Question

Case: Treadway v. Gateway Chevrolet Oldsmobile Inc.

Facts: Gateway Chevrolet Oldsmobile (GCO), a car dealership, sent an unsolicited letter to Tonja Treadway notifying her that she was “pre-approved” for the financing to purchase a car. Gateway did not provide financing itself; instead, it arranged loans through banks or finance companies.

Treadway called the dealer to say that she was interested in purchasing a used car. With her permission, Gateway obtained her credit report. Based on this report, the dealer determined that Treadway was not eligible for financing. This was not surprising, given that Gateway had purchased Treadway’s name from a list of people who had recently filed for bankruptcy.

Instead of applying for a loan on behalf of Treadway, Gateway told her that it had found a bank that would finance her transaction, but only if she purchased a new car and provided a co-signer. Treadway agreed to purchase a new car and came up with Pearlie Smith, her godmother, to serve as a co-signer.

Concerned as it was with customer service, Gateway had an agent deliver papers directly to smith’s house to be signed immediately. If Smith had read the papers before she signed them, she might have realized that she had committed herself to be the sole purchaser and owner of the car. But she had no idea that she was the owner until she began receiving bills on the car loan. After Treadway made the first payment on behalf of smith, both women refused to pay more – Smith because she did not want a new car; Treadway because the car was not hers. The car was repossessed, but the financing company continued to demand payment.

It appears that Gateway was running a scam. The dealership would lure desperate prospects off the bankruptcy rolls and into the showroom with promises of financing for a used car, and then sell a new car to their “co-signer”) who was, in fact, the sole signer). Instead of selling a used car to Treadway, Gateway sold a new car to Smith.

Treadway filed suit against Gateway, alleging that it had violated the ECOA by not notifying her that it had taken an adverse action against her.

You Be the Judge: Did Gateway violate the ECOA?

Question: Did Treadway ever file a loan application?

Question: Then how could she claim that she had been denied credit?

Question: Did the court rule that Gateway had discriminated?

Answer 1

PLEASE - - - - PLEASE KINDLY UP-VOTE. IT HELPS ME A LOT. THANK YOU IN ADVANCE.