Car salesman have a notorious reputation for haggling consumers into buying new vehicles. While, of course, this practice isn’t illegal, some dealers can take additional steps that are clearly illegal. One such tactic is called a ‘yo-yo’ sale.
Consider this: your are at a dealership looking for a new vehicle. You negotiate a purchase price, and the dealer says your credit application was approved. You sign the paperwork and drive the car home. Then, days or weeks later, you get a call from the dealership saying that there was an issue with your credit application and that you actually weren’t approved. Instead, you need to come back and return the vehicle, or sign a new (less favorable) deal.
This example is a classic yo-yo sale, aptly titled because you drive away, only to be pulled back later. It is also illegal in many circumstances, violating both state and federal consumer protection laws.
Dealers can use this deceptive sales tactic for many reasons. It may want the certainty of your sale and want you to stop shopping around, while the dealer can still consider its options. It may think you can be pressured into paying more money for the vehicle. Or, it may not be able to assign your deal to another bank for as much profit as it originally thought. Some dealers will even refuse to return your trade-in, or say that it has already been sold, in order to get your agreement for less favorable terms. The idea is to put as much pressure on you as possible to agree to pay the dealer even more money – particularly after you’ve already shown off the new car to your friends and family.
In defense of this practice, dealers will often claim that the deal with you was conditional on financing approval from another bank, and that it was not accepted. In other words, it is arguing that the deal was fully enforceable against you, but not against them. Some dealers will also include language to this effect in the paperwork they give you. In many circumstances, though, this language will contradict the actual contract you signed, or may not be enforceable for other reasons.
In Massachusetts, the Attorney General has published regulations specifically prohibiting dealers from attempting to increase the sale price of a vehicle after a buyer’s offer has already been accepted, and it further requires dealers to clearly identify any conditions that exist before a sale is binding on all parties. 940 CMR § 5.04. Additionally, the Massachusetts Consumer Protection Act clearly prohibits any such unfair and deceptive practices. In some cases, this practice may also violate federal consumer protection statutes, including the Truth In Lending Act and the Equal Credit Opportunity Act.
If you believe you were the victim of a yo-yo sale, or any other automobile fraud issue, then please contact Brine Consumer Law today at (508) 556-1899. All initial consultations are free, and most automobile fraud cases can be taken on a contingency fee basis, meaning that there is no out of pocket cost to you.
Photo credit: Enrique Calabuig