In Toney v. Kinsch, 2012 WL 567729 (N.D.Ill. 2012), Judge Chang found no ECOA violation on behalf of an automobile finance company arising from a dealership’s alleged malfeasance when the finance company re-assigned the RISC back to the dealer.


In September 2008, Ethel Toney contracted to buy a 2006 Dodge Charger from a car dealership, and Defendant Capital One agreed to finance the purchase. Toney, who was homebound and did not have a current Illinois driver’s license, intended to only be a co-signer on the loan for her son, Vince.  A salesman from the car dealership, Norwood Park Dodge, told Toney that if she entered into a financing agreement to buy the car, Vince would be able to refinance the vehicle in his name after four months of timely payments.  The salesman also represented that Capital One would only finance the car if Toney paid $2,000 for a service contract.  Toney asked the salesman to provide information about the refinancing program, and he promised he would fax it over after she signed the contract. . . .By September 17, five days later, Toney had not received the refinancing program information. . . . Capital One sent Toney a welcome letter advising her that she should send all her car payments to Capital One. ¶  . . . Toney called Capital One and explained to a representative she was concerned that the credit application the dealership had submitted on her behalf contained incorrect information.  When Toney asked the Capital One representative about the terms of the refinancing program that dealership personnel had described to her and her son, he told her that Capital One was not aware of such a program.  . . .¶  On September 19, Capital One sent Toney a copy of the retail installment contract and credit application she had requested.  Toney discovered that the contract had been backdated to September 6 and that the dealership had overstated her monthly income by $1,800. Soon after, Toney began receiving harassing phone calls from the dealership, as well as calls from someone claiming to be with the Chicago Police Department. Toney called Capital One to determine the status of the contract and was told that the contract was binding.   . . .On October 5, Toney discovered that the car had been repossessed. The next day Toney called Capital One to tell them about the repossession, and a company representative told her that Capital One had not authorized the repossession.  On that same day, Capital One withdrew $592.16 from Toney’s checking account via an “auto check payment.” ¶ Toney received her final communications from Capital One in November. First, Capital One sent Toney a letter informing her that Norwood Park Dodge had repurchased her contract. On November 10, Capital One sent Toney an “overpayment refund” of $193.59.  Finally, on November 20, Capital One sent Toney a letter to tell her it was releasing any security interest it had in the 2006 Dodge Charger.


The District Court found that these facts stated no ECOA claim because no ‘adverse action’ was involved. 


The Equal Credit Opportunity Act requires creditors that take an “adverse action” against a credit applicant to provide the applicant with “a [written] statement of [specific] reasons for such action” or “written notification of adverse action” that discloses the applicant’s right to a written statement of reasons for the adverse action. 15 U.S.C. § 1691(d). The statute defines “adverse action” as “a denial or revocation of credit, a change in the terms of an existing credit arrangement, or a refusal to grant credit in substantially the amount or on substantially the terms requested.” § 1691(d)(6). The statute also gave the Federal Reserve Board the power to implement regulations to carry out the Act’s purpose. See 15 U.S.C. § 1691b(a). These regulations further define “adverse action” as, in pertinent part, a “refusal to grant credit in substantially the amount or on substantially the terms requested in an application,” and a “termination of an account or an unfavorable change in the terms of an account.” 12 C.F.R. § 202.2(c)(1)(i)-(ii). . . ¶  Additionally, Capital One’s actions in this case do not appear to be the kind of adverse credit decisions the statute contemplates subjecting to regulation. The Act’s “strict” notice requirement has twin aims: to discourage discrimination in lending by requiring creditors to explain their credit decisions, and to help rejected credit applicants understand where and how their credit status is deficient. Treadway v. Gateway Chevrolet Oldsmobile Inc., 362 F.3d 971, 977 (7th Cir.2004). The latter also gives consumers an opportunity to rectify mistakes “[i] n those cases where the creditor may have acted on misinformation or inadequate information.” Id. In this case, Toney’s own actions alerted Capital One to the potential credit issues, including that the dealership significantly overstated her income on the loan application.