Tonja Treadway v. Gateway Chevrolet Oldsmobile Inc .

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-2828
T ONJA T READWAY ,
Plaintiff-Appellant,
v.
G ATEWAY C HEVROLET O LDSMOBILE I NC .,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 C 9921—James B. Moran, Judge .
____________
A RGUED J ANUARY 20, 2004—D ECIDED A PRIL 2, 2004
____________
Before C UDAHY , K ANNE and E VANS , Circuit Judges.
C UDAHY , Circuit Judge. Tonja Treadway sought financ-
ing to buy a used automobile through Gateway Chevrolet
Oldsmobile. After reviewing her credit report, Gateway de-
cided that it would be futile to send her application to any
lender. Instead of notifying her of this decision, however,
Gateway indicated that it could get her financing if she had
a cosigner. Treadway was able to produce her godmother as
a “cosigner”, but it ultimately turned out that Gateway had
never obtained financing for Treadway, and her godmother

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2 No. 03-2828
was led to purchase the car herself. Treadway filed a suit
against Gateway under the Equal Credit Opportunity Act
(ECOA) and the Fair Credit Reporting Act (FCRA) based on
its failure to notify her that it did not send her application
to any lender. The district court dismissed both claims, and
this appeal followed.
I.
Tonja Treadway received a direct-mail solicitation from
Gateway Chevrolet Oldsmobile, a seller of new and used
automobiles, indicating that she was “pre-approved” for the
financing of the purchase of a car. Treadway called
the number listed on the mailing and gave Gateway her
social security number so that it could access her credit
report. Gateway insists that it does not itself provide
financing for the cars it sells or leases. Instead, it attempts
to arrange for financing through banks or finance compa-
nies. Gateway obtained a copy of Treadway’s credit report.
Based on the credit report, Gateway determined that
Treadway would not be eligible for financing. This could not
have been particularly surprising to Gateway given that it
had purchased her name (in order to send the direct-mail
solicitation) from a list of people who had recently filed for
bankruptcy. Because she was not creditworthy, Gateway
unilaterally decided not to seek financing on behalf of
Treadway from any bank or finance company. In fact, it was
common practice for Gateway not to seek financing for
those that it determined to be ineligible for credit. See
Supp. App. at 3, ¶ 5 (Gateway’s statement of uncontested
facts) (“If the review of the credit report shows that the
customer would not likely be eligible for financing with any
bank or finance company, Gateway would not submit an
application for financing with any bank or finance company
because there would be no benefit to the customer or

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No. 03-2828 3
1 The appendix annexed to Treadway’s opening brief will be
referred to as “App.” while the appendix annexed to Gateway’s
opposition brief will be referred to as “Supp. App.”.
Gateway.”). 1 Of course, it is not surprising that this has
occurred regularly in the course of Gateway’s business,
given that it sometimes solicits potential customers from
amongst those who have declared bankruptcy.
Shortly after her call, Treadway received a return call
from Gateway inviting her to come to the dealership. On
October 17, 2001, she made a visit to Gateway. According to
Treadway, Gateway failed to inform her that it had decided
not to seek credit on her behalf. To the contrary, it indicated
that it had found a bank that would finance Treadway, but
the bank would not finance a used car— only a new car.
Moreover, Treadway would need a cosigner. Treadway
agreed to purchase a new car instead of a used car and
came up with Pearlie Smith, her godmother, to serve as a
cosigner. Concerned as it was with customer convenience,
Gateway had an agent deliver papers directly to Smith’s
house to be signed immediately. Treadway asserts that
Smith signed the papers without reading them. After Smith
signed, Gateway sold the note to Household Automotive
Finance. It turned out that, if Smith had read the papers
Gateway hand-delivered, she might have realized that she
had committed herself to be the purchaser and sole owner
of the car. See App. at 17, ¶ 81 (Plaintiff’s local rule 56.1
statement: plaintiff’s statement of additional facts). This
became clear to Smith when she started receiving state-
ments requiring payment on the car note. After Treadway
made the first payment on the note on behalf of Smith, both
Smith and Treadway refused to make further payment. The
car was repossessed and Household continues to demand
payment on the note.

