Deceptive Adverse Action Letters Sent to Consumers with Good Credit

Unnecessary Adverse Action Letters

• 🎯 Consumers with good credit scores, like former California Assembly Speaker Robert Hertzberg (850 credit score), are receiving alarming letters claiming their credit is in danger or not good.
• ⚠️ These letters are often sent after doing business with an auto dealer and can contain scary messages about credit denial or unfavorable loan terms.
• 💡 In reality, for many recipients, nothing bad has happened, and there were no actual credit changes or denials.

Federal Law and Auto Dealers

• 📜 Federal law requires consumers to be notified anytime they are denied credit or offered different loan terms, a process called a Notice of Adverse Action.
• 🚗 Auto dealers are among the businesses that send the most of these notices.
• 🏢 Thousands of dealers nationwide, including many in California, use third-party companies like 700 Credit to manage and mail these notices.

700 Credit and Dealer Policies

• ✉️ 700 Credit provides different templates for compliance letters to car dealers, allowing them to choose which their lawyers prefer.
• ⚖️ The company then handles mailing the notices, with dealer policies varying based on their interpretation of regulations.
• ❓ Some dealers' policies may trigger adverse action notices for everyone who applies for credit, regardless of their credit standing.

Credit Freezes and Misleading Information

• 🔒 While some dealers, like Cadillac Pasadena, state they don't send these letters unnecessarily, they might deem them appropriate if a customer has a credit freeze in place to protect against identity theft.
• 🗣️ Hertzberg, who has a credit freeze, argues that no one instructed him to lift it, questioning the criteria for triggering these notices.
• 🧐 The more serious issue is people being misled by these potentially scary letters.

Seeking Regulatory Action

• 🏛️ Robert Hertzberg is in touch with regulators, lawmakers, and the State Attorney General's office.
• ✅ His goal is to ensure these letters are only sent to people who truly have credit troubles and to prevent them from being sent erroneously.