This post is about a common scam we call a yo-yo sale, in which a consumer has taken delivery of a car and then receives a call, text, or email from the dealer asking the consumer to return to the dealership, usually a day or two after the sale, because there was a problem of some sort with the paperwork.
There are lots of variations of this scam. What you should know is that if you buy a car and are subsequently asked to return and sign papers changing the deal, it’s most likely illegal and most likely a scam.
The most common way this happens – and the classic form of it – is involves the dealer financing. Dealers are often able to put you in the car and let you drive it home before the financing is truly approved. Really when you buy a car from a dealer and elect their financing, rather than bringing your own, the dealer is facilitating a credit arrangement with a bank or financial institution. Sometimes dealers overstep; they put you in a car and at a finance rate that the bank later doesn’t agree to. Then they call you back and ask you to come in and sign papers for a new deal at a higher interest rate.
A variation of this deal involves car warranties. I’ve seen cases where the dealer sells a car with a warranty, then claims there is some kind of problem setting the warranty up and they need you to sign new paperwork.
Sometimes when this happens, it’s because the dealer was too aggressive in making the sale, and promised terms of financing that the bank later wouldn’t approve. Rather than eat the costs of that, the dealer calls the consumer back to change the deal. Other times, the act is deliberate. The dealer knows that the consumer is less likely to put up much of a fight when the consumer has already surrendered their trade-in.
If this happens, you have more rights than you might think. First, you do not have to agree. You can give the car back and get you money and your trade back. The dealer might not say that at first and might initially refuse, but you can stand your ground. Second, when this happens, it usually violates a number of laws. It’s usually a violation of the Federal Truth in Lending Act; the Fair Business Practices Act; and, for elderly citizens of Georgia, a violation of the Unfair and Deceptive Practices Toward the Elderly Act. Most of these statutes have fee shifting provisions, making the dealer responsible for paying your attorney fees.
If you think you have been the victim of a yo-yo sale, call Divis Law for a free consultation. We are a consumer law firm and have experience with yo-yo sales.