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4 No. 03-2828
On December 28, 2001, Treadway filed a suit against
Gateway under the ECOA and the FCRA. In an order dated
April 12, 2002, the district court granted in part and denied
in part Gateway’s motion to dismiss. Specifically, the
district court dismissed Treadway’s FCRA claim because
Gateway was not a “user” of credit reports. See Treadway v.
Gateway Chevrolet, Oldsmobile Inc., No. 01-C-9921, 2002
WL 554513 (N.D. Ill. April 12, 2002). The district court,
however, declined to dismiss Treadway’s ECOA claim
because it found that, contrary to Gateway’s assertion, the
notification requirement of ECOA does not require an
allegation of discrimination. Id. Later, in an order dated
June 13, 2003, the district court granted Gateway’s motion
for summary judgment finding that Treadway had not
alleged an “adverse action” as required by the ECOA. See
Treadway v. Gateway Chevrolet, Oldsmobile Inc., No. 01-C-
9921, 2003 WL 21372469 (N.D. Ill. June 13, 2003). This
appeal followed.
II.
A. Equal Credit Opportunity Act
We review de novo the district court’s decision to grant
summary judgment as to Treadway’s ECOA claim, constru-
ing all facts and drawing all reasonable inferences from
those facts, in favor of the plaintiff, the non-moving party
in this case. See Ceruti v. BASF Corp., 349 F.3d 1055, 1060
(7th Cir. 2003). Summary judgment is proper when the
“pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits if any, show
that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56.
The ECOA was originally enacted in 1974 to prohi-
bit discrimination in credit transactions. See Fischl v.
General Motors Acceptance Corp., 708 F.2d 143, 146 (5th

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No. 03-2828 5
2 This notice requirement is not particularly arduous. The
Federal Reserve Board has created several sample notification
forms which can be modified and used by creditors. See 12 C.F.R.
§ 202, App. C; 68 F.R. 13144, 13184 (March 18, 2003). These short
forms essentially require that the creditor (1) describe the type of
credit which the applicant requested as well as the adverse action
taken, and (2) check off the creditor’s principal reasons for taking
the adverse action from amongst a pre-printed list. Id.
3 Where Congress has expressly delegated to an agency the re-
sponsibility of articulating standards governing a particular area,
(continued...)
Cir. 1983). It was amended in 1976 to require creditors
to furnish written notice of the specific reasons why an
adverse action was taken against a consumer. Id.; 15 U.S.C.
§§ 1691(d)(2) and (3) (“A statement of reasons meets the
requirements of this section only if it contains the specific
reasons for the adverse action taken.”). 2 In this case,
although Gateway ultimately got Treadway into a vehicle
based on her godmother’s credit, it did not even attempt to
obtain financing for Treadway based on her own credit, as
she requested. While an automobile dealership is some-
times considered merely an “arranger” or “referrer” with
regard to credit, here Gateway effectively became the denier
of credit. Therefore, we must decide as a matter of first
impression whether an automobile dealership’s unilateral
decision not to submit a credit application to any lender
constitutes an “adverse action” for purposes of the ECOA.
Based upon the plain language, the commentary to and the
purpose of the statute, we find that the decision not to
submit a credit application to any lender does constitute an
adverse action.
Any analysis must begin with the language of the statute
itself. See Pittway Corp. v. United States, 102 F.3d 932, 934
(7th Cir. 1996). The term, “adverse action” is defined
in relevant part by the ECOA as “a denial or revocation of
credit.” 15 U.S.C. § 1691(d)(6). 3 By unilaterally deciding not

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6 No. 03-2828
(...continued)
the courts must accord the ensuing regulation substantial def-
erence. See Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 844 (1984). The ECOA delegated to
the Federal Reserve Board the power to implement regulations in
furtherance of carrying out the Act’s purpose. See 15 U.S.C.
§ 1691b(a). These regulations, known as “Regulation B”, are found
under 12 C.F.R. §§ 202.1-202.15. Regulation B further defines
“adverse action” as a “refusal to grant credit in substantially the
amount or on substantially the terms requested in an application.”
12 C.F.R. § 202.2(c)(1)(i).
to send Treadway’s application to any lender, Gateway
effectively denied credit to Treadway. Whether it is the
lender or the dealership that makes the decision, both the
action and the outcome are the same. In both cases, the
decision maker (1) reviews the applicant’s credit report
to determine whether she is creditworthy, (2) makes a
determination adverse to the applicant (i.e., that she is not
creditworthy), (3) decides not to proceed any further in
arranging credit and (4) as a result the applicant is not
granted credit. There is no logical reason why these same
steps would be considered an “adverse action” when taken
by a lender but not when taken by a dealership, given that
the result is the same in either case.
We interpret statutes to avoid absurd results. See
FutureSource L.L.C. v. Reuters Ltd., 312 F.3d 281, 284-85
(7th Cir. 2002) (“Nonsensical interpretations of contracts, as
of statutes, are disfavored . . . [n]ot because of a judicial
aversion to nonsense as such, but because people are un-
likely to make contracts, or legislators statutes, that they
believe will have absurd consequences.”). Under a contrary
interpretation of the statute, if the dealer forwarded the
credit application to a lender and that lender determined
that the applicant was not creditworthy, either the lender
or the dealer would have to provide notice to the applicant.

