What Donna Frederick says she endured at a South Durham auto dealership in late summer gives an altogether different meaning to the term “car trouble.”
Frederick, retired and living on a fixed income, is the former owner of The Playhouse toy store on Ninth Street. She says the service department at Michael Jordan Nissan repaired the timing belt on her 2015 Nissan Versa, but the dealership’s sales department tore her credit apart.
Frederick says a salesman at the dealership on U.S. 15-501 applied for a $24,000 auto loan with at least three different agencies without her permission. She says the process placed five hard inquiries on her credit history and lowered her credit score at a time when she’s trying to work out a forbearance plan with her bank to save her home.
According to consumer education platform Forbes Advisor, a hard credit check or inquiry takes place when someone applies for a loan, credit card, or an increase in a line of credit. A hard credit inquiry can lower one’s credit score. A salesman last week at the Sir Walter Raleigh Chevrolet also told the INDY that a hard credit check can lower one’s credit score. By comparison, soft inquiries have no impact on one’s credit score. Forbes reports that if a lender checks a consumer’s credit report, the inquiry won’t show up and is only visible on consumer disclosures via a personal request.
Frederick says the red flags that appeared on her account prevented her from cashing her monthly Social Security check at her bank. She’s not even sure she can cash this month’s government check at her bank.
If what Frederick says happened really happened, it’s not a good look for an auto dealership that prominently features the name and logo of a living legend who is arguably the greatest basketball player of all time.
Last week, Dean Ives, general manager of the dealership, said Frederick’s account of events is “not factual,” and that as a respected dealer, the business does not engage in practices that are harmful to its customers.
“To be blunt, there would be absolutely no reason to attempt to secure financing on behalf of a consumer without their knowledge or consent, if for no other reason due to the extreme inventory crisis plaguing the auto industry,” Ives said in an email to the INDY. “We simply do not have enough vehicles to meet the needs/desires of interested parties as it is. We in no way desired … then or now, to harm Ms. Frederick. Nor was there any malicious activity with regard to interactions with her.”
Nazneen Ahmed, press secretary for N.C. Attorney General Josh Stein, told the INDY that the dealership’s action could potentially be a violation of the federal Fair Credit Reporting Act, and encouraged Frederick to contact the DOJ office to file a complaint.
“And if she’s concerned about identity theft and potential violations of North Carolina’s identity theft statute, she should also consider contacting local law enforcement,” Ahmed said in an email to the INDY.
Frederick says a credit history showing that an unemployed retiree on a fixed income tried to secure a $24,000 loan to buy a car may hurt her chances of keeping her home.
Frederick has not paid her monthly mortgage since July of last year, when the Centers for Disease Control and Prevention imposed a moratorium on evictions and foreclosures with so many people across the country thrown out of work due to the pandemic.
With the moratorium’s ending on September 30, Frederick has been working with Wells Fargo bank on a forbearance plan to save her home.
Things seemed to be working out. Then, on August 25, she was sitting in the service department waiting area looking at her phone when she was approached by a young salesman who told her she could receive an above-average price for her car if she was willing to sell it to the dealership, who would in turn sell her a 2020 Nissan Kicks.
“He told me, ‘A lot of people are looking for used cars and we can give you a great deal if you trade in,’” says Frederick.
A widely reported semiconductor chip shortage has recently prompted automakers to cut their production of vehicles. As a consequence, the limited supply of new cars and trucks has led to an increased prices for used cars.
“I thought, ‘I got a couple of hours, why not look?’” Frederick says.
Why not, indeed.
The young salesman showed her a 2020 Nissan Kicks that the dealership had just taken off the showroom floor.
“He said the Kicks was an upgrade,” Frederick explained, and that the dealership would buy her car and also pay off the loan amount left on the vehicle.
Frederick told the salesman which bank was holding the loan on the car. He left to “run some numbers,” returned, and said he could get her in the Kicks for a monthly payment of $500 a month.
“I told him, ‘No way,’” Frederick says. “I told him I was retired and didn’t have any money. I was just trying to get my car fixed.”
Undeterred, a second salesman assured Frederick they were “pretty close” before ducking away to again “run some numbers.”
He returned and told Frederick she could get the car with a monthly payment of $470.
“I told him no, again,” Frederick said. “I told him I can’t pay that. I don’t have a job and I’m on retirement.”
