Auto Fraud: Spot Delivery and Yo-Yo’s

Auto fraud scams such as spot delivery or “yo-yo’s” may not be common terms, but as illegal practices, they are more common than you think. The scam usually works something like this: You pick out the car you want, sign some paperwork, and drive off the lot thinking you are the proud owner of a new vehicle. In other words, you received delivery of the vehicle “on the spot.”

You may not have read the fine print on the contract that says delivery is conditioned upon approval of your financing package. A few days or weeks later, you get a call from the dealer, who tells you that your financing fell through and you have to renegotiate a loan at a higher rate (meaning a higher monthly payment), or that you have to make an additional down payment, usually $1,000 or more, in order to keep the car.

If you refuse, the dealer may tell you that you don’t have a right to keep the car, threaten to repossess it, or have you come back to the dealership and make you wait for hours to wear you down. If you say you would prefer to get your trade-in back, he will tell you that it’s already been sold. You feel like you’re between a rock and a hard place, so you sign the papers. The end result is that the dealer gets a bigger kickback from the financing company.

The best way to avoid the yo-yo scam is to understand that you have rights under the Truth in Lending Act. One of those rights is to get the dealer’s credit offer in writing. Then shop for the best financing terms you can find. Remember that the dealer isn’t committed to finding cheap financing for you; he’s committed to making the greatest amount of money from the financing package he can sell to you.

If you’ve been the victim of a yo-yo scam, it’s time to consult an attorney with experience in auto fraud. Lemberg & Associates attorneys are well acquainted with the law that prohibits spot delivery and other types of auto fraud schemes. You can sue the dealer for violating truth-in-lending laws, but you can bet that the dealer will have a team of lawyers at his side. You’ll only be on equal footing if you have your own attorney to lay out your case and to get you the compensation you deserve.