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No. 03-2828 7
See 15 U.S.C. § 1691(d)(4). However, if it is the dealer,
itself, that makes the same determination and therefore
fails to forward the application to any lender, the applicant
would receive no notice. This result is inconsistent at best.
Gateway responds with the syllogism that one who is
unable to grant credit cannot deny credit either. The facts
of this case, however, demonstrate otherwise. Nothing in
the definition of “denial” requires that the party doing the
denying have the ability to grant as well. See Black’s Law
Dictionary (7th ed. 1999) (defining “denial” as “a refusal or
rejection”). To the contrary, courts frequently deny motions
which they lack the jurisdiction, discretion or authority to
grant. See, e.g., United States v. Ross, 243 F.3d 375, 378
(7th Cir. 2001) (“It is a basic principle of law that courts of
appeal do not have the authority to overrule a Supreme
Court decision, . . . and, therefore, we deny Ross’s appeal on
the speedy trial issue.”); Miller v. Marriott Int’l, Inc., 300
F.3d 1061, 1065 n.4 (9th Cir. 2002) (“Because we lack
jurisdiction over the merits of Millers’ appeal, we deny
these motions without prejudice.”); Pichardo v. I.N.S., 104
F.3d 756, 757 (5th Cir. 1997) (“Because we lack jurisdiction,
we deny the petition.”).
The comments of the Federal Reserve Board further belie
Gateway’s theory that the ability to grant credit is the sine
qua non of the ability to take “adverse action” under the
ECOA. For instance, when industry commentators criticized
a comment to the ECOA as failing to expressly exclude from
liability “persons without discretion to decide whether
credit will be extended,” the Federal Reserve Board de-
clined, in its official response to the criticism, to add an
express exclusion or to definitively exclude such parties. See
68 Fed. Reg. 13155 (quoted in full infra at 14). Moreover,
the Federal Reserve Board has suggested that a party may
deny credit even before it would necessarily have the
authority or ability to grant credit. See id. at 13187 (noting
that a “creditor” may deny credit before the applicant has

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8 No. 03-2828
even requested it, but that the creditor must provide the
applicant with notice).
In any event, Gateway’s syllogism relates more to the
question whether Gateway is a “creditor” for purposes of the
ECOA than to whether its activity constitutes an “adverse
action.” We will address this issue shortly, but for now it
suffices to note that the ECOA does not limit its definition
of “creditor” to those with the ability to extend credit. See 15
U.S.C. § 1691a(e) (defining “creditor,” inter alia, as “any
person who regularly arranges for the extension, renewal,
or continuation of credit”); 12 C.F.R. § 202.2(l) (“Creditor
means a person who, in the ordinary course of business,
regularly participates in a credit decision . . . .”) (emphasis
added).
Any other interpretation of the statute would run con-
trary to the purpose of the strict notice requirement.
Congress described this requirement as
a strong and necessary adjunct to the antidiscrimina-
tion purpose of the legislation, for only if creditors know
they must explain their decisions will they effectively
be discouraged from discriminatory practices. Yet this
requirement fulfills a broader need: rejected credit
applicants will now be able to learn where and how
their credit status is deficient and this information
should have a pervasive and valuable educational
benefit. Instead of being told only that they do not meet
a particular creditor’s standards, consumers particu-
larly should benefit from knowing, for example, that the
reason for the denial is their short residence in the
area, or their recent change of employment, or their
already over-extended financial situation. In those
cases where the creditor may have acted on misinforma-
tion or inadequate information, the statement of
reasons gives the applicant a chance to rectify the
mistake.

