Consumer complaint received 2023-05-11
Company: TOYOTA MOTOR CREDIT CORPORATION
State: OH
Product: Credit reporting, credit repair services, or other personal consumer reports
Sub-product: Credit reporting
Issue: Improper use of your report
Sub-issue: Reporting company used your report improperly

Complaint:
On our around XX/XX/2023 I was in discussions with multiple Toyota dealerships working on building and reserving a vehicle. After delivering all of the specs to the sales person, they asked for a credit card for the non-refundable downpayment of {$1000.00} and my social security number. I understood the deposit, it ensures that the person ordering the vehicle is serious about the transaction, even if it takes months, but I did not understand the requirement of my social security number. When I inquired, the sales agent informed my it was to run a credit check. I pushed back and told them that, first, this was not clear in the process and that they did not inform me of this requirement when requesting my social security number but more importantly, there was no credit transaction and, from what I can tell in FCRA, no permissible purpose for Toyota dealerships, through Toyota Financial Services ( TFS ), to obtain a consumer credit report due to reserving a vehicle.

Even if the Bureau where to conclude that this practice falls under permissible purpose as outlined in FCRA Section 604 ( a ) ( 3 ) ( F ) ( i ) as a " business transaction '', I challenge the Bureau to review this as a potential unfair business practice. As the Bureau understands, when a hard inquiry is made to a consumer report, it negatively affects the score. What this practice does, which is unavoidable when a consumer is trying to find the vehicle that is the correct fit for them especially given the supply issues, is allow the finance company ( in this case TFS ) to make multiple hard inquiries on the same consumer. The first inquiry coming from the unnecessary first inquiry when reserving a vehicle and then the second will come after ( could be over 6 months ) for the ultimate financing of the vehicle. By having the second hard inquiry on the credit, there is significant chance that the consumer credit score will drop by double digit points allowing the finance company to charge a higher rate than the consumer may have paid if there was only one hard inquiry. This practice ultimately has a more negative affect to the consumer who is not in a position to be able to afford a higher rate. 
I understand that credit reporting agencies typically treat multiple hard inquiries from the same company as one but the practice is generally a 14-45 day period to allow a consumer to shop around. The wait for a vehicle extends beyond that grace period and harms the consumer ultimately trying to reserve a vehicle. 
This practice is harmful to consumers, not easily avoidable, and it is not clearly disclosed. Additionally, the consumer is already putting down a significant amount of money upfront which should alleviate the company 's concerns of a consumer walking away. Adding the requirement of pulling a consumer credit report is unnecessary and harmful.

Company response to consumer: Closed with explanation