Patriot Act Car Dealer Financing Scam

Car dealers hiding behind the 9-11 Terrorist attacks to scam car buyers paying cash for new cars

Jeff Ostroff Author Circle
By , Consumer Advocate, Editor-In-Chief
Published January 3, 2013, | Updated March 27, 2019
Patriot Act image

Do you know what the Patriot Act is? You should know because many car dealers have been raking consumers over the coals by abusing the Patriot Act to scam you when you are buying a new car. Sadly, too many consumers can answer yes to my second question; they were victims of this dirty trick. This scam is often pulled on you when you are paying cash or cashier's check in full for your new car, instead of financing through the dealer.

No surprise there, obviously the car dealer would prefer that you finance through them as opposed to paying cash for your new car. The way this scam works is the LieNance manager forces you to fill out a credit application, even though you are paying cash. They are of course lying to you that it's "required by the Patriot Act " for them to collect this signed credit application from you. One victim contacted us here at and she asked for help to get out of this scam. What did we tell our heroine to do?

Background on the Patriot Act

The Patriot Act is an act of Congress, signed by President George Bush Jr. in 2001 as a set of tools to aid in combating domestic terrorism. It covers many facets of criminal activity from surveillance procedures, money laundering, border patrol, and other categories.

The Patriot Act added tighter bank regulations, and new requirements ensure financial institution accounts must have ID verified. Cash business transactions over $10,000 require businesses to check your name against a list of terrorist suspects. When I bought a condo in Broward County, the bank filled out a short one-page Patriot Act ID verification document confirming that I am Jeff Ostroff.

The Patriot Act gave the United States government better tracking of and more control over the flow of money from internationals who might be high-risk individuals or dangerous terrorists. It was a set of tools that worked to prevent money from getting into the hands of terrorists.

Car dealers lose out on more profit when you pay in full for your new car

Car dealers make money when you finance your new car purchase through them, not when you pay cash or write a check for the full amount of the sale. Brilliant deduction: they don't profit as much if you don't finance through their car dealership.

If you show up with cash or a check and pay for the car in full, or you have financing from your credit union, they don't like it, and they want you to finance through them instead. They will say anything to get you to finance through their dealership, including lying to you that it's required by law for you to fill out this loan application.

These dirty underhanded tricks are what inspired us to coin the term Lie Nance Manager many years ago to refer to any car dealership finance manager who is crooked. Let me point out there are many honest finance managers, but there are also sociopaths similar to Bernie Madoff who don't think twice about lying through their teeth to extract more out of you.

We started reporting about this scam years ago after our consumer advocate team here at began receiving complaints from consumers not long after the September 11 Attacks. We cover this Patriot Act scam and numerous other common car dealer scams in our guide Top 10 Car Dealer Scams. You'll want to educate yourself on current tricks of the trade by reading that list.

The Vortex of the Patriot Act Scam

One of our visitors here at had contacted us to complain that she fell victim to this scam. The car dealer demanded she shows them her her driver's license, which is normal, and social security number (not so normal) even though she was paying for the car by check.

All the car dealer needs to do is confirm her ID and verify the check with the bank. But the finance manager asked her to fill out a credit application, stating they needed the first 5 lines for titling the vehicle. She filled out only her name, address, phone number and knew from our site to cross out everything else and wrote on the form "no credit check."

The sales director claimed her Social Security number was required to title the vehicle, which is a lie. That killed the deal for our lady friend, they would not let up, and so she left without a new car.

We already knew what the car dealer finance manager told her was a lie and told her to check her DMV for the real requirements on titling a car, to confront the dealer. Here's what the Texas DMV told her which surprisingly does not match what the car dealer told her:

  1. Social Security number is not required to title a new vehicle
  2. A Credit application is not required to title a new vehicle
  3. DMV advised her to find another dealer if SSN or credit application is required for titling
  4. Copy of driver's license is required to register your new vehicle

How to prevent this scam from happening to You

The law does not force car dealers as much as they like you to make you think. It also helps you to bring printouts off the DMV site of documents required to title a new car. Then your salesperson can't lie saying the DMV requires it.

Bring up the PDF file of The USA Patriot Act (H.R. 3162), Section 326 force the car dealer to show you where in this law it requires you to fill out a credit application. You want them to point to the exact numbered paragraph where the Patriot Act requires what the salesperson told you. Watch the salespeople scatter in all directions.

These Boots Were Made for Walking!

Unless you are financing at your new car the dealer, there is no reason to fill out credit applications, it means you are applying for credit, maybe a car loan, or they may run your credit, possibly lowering your score in the process.

Now that you're aware of this scam, and you know it is illegal if it happens to you just walk out. Some sales managers will let you walk too, a deal slipping through their fingers. There are plenty of good dealerships that don't require you to complete credit applications when you bring your own car financing. When I bought my Lexus GX470 and paid for it in full with a cashier's check, the Lexus dealer was honest and did not require me to fill out any credit applications.

Meanwhile back at the dealership, lies morph into new Lies

The dealership kept trying to sell the scam to our friend. They changed their story like many car dealers do when confronted with the truth about this scam, telling her "actually we collect this information to protect the customer and the dealership, to confirm that you are who you say you are."

Well, we always thought that simply checking the driver's license accomplishes verifying your identity all by itself, without the need from any assistance of a credit application. Trying to pressure our friend one last time, the finance manager emailed her the old trite saying: "This offer will not be available tomorrow."

Hold on a minute, I can't breathe through all my laughter. Won't be available tomorrow? Newsflash: neither will the buyer! Now you are prepared to stop the car dealer in their tracks when they Pull Patriot Act scam on you. Buyer beware, so be on the lookout.

Author Jeff Ostroff

About The Author: Jeff Ostroff

A lifelong consumer advocate with over 20 years of unparalleled expertise, Jeff is the Founder, CEO and Editor-In-Chief of As chief consumer advocate, he oversees a team of experts who cover all aspects of buying and selling new and used cars including leasing and financing.

For decades, Jeff has been the recognized authority on vehicle purchasing, sought out often by the media for his decades of experience and commentary, for live call-in business radio talk shows and is cited often by the press for his expertise in savvy car shopping methods and preventing consumer scams and online fraud. Jeff has been quoted in: CNN, MSNBC, Forbes, New York Times, Consumer Reports, Wall Street Journal and many more.

Jeff also has extensive experience and expertise in new car brokering and selling used cars for clients on eBay and Craigslist. Connect with Jeff via Email or on Twitter. has affiliate relationships with multiple web sites. We are paid referral fees for leads or sales generated from visitors that click on some links or fill out certain forms on this site. Please view our advertising policy page for more information.