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No. 03-2828 9
4 Treadway alleged in her complaint that “Gateway Chevrolet
attempted to arrange financing for Treadway” and that “Treadway
was denied credit with respect to the transaction for which
Gateway Chevrolet attempted to arrange financing.” App. at 28,
Cplt. ¶¶ 12, 13. It was not until later into discovery that
Treadway learned that Gateway had decided not to send her
application to any lender.
Fischl, 708 at 146 (quoting 147 S.Rep. No. 94-589, 94th
Cong., 2d Sess., reprinted in 1976 U.S. Code Cong. &
Admin. News, pp. 403, 406). In sum, the notice requirement
serves two purposes: it discourages discrimination and it
educates consumers as to the deficiencies in their credit
status. If an automobile dealership that decides against
referring a particular applicant to any lender need not
provide notice of this decision to the applicant, then
it becomes significantly easier for it to discriminate. See
Lacey v. William Chrysler Plymouth Inc., No. 02-C-7113,
2004 WL 415972, at *5 (N.D. Ill. February 23, 2004) (noting
that “excusing a car dealership from complying with the
ECOA’s notice requirements because it did not submit a
customer’s credit application to a lender would undercut the
[anti-discriminatory] purpose of the Act.”). While it is true
that the victim of discrimination may still be able to seek
redress under 12 C.F.R. § 202.4(a) (“[a] creditor shall not
discriminate against an applicant on a prohibited basis
regarding any aspect of a credit transaction”), if an ap-
plicant never receives notice, it will be difficult for her to
ever determine that she was the victim of discrimination.
This is particularly true because, as was the case here,
without proper notice, the applicant may assume that her
application was sent to lenders, and it was the lenders
who did the rejecting. 4 Car dealers could throw the credit
report of every minority applicant in the “circular file”

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10 No. 03-2828
5 It has been argued that such discrimination is contrary to the
drive to maximize profits, and therefore it is unrealistic to expect
such results from automobile dealerships and other profit-maxi-
mizing entities. It would be hard to convince the thousands of
African Americans who were denied access to restaurants, shops
and motels in the era of segregation, that profit motives will
always outweigh discriminatory motives. The fact that discrimina-
tion is irrational has never stopped it from occurring in the past,
and we decline to find that it will not occur in the future.
and none would be the wiser. 5 Moreover, the notice re-
quirement is intended to prevent discrimination ex ante
because “if creditors know they must explain their decisions
. . . they [will] effectively be discouraged” from discriminat-
ing. Fischl, 708 F.2d at 146. The fact that victims may be
able to seek redress after having already experienced
discrimination does not fulfill the preventive purpose of the
statute.
Additionally, the contrary rule thwarts the educational
purpose of the statute. If dealers are permitted to unilater-
ally decide not to send a credit application to any lender
without notice, the applicant will never learn about the
deficiencies in her credit status and whether there are any
errors in her credit report. Therefore, based on the forego-
ing analysis, we find that Gateway’s action constitutes an
“adverse action” for purposes of the ECOA.
Next, we must determine whether Gateway can be
considered a “creditor” for purposes of the ECOA, for the
notice requirements of the ECOA apply only to creditors.
See 15 U.S.C. § 1681(d)(2) (“Each applicant against whom
an adverse action is taken shall be entitled to a statement
of reasons for such action from the creditor . . . .”) (emphasis
added). The ECOA defines a “creditor” as “any person who
regularly extends, renews, or continues credit; any person
who regularly arranges for the extension, renewal, or
continuation of credit; or any assignee of an original
creditor who participates in the decision to extend, renew,

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No. 03-2828 11
or continue credit.” 15 U.S.C. § 1691a(e) (emphasis added).
Although it failed to do so for Treadway, there can be no
question that Gateway regularly arranges credit for its
customers. See Bayard v. Behlmann Auto. Servs., Inc., 292
F. Supp. 2d 1181, 1185 (E.D. Mo. 2003) (noting that an
automobile dealership “would be considered a creditor as
one who regularly arranges for the extension of credit.”) The
term, “creditor” is also defined by Regulation B:
Creditor means a person who, in the ordinary course of
business, regularly participates in a credit decision,
including setting the terms of the credit. The term cre-
ditor includes a creditor’s assignee, transferee, or sub-
rogee who so participates. For purposes of § 202.4(a)
and (b), the term creditor also includes a person who, in
the ordinary course of business, regularly refers appli-
cants or prospective applicants to creditors, or selects or
offers to select creditors to whom requests for credit
may be made. A person is not a creditor regarding any
violation of the Act or this regulation committed by
another creditor unless the person knew or had reason-
able notice of the act, policy, or practice that constituted
the violation before becoming involved in the credit
transaction. The term does not include a person whose
only participation in a credit transaction involves
honoring a credit card.
12 C.F.R § 202.2(l) (emphasis added). The district court
found that Gateway was a creditor because it falls within
the definition of “a person who in the ordinary course of
business regularly refers applicants or prospective appli-
cants to creditors, or selects or offers to select creditors to
whom requests for credit may be made.” See Treadway,
2003 WL 21372469 (quoting the regulation). In so doing, the
district court joined a long line of Illinois district court cases
which have held that automobile dealerships are “creditors”
for purposes of the ECOA because they regularly refer
applicants to lenders. See, e.g., Payne v. Ken Diepholz Ford
Lincoln Mercury, Inc., No. 02-C-1329, 2004 WL 40631, *4

