Case: Treadway v. Gateway Chevrolet Oldsmobile Inc.


The plaintiff, Tonja Treadway appeals the 12th April 2002 ruling by the District Court against the defendant Gateway Chevrolet Oldsmobile, Inc., where the motion by the latter to dismiss was granted (Buick, n.d.). The plaintiff alleges violation of ECOA (Equal Credit Opportunity Act) and FCRA (Fair Credit Reporting Act) since Gateway failed to notify it of its failure to send their application to lenders.

Tonja received a direct mail from Chevrolet indicating that it was pre-approved to receive funds to buy a used car. The plaintiff called the listed number to inquire of its credit report in order to purchase the car via the defendant. Gateway informed her that it does not offer funds for the cars it leases or sell, but it organizes for financing from financial institutions. The defendant decided not to send the plaintiff’s funding application to other lenders, and never notified Treadway, instead it indicated that the funds were only available if she had a cosigner. She managed to avail a cosigner, but it ended that the cosigner was to buy the car on her own since Gateway did not get the financing for Treadway. This led to the 28th December 2001 suit in the district court under the FCRA and ECOA, which was dismissed and this appeal followed (Beatty, Samuelson, & Abril, 2018).

Main Issues in the Case

  • Whether Gateway Chevrolet, Oldsmobile, Inc. violated the Equal Credit Opportunity Act (ECOA).
  • Whether the district court provided a proper ruling regarding the case.


The district court indicated that GCO is a creditor based on the ECOA creditor requirements. A creditor according to ECOA is an individual who renews, extends or continues credit or arranges or is an assignee of a creditor for the continuation, extension or renewal of credit. However, this decision was improperly made based on the Equal Credit Opportunity Act 12 C.F.R § 202.4 (a) and (b).

Equal Credit Opportunity Act indicates that lenders should notify loan applicants of the status of their loan application, and provide the reasons behind a loan rejection. Gateway did not forward Tonja’s application to any financial lender, which means it rejected the application. Failure to notify Treadway means that it will automatically assume that financial institutions rejected its application. Gateway, therefore, exercised an adverse action under ECOA 15 U.S.C. § 1691(d) (6). Under secret deals, this would mean that there would be no accountability for the credit report provided to the loan applicant. This creates an opportunity for Gateway and other such firms to continue discriminating other firms without chances of being caught. The ECOA stature aims at controlling discrimination by emphasizing that creditors offer an explanation for their decisions and the fact that affected victims can get redress does not fulfil the purpose of the stature.

It is clear that GCO violated the ECOA restatements and thus the final decision by the district court is reversed.  


Beatty, J. F., Samuelson, S. S., & Abril, P. S. (2018). Business law and the legal environment. Cengage Learning.