A Maryland couple arrived at their local Subaru dealership with their own financing, only to be told that they still needed to fill out a form required by the government because of the Patriot Act. When they hesitated, the salesman said regulations meant to identify money laundering by possible terrorists required that all customers fill out the form.
However, the couple later learned that the finance manager used the information to run their credit report without their permission. That check could have lowered their credit score.
There are times when a car dealer has good reason to pull your credit report, such as when you're seeking to finance through the dealership. As the dealership reviews your report, it will also be looking for any signs of identity theft or fraud, in compliance with what federal consumer-protection agencies call the "Red Flag Rules."
But industry experts, including attorneys from both the National Automobile Dealers Association (NADA) and the National Independent Automobile Dealers Association (NIADA), say that the Patriot Act does not require dealers to run a credit report on customers who pay cash.
However, laws designed to combat money laundering by terrorist organizations do require dealers to check the identification of customers paying more than $10,000 in cash and to report those transactions to the Internal Revenue Service on Form 8300. Paying with a cashier's check, money order or traveler's check also qualifies as a cash transaction, according to the IRS. (Oddly, a personal check does not qualify as cash, according to the IRS form's instructions. But it's the rare car dealer who would accept a personal check for a vehicle purchase.)