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12 No. 03-2828
6 Section 202.4(a) is entitled “discrimination” and notes that “[a]
creditor shall not discriminate against an applicant on a prohib-
ited basis regarding any aspect of a credit transaction.” Section
202.4(b) is entitled “discouragement” and notes that “[a] creditor
shall not make any oral or written statement, in advertising or
otherwise, to applicants or prospective applicants that would dis-
courage on a prohibited basis a reasonable person from making or
pursuing an application.”
7 Prior to April 15, 2003, Regulation B defined a “creditor” as “a
person who, in the ordinary course of business, regularly par-
ticipates in the decision of whether or not to extend credit.” 12
C.F.R § 202.2(l) (January 2002). We do not view the subsequent
amendment as a substantive change in the regulation but merely
as a clarification. See 68 Fed. Reg. at 13145 (“The final rule
changes the words ‘regularly participates in the decision of
whether or not to extend credit’ to ‘regularly participates in a
credit decision, including setting the terms of the credit’ to clarify
(continued...)
(N.D. Ill. January 5, 2004); Gallegos v. Rizza Chevrolet, Inc.,
No. 03-C-4237, 2003 WL 22326523, *2 (N.D. Ill. October 9,
2003); Burns v. Elmhurst Auto Mall, Inc., No. 00-C-5732,
2001 WL 521840, *2 (N.D. Ill. May 16, 2001); Leguillou v.
Lynch Ford, Inc., No. 99-C-3449, 2000 WL 198796, *4 (N.D.
Ill. February 14, 2000).
However, this line of cases fails to acknowledge that
one who regularly refers applicants to lenders is a “creditor”
under the ECOA only for purposes of 12 C.F.R. § 202.4(a)
(discrimination) and (b) (discouragement). 6 Neither of these
sections are applicable in this case. Therefore, the district
court improperly found that Gateway was a “creditor” based
on the “regularly refers applicants to lenders” portion of the
statute.
Nonetheless, Gateway is still considered a “creditor” if
it “regularly participates in a credit decision, including
setting the terms of the credit.” 12 C.F.R § 202.2(l) (April
15, 2003). 7 The comment to the regulatory definition of

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No. 03-2828 13
(...continued)
the definition of ‘creditor.’ ”) (emphasis added). Therefore, retro-
active application of the amended regulation is not prohibited. See
Pope v. Shalala, 998 F.2d 473, 483 (7th Cir. 1993) (holding that a
regulation “simply clarifying an unsettled or confusing area of the
law . . . does not change the law, but restates what the law
according to the agency is and has always been.”); see also
Manhattan Gen. Equip. Co. v. Commissioner of Internal Revenue,
297 U.S. 129, 135 (1936) (“The regulation constitutes only a step
in the administrative process. It does not, and could not, alter the
statute. It is no more retroactive in its operation than is a judicial
determination construing and applying a statute to a case in
hand.”).
“creditor” states that
[F]or certain purposes, the term creditor includes per-
sons such as real estate brokers, automobile dealers,
home builders, and home-improvement contractors who
do not participate in credit decisions but who only
accept applications and refer applicants to creditors, or
select or offer to select creditors to whom credit re-
quests can be made. These persons must comply with §
202.4(a), the general rule prohibiting discrimination,
and with § 202.4(b), the general rule discouraging
applications.
12 C.F.R. Pt. 202, Supp. I (March 2003). The Federal
Reserve Board elaborated on this comment:
Some industry commenters expressed concern that the
clarification would include in the definition of creditor
persons without discretion to decide whether credit will
be extended. The Board recognizes that in the credit
application process persons may play a variety of roles,
from accepting applications through extending and
denying credit. Comment 2(l)-2 is intended to clarify
that where the only role a person plays is accepting and
referring applications for credit, or selecting creditors to