Frederick told the salesman he should talk with her niece.
“She is looking for a car,” she explained to him. “Maybe she’ll be interested.”
Frederick got into her newly-repaired car and went home.
Two days later, she received a letter from officials with Langley Federal Credit Union out of Newport News, Virginia, who thanked her for applying for an auto loan but she was not approved for the $24,000.
On September 1, Frederick received a second letter from officials with TowneBank in Virginia Beach, Virginia who also informed her she had been denied the $24,000 she had applied for.
A third Virginia lending institution, the Northwest Federal Credit, sent a letter that informed Frederick her application from Michael Jordan Nissan has been “instant denied.”
“I thought, ‘Now wait a minute. These are all car loan applications. I didn’t apply for a loan,’” Frederick says.
It was the first of the month. Fredericks’s Social Security check had arrived in the mail and she went to Wells Fargo to cash it.
“When I got to the bank, the teller said, ‘I can’t cash your check. And it won’t let me deposit it.’ I asked her, ‘Why not? It’s a government check.’”
The teller told Frederick to come back tomorrow.
“I said, ‘Oh okay. No problem. I’ll get the manager to check on my account.’”
But when Frederick returned, the teller told her the account had been flagged.
Frederick eventually went to another bank and cashed her check. She then went online and obtained a 43-page copy of her credit report.
“There at the very bottom it showed that someone had made five hard inquiries and one soft one on August 25. They were all from Nissan,” she says.
The Forbes Advisor notes that a single hard inquiry can lower a credit score five points or less, and stays on a credit report for two years, but only impacts the score for one year.
Ives, the dealership’s general manager, remains unconvinced that actions by his dealership had anything to do with the bank refusing to cash her Social Security check.
“In my thirty plus years, as an educated businessman, I know of no provisions for a bank to refuse to cash a check or withhold funds due to inquiries,” he told the INDY. “To do so seems highly suspect and bordering on illegal, and perhaps is due to other circumstances. My advice to Ms. Frederick [is to discuss] this subject with the bank manager.”
Ives also attached documents from Experian and the Consumer Financial Protection Bureau that outline regulations that guide inquiries and credit. The documents contradict the Forbes Advisor report and what appears to be conventional wisdom.
“Shopping for the best deal on an auto loan will generally have little to no impact on your credit score(s),” states a document from cfb.gov. It also states it is not legal advice or regulatory guidance.
A Q&A from Experian notes that “most credit scoring systems allow people to shop for the best rates on car loans without having a negative impact on their credit scores. They do so by counting all inquiries for auto loans within a given time as a single inquiry.”
And as for submitting loan auto loan applications without someone’s permission, Ives told the INDY he “will respectfully disagree.
“She not only test drove/viewed multiple vehicles, she also willingly provided address, social security, birthdate, and income information,” Ives said. “We certainly were not privy to that information prior to her providing it, and moreover a person doesn’t provide such information unless they are attempting to purchase a vehicle.”
Per the state attorney general’s press secretary’s statement regarding identity theft, it is illegal for a car dealership to run a hard pull of a customer’s credit without their permission. Frederick called the dealership and talked with Justin Bowden, the company’s consumer affairs manager who promised to undo the errant inquiries. Frederick says Bowden texted a confirmation note from Experian to her on September 15 indicating the inquiries would be dropped from her credit report by October 15.
Bowden did not return calls and an email from the INDY last week, but Ives said his fellow manager went “above and beyond, stepping outside the scope of responsibility, in an effort to assist Ms. Frederick with regard to these inquiries, even though they are legitimate.”
But Frederick is standing her ground.
“I don’t care if I test drove 50 cars, I didn’t give them permission to apply for a $24,000 car loan,” she says.
Frederick called Nissan America, and a legal firm she found online. She also filed complaints with the N.C. Department of Justice and the N.C. Better Business Bureau, and she contacted the lending agencies that denied the Nissan salesman the $24,000 loan on her behalf.
Ahmed, the attorney general’s press secretary, told the INDY she’s not aware of what Frederick says about what happened to her being commonplace, but added “it’s always possible that such situations are underreported to our office.”
As for saving her home, Frederick says she spoke with someone with her bank’s customer service division and said they are aware of what’s going on.
So Frederick remains hopeful, but she’s still furious.
“I wish I could get in touch with Michael Jordan himself,” she says. “I know he wouldn’t be happy.”
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