Handing over your driver's licence before taking a car out for a test drive may lower your bargaining power, a CBC News investigation has learned.
While some salespeople copy licences for security purposes, others use them to run credit checks on consumers, said consumer fraud consultant Duane Overholt.
"Absolutely, in the American market, Canadian market, people are having their credit pulled without their knowledge," said Overholt, who is based in Maryland.
Once salespeople confirm consumers' credit records, they can adjust pricing and financing in a bid to boost profits.
Under privacy legislation, dealers are required to ask permission before checking credit. But two credit agencies, Transunion and Equifax, told CBC News that they don't usually ask for verification. The agencies said when dealers call for credit checks, they assume the consumer has granted permission for the check to be completed.
George Iny, president of the Automobile Protection Association in Montreal, said insiders in the automobile industry have confirmed the practice.
"I think people will be stunned," Iny said. "When they tell you they know something is going on, it's because at a certain basic level, at least in some markets, it must be relatively prevalent."
The Canadian Automobile Dealers Association said it hasn't fielded any related complaints.
'To find out that they could be looking into my personal information to see if I'm a valuable customer, and that dictates what rates I would get, or price, or financing, is an invasion of my rights.' �Consumer Tammy Hopkins
But consumer Tammy Hopkins, who recently handed over her licence eight times while testing new cars, said she was distressed to learn of the practice.
"To find out that they could be looking into my personal information to see if I'm a valuable customer, and that dictates what rates I would get, or price, or financing, is an invasion of my rights. I'm quite offended by that," she said.
Overholt said consumers should not give permission to a salesperson to run a credit check before negotiating a price.
"I would never test drive a vehicle until after I've discussed the price," he said. "Car dealers want you to fall in love with that automobile. I would pick the car I like, negotiate the price, then drive it."
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