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14 No. 03-2828
8 Gateway’s actions are distinguishable from the common sce-
nario in which an automobile dealership decides to send a credit
application to a limited number of the many lenders with which
it works. The Federal Reserve Board has clearly indicated that
merely “selecting creditors to whom applications will be made”
does not make one a “creditor” for purposes of the notice require-
ments of the ECOA. See 68 Fed. Reg. 13155. In that situation,
(continued...)
whom applications will be made, the person meets the
definition of creditor, but only for purposes of the
prohibitions against discrimination and discourage-
ment. For example, an automobile dealer may merely
accept and refer applications for credit, or it may accept
applications, perform underwriting, and make a deci-
sion whether to extend credit. Where the automobile
dealer only accepts applications for credit and refers
those applications to another creditor who makes the
credit decision—for example, where the dealer does not
participate in setting the terms of the credit or making
the credit decision—the dealer is subject only to §§
202.4(a) and (b) for purposes of compliance with Regula-
tion B.
68 Fed. Reg at 13155. As one court has summarized, there
is “a continuum of participation in a credit decision from no
participation, to referring applicants to the decision maker,
to final decision making. At some point along the contin-
uum, a party becomes a creditor for purposes of the notifica-
tion requirements of the Act.” Bayard, 292 F. Supp. 2d at
1186. In the present case, it is clear that Gateway falls on
the “creditor” side of the continuum.
First, Gateway admits that it regularly decides not to
send an applicant’s credit application to any lender. See
Supp. App. at 3, ¶ 5. By so deciding, Gateway not only
“participates” in the decision of whether to extend credit—
it makes the decision itself. 8 Second, Gateway frequently

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No. 03-2828 15
(...continued)
at least one lender is given the opportunity to decide whether to
extend credit. Therefore, it is the lender, rather than the dealer,
that makes the credit decision. Where the dealer decides not to
send out the application at all, however, it is making the credit
decision. Moreover, if the dealer sends the application to at least
one lender, there is another party that can provide notice to the
applicant. Where the dealer decides not send out the application
at all, only the dealer can provide notice.
participates in the credit decision by restructuring the
terms of the sale in order to meet the concerns of the
creditor. See App. at 16, ¶¶ 58-63 (Plaintiff’s local rule 56.1
statement: plaintiff’s statement of additional facts). For
instance, in order to get a lender to change its mind and
extend credit, Gateway might (a) insist on more money
down; (b) request that the applicant find a cosigner; or (c)
lower the price of the car in order to lower the loan-to-value
ratio. Id. at ¶ 59; see also Bayard, 292 F. Supp. 2d at 1186-
87 (finding that an automobile dealership “participated in
the decision of whether or not to extend credit” where, after
lender initially denied credit, the dealer called the lender
and advocated for extending credit to the applicant, eventu-
ally resulting in the lender’s offering credit at a higher
interest rate).
Finally, Gateway regularly set the annual percentage rate
(APR) associated with the sale. Id. at ¶ 60-62. If Gateway
set an APR higher than the rate upon which the lender
would otherwise agree to extend credit, Gateway and the
lender would split the incremental proceeds, known as the
“reserve”. Therefore, Gateway could increase the APR in
order to induce the lender to agree to extend credit and in
so doing, it was also “setting the terms of the credit” and
benefiting from the loan. See Payne, No. 02-C-1329, 2004
WL 40631, at *4 (finding that an automobile dealership was
a “creditor” for purposes of the notice requirement of the

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16 No. 03-2828
9 Under Gateway’s interpretation, even if Gateway had sent
Treadway’s applications to lenders and those lenders denied her
credit, neither Gateway nor the lenders would be required to
provide Treadway with notice of the adverse action “because
Treadway never submitted her information to an actual lender or
finance company.” Gateway Br. at 14. This would contradict the
express notice requirement of the statute. See 15 U.S.C.
(continued...)
ECOA where it, inter alia, “negotiates the terms of financ-
ing for its customers, and has the discretion to set a higher
interest rate than the lender requires”) While it is likely
that only the fact Gateway unilaterally decided not to send
Treadway’s applicant to any lender would be enough to
make Gateway a “creditor”, cumulatively these above
factors demonstrate that Gateway must be considered a
“creditor” for purposes of the ECOA’s notice requirements.
Gateway’s final argument is that Treadway never submit-
ted an “application” for credit. See Gateway Br. at 13. This
argument is without merit. According to the regulation, an
“application” is “an oral or written request for an extension
of credit that is made in accordance with procedures used
by a creditor for the type of credit requested.” 12 C.F.R. §
202.2(f). Gateway has not identified any way in which
Treadway failed to comply with Gateway’s usual procedure.
Gateway argues that “[b]ecause Treadway never submitted
her information to an actual lender or finance company she
could not have submitted an ‘application’ as defined under
the ECOA.” Gateway Br. at 14 (emphasis added). The
regulations, however, require that the applicant request an
extension of credit from a “creditor” not from a “lender or
finance company.” 12 C.F.R. § 202.2(f); see also § 202.2(e)
(“Applicant means any person who requests . . . an exten-
sion of credit from a creditor . . . .”) (emphasis added). As
discussed supra, Gateway is a creditor for purposes of the
ECOA. 9 Therefore, we find that the district court improp

