a test drive, says Charles Cyrill, a spokesman for the National Automobile Dealers Association. If you encounter this situation and are worried that your privacy may be compromised, explicitly tell the salesperson that you are not authorizing use of your license to pull your credit report.

Under the federal Fair Credit Reporting Act, a car dealer must always get your permission to look at your credit report. He or she can get that permission in writing—when you sign a release or a loan application—or by implication, without your signature, if there is a “legitimate business need.”

What does that mean? According to the FTC, simply shopping around, checking deals, and even taking test drives does not constitute a legitimate business need by itself. Rather, it’s only when you’ve gone further along into an obvious purchase transaction that your actions qualify as business that possibly involves a need to check your credit, according to a 1998 FTC staff opinion letter.

“Only in those circumstances where it is clear both to the consumer and to the dealer that the consumer is actually initiating the purchase or lease of a specific vehicle and, in addition, the dealer has a legitimate business need for consumer report information may the dealer obtain a report without written permission,” says the FTC opinion. –Jeff Blyskal

For more on the ins and outs of buying new and used cars, check out the Cars section of Consumer Reports Online.

Comments

[Linda R.]

Can you provide a statement that anyone could write on the photocopy to show they are refusing to authorize a credit check? Can the laws be changed to require specific opt-in and strike the loophole "legitimate business need"? Personally it's my information and all uses of it should be required to be backed up by written (Opt-In) authorization.

[Lee W.]

How about giving the dealer a photocopy of your license but scratch out your date of birth? They could always go to DMV for this info based on your driver license number if there is a legitimate need but not check your credit.

[Nancy Impey]

We've bought and sold numerous vehicles over the years and have always paid cash or financed through our credit union. We're aware that the real profit is from indirect lending but we make it clear up front that we don't finance thru dealers.
We recently purchased a certified pre-owned Volvo and paid cash but it was not without difficulty. At one dealership, we were told that we had to fill out and submit a purchase/lease contract with our SS numbers because it was required by the Patriot Act. Another dealership also required that we complete a purchase/lease contract because it was policy for all purchases. When I contacted Volvo to protest, they directed us back to the dealerships. We finally found a third vehicle that we wanted to buy and again we were prepared to walk should the dealership require a purchase/lease contract for a cash transaction but to our delight it was never mentioned.
Not only did they not require copies of our licenses for a test drive, when we said we'd run to our credit union for a cashier check, they said our personal check would be sufficient. They would only need our driver licenses and proof of insurance as required by California DMV for registration. They prepared the bill of sale and registration documents and we were on our way within the hour. At no time we were pressured into signing a purchase/lease contract or credit application for a cash transaction - nor was there any mention of the Patriot Act.
A lease/purchase contract is just that - a contract and it has no relationship whatsoever to a cash transaction. It was a matter of principle that we weren't forced into signing the wrong forms.