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. In fact, Treadway had recently filed for bankruptcy and wasnot eligible for credit, a fact GCO knew.GCO promised to apply for a loan on Treadway’s behalf, but never did. Instead it told her she had to have a cosigner. Her godmother, Pearlie Smith, agreed to cosign. When GCO presented Smith with the papers, she did not read them, so she did not realize that she was in fact agreeing to purchase and pay for the car herself. 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 financing company repossessed the car but continued to demand payment. 

GCO was running a scam. It 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 Tonja Treadway, GCO sold a new car to Pearlie Smith. 

Treadway sued GCO, alleging that it had violated the ECOA by not notifying her that it had taken an adverse action against her. The district court granted GCO’s motion for summary judgment on the grounds that GCO had not committed an adverse action under the ECOA. This appeal followed.

Questions:

1. Did Gateway violate the ECOA?

2. Did Treadway ever file a loan application? 

3. Then how could she claim that she had been denied credit?

4. Did the court rule that GCO had discriminated?