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No. 03-2828 17
(...continued)
§1961(d)(4). Gateway’s argument, therefore, must be that
Treadway’s request was merely an “inquiry” which did not become
an “application” unless and until Gateway submitted it to a
lender. The Federal Reserve Board, however, has specifically
addressed “[w]hen an inquiry . . . becomes an application.” 68 Fed.
Reg. 13187. Accordingly, “if in giving information to the consumer
the creditor also evaluates information about the consumer,
decides to decline the request, and communicates this to the
consumer, the creditor has treated the inquiry . . . as
an application and must then comply with the notification re-
quirements under § 202.9.” Id. Of course, in the case before us, the
fact that the dealer failed to communicate to Treadway its
negative action on the application as submitted cannot be held
against Treadway. Therefore, even if it was not an application in
the beginning, when Gateway declined Treadway’s request, it
became an application and Gateway was required to comply with
§ 202.9.
erly granted Gateway’s motion for summary judgment with
respect to the ECOA.
B. Fair Credit Reporting Act
We review de novo the district court’s grant of Gateway’s
motion to dismiss Treadway’s FCRA claim. See Flannery v.
Recording Indus. Ass’n of Am., 354 F.3d 632, 637 (7th Cir.
2004). We accept all well-pleaded allegations in the com-
plaint as true and draw all reasonable inferences in favor
of the plaintiff. Id. Dismissal under 12(b)(6) is only appro-
priate when there is no possible interpretation of the
complaint under which it can state a claim. Id. Congress
enacted the FCRA in 1970 to address abuses in the con-
sumer reporting industry. See S. Rep. No. 91-517, at 3
(1969); 116 Cong. Rec. 35941 (1970) (statement of Sen.
Proxmire); id. at 36570 (statement of Rep. Sullivan); see
also Guimond v. Trans Union Credit Info. Co., 45 F.3d

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18 No. 03-2828
1329, 1333 (9th Cir. 1995); St. Paul Guardian Ins. Co. v.
Johnson, 884 F.2d 881, 883 (5th Cir. 1989); Hovater
v. Equifax, Inc., 823 F.2d 413, 416-17 (11th Cir. 1987).
Employers were placing increased reliance on consumer
reporting agencies to obtain background information on
prospective employees. Congress found that agencies were
too often reporting inaccurate information that was ad-
versely affecting the ability of individuals to obtain em-
ployment. See Dalton v. Capital Associated Indus., Inc., 257
F.3d 409, 414-15 (4th Cir. 2001). As Representative
Sullivan remarked, “with the trend toward . . . the es-
tablishment of all sorts of computerized data banks, the
individual is in great danger of having his life and character
reduced to impersonal ‘blips’ and key-punch holes in a stolid
and unthinking machine which can literally ruin his
reputation without cause, and make him unemployable.”
116 Cong. Rec. 36570 (1970); id. In enacting the FCRA,
Congress adopted a variety of measures designed to insure
that agencies report accurate information.
The FCRA and ECOA have similar notice requirements.
Prior to amendment in 1996, § 1681m of the FCRA provided
that “whenever credit or insurance . . . is denied . . . either
wholly or partly because of information contained in a
credit report . . ., the user of the consumer report, shall so
advise the consumer against whom such adverse action
is taken.” See 15 U.S.C. § 1681m (pre-1996 version) (empha-
sis added); Northrop v. Hoffman of Simsbury, Inc., 134 F.3d
41, 48 n.10 (2d Cir. 1997); Austin v. Bank Am. Serv. Corp.,
419 F. Supp. 730, 733 (D.C. Ga. 1974). The district court
found that Treadway could not state a claim under the
FCRA because Gateway was not a “user” of credit reports
under the FCRA. See Treadway, No. 01-C-9921, 2002 WL
554513. In 1996, however, § 1681m(a) was amended to
require that “[I]f any person takes any adverse action with
respect to any consumer that is based in whole or in part on
any information contained in a consumer report, the person

