In Brogan v. Fred Beans Chevrolet, No. 20-1944, 2021 U.S. App. LEXIS 11183, at *1-2 (3d Cir. Apr. 19, 2021), the Court of Appeals for the Third Circuit found no TILA or FCRA violation by a car dealer in attempting to get a customer’s car financed. The facts were as follows:
In 2017, Brogan bought a used Subaru from Fred Beans Chevrolet. He made a $4000 down payment and traded in his old Hyundai. To cover the rest of the cost, he contracted with Fred Beans for a loan. Fred Beans planned to assign this contract to Fifth Third Bank, which had conditionally approved the transfer. But after that conditional approval, Brogan chose to buy extra op-tions, raising the price. He left the dealership with the Subaru, thinking that the financing was set. Then Fred Beans ran into a hitch: Fifth Third was unwilling to finance the in-creased loan amount. Another bank, Ally Financial, said it was willing to step in. So Fred Beans sent Brogan a second contract with the new, lower interest rate and an assignment to Ally. Brogan had made no payments on his car under the first contract. He also did not make payments under the second contract. So Fred Beans drafted and sent a third contract with the same terms as the second one. Two weeks later, after Fred Beans reached out again, Brogan finally acknowledged the third contract and returned it to Fred Beans with an application for a loan from Ally. Ally then got Brogan’s credit report and decided to take over the third contract.
The Court of Appeals found no TILA violation.
Brogan first claims that Fred Beans violated the Truth in Lending Act. The TILA re-quires creditors to meaningfully disclose credit terms. See 15 U.S.C. §§ 1601-04. Brogan says that Fred Beans told him that it was assigning his first contract to Fifth Third, when in fact that assignment was only tentative. He speculates that Fred Beans intentionally misled him to lock him into the credit terms. But Fred Beans never lied. It expected to and indeed tried to assign the first contract to Fifth Third. It reasonably thought it could do that because the bank had conditionally approved the transfer. Fred Beans did not misrepresent anything; it based its numbers and assignment on its mistaken belief. The TILA does not penalize creditors for statements that become inaccurate based on later events. 15 U.S.C. § 1634. And Fred Beans did all that it needed to do to correct itself. When Fifth Third pulled out, Fred Beans quickly found a replacement. It promptly notified Brogan of the error by sending an updated contract. § 1640(b). And it adjusted the charge by lowering his interest rate. Id. Brogan also suggests that Fred Beans lied about assigning the later contracts to Ally even though that was tentative too. Again, it did not lie. And as the District Court noted, Brogan cannot ground any of his claims in a specific section or regulation of the TILA
The Court of Appeals found no FCRA violation either.
Brogan also insists that Fred Beans violated the Fair Credit Reporting Act because banks other than Fifth Third got his credit report without his permission. But under the FCRA, Fred Beans and the banks can get and use a consumer’s credit report “[i]n accordance with the written instructions of the consumer to whom it relate[d].” 15 U.S.C. § 1681b(a)(2). And Brogan’s written instructions authorized other banks to get his report. Brogan filled out a credit application, giving the dealership and banks permission to access his credit report “in connection with the proposed transaction” or “any update, renewal, refinancing, modification or extension of that transaction.” JA 68. He argues that the “proposed transaction” ended the day he drove off with his Subaru and that no other bank should have pulled his credit report. But after Fifth Third withdrew, Fred Beans had to assign Brogan’s sales contract to another bank. The two banks considering the assignment, including Ally, asked for his credit report. These inquiries were “in connection with” financing the Subaru sale (or an “update” or “modification” of that transaction). JA 68. So they were authorized by the credit application’s terms and thus allowed by the FCRA.