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No. 03-2828 19
shall provide oral, written, or electronic notice of the
adverse action to consumer.” 15 U.S.C. § 1681m(a) (empha-
sis added). The amended § 1681m, therefore, does not
require that Gateway be a “user” of credit for purposes of
that subsection. See Northrop, 134 F.3d at 48 n.10. Even if
there were such a requirement, there can be no doubt that
Gateway is a “user” of credit. Id. at 49 (“[A]n automobile
dealership . . . is clearly a party that in the ordinary course
of business would have occasion to request and receive
credit reports from consumer reporting agencies for the
permissible purposes described in § 1681b. It is therefore
precisely the sort of party that would be expected to ‘use’
credit reports under the Act.”). Therefore, the district court
erred by dismissing this claim on the ground that Gateway
was not a “user” of credit.
Nonetheless, dismissal was appropriate because
Treadway failed to allege an “adverse action” under the
FCRA. The FCRA defines “adverse action” more broadly
than does the ECOA. See Cannon v. Metro Ford, 242 F.
Supp. 2d 1322, 1331-32 (S.D. Fla. 2002). The FCRA defini-
tion of “adverse action” starts with the ECOA definition but
also includes a “catch-all” phrase which defines “adverse
action” as “an action or determination that is—(I) made in
connection with an application that was made by, or a
transaction that was initiated by, any consumer . . . and (II)
[is] adverse to the interests of the consumer.” 15 U.S.C. §
1681a(k)(1)(B)(iv); Consumer Reporting Reform Act, H.R.
Rep. No. 103-486 at 26 (1994) (“[T]he definition contains a
catch-all phrase that makes clear that any action taken or
determination made with respect to a consumer application
or a consumer initiated transaction that is adverse to the
interests of the consumer constitutes an adverse action . .
. .”); H.R. Rep. No. 102-692 at 21 (1992); S. Rep. No. 103-209
at 8 (1993); but see Anne P. Fortney & Linda B. Dubnow,
The New Fair Credit Reporting Act— New Duties; New
Liability; New Questions, 52 Consumer Fin. L. Q. Rep. 17 at

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20 No. 03-2828
10 It is true that Treadway made the general allegation that
“Gateway Chevrolet took adverse action against Treadway based
on information contained in a credit report.” Id. at ¶ 17. It is
possible that this general allegation might be enough to sustain
a complaint under the liberal pleading requirements of the
Federal Rules of Civil Procedure. See Fed. R. Civ. P. 8. However,
we have held that “if a plaintiff does plead particulars, and they
show he has no claim, then he is out of luck—he has pleaded
himself out of court.” Thomas v. Farley, 31 F.3d 557, 558-59 (7th
Cir. 1994); R.J.R. Services, Inc. v. Aetna Casualty and Surety Co.,
895 F.2d 279, 281 (7th Cir. 1989) (noting that a court is “not
obliged to ignore any facts set forth in the complaint that un-
dermine the plaintiff’s claim”). In this case, the district court was
unable to assume that Gateway did not attempt to arrange fi-
nancing for Treadway given that Treadway had pleaded the
opposite.
*20 (1998) (arguing that the “catch-all” language of the
FCRA applies only in non-credit transactions).
As we suggested earlier in the context of our discussion of
the ECOA, there is no question that Gateway’s decision not
to send Treadway’s application to any lender would also
constitute an “adverse action” under the FCRA. The
problem for Treadway, however, is that at the time Gate-
way filed a motion to dismiss, she was not yet aware that
Gateway had decided not to send her application to any
lender. Her complaint alleged only that “Gateway Chevolet
attempted to arrange financing for Treadway” and
“Treadway was denied credit with respect to the transaction
for which Gateway Chevrolet attempted to arrange financ-
ing.” App. at 29, Cplt. ¶¶ 12-13. It is doubtful that these
allegations are enough to constitute an “adverse action”
even under the liberal definition of the FCRA. 10 See, e.g.,
Najieb v. Chrysler-Plymouth, No. 01-C-8295, 2002 WL
31906466, at *6 n.14 (N.D. Ill. 2002) (holding that
an automobile dealership’s submission of credit reports to

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No. 03-2828 21
seven financial institutions, all of which rejected the ap-
plication, did not constitute an adverse action under the
FCRA).
Apparently Treadway never amended her complaint to
allege that Gateway unilaterally decided not to send her
application to any lender. Nonetheless, it seems that the
district court accepted this allegation as part of the com-
plaint by the summary judgment stage. See Treadway, No.
01-C-9921, 2003 WL 21372469 (“The narrow question before
us is whether Gateway’s decision to not submit her applica-
tion to a lender constitutes an adverse action requiring
notification under section 1691(d)(2).”). Given this fact, and
given that Treadway’s complaint was deficient only because
Gateway improperly withheld information regarding this
credit transaction, Treadway should be allowed to amend
her complaint to include this allegation.
III.
For these reasons, we reverse the district court’s grant of
summary judgment with respect to Treadway’s ECOA
claim. Further, we affirm the district court’s grant of
Gateway’s motion to dismiss with respect to Treadway’s
FCRA claim. However, on remand, Treadway must be given
the opportunity to amend her complaint to allege an
“adverse action” under the FCRA.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-2-04

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