Dealers tell consumers they have to return their vehicles unless they pay more

Scam Warning Road Signs / Consumers Beware: Don't Let Dealers Take You In with a Yo-Yo Auto Sale Scam
Image: NCCC
February 15, 2017

You've finally filled out all the paperwork for a new or used car and drive it off the lot in triumph. Then, only a few hours (or days or weeks) later, the dealer calls you and tells you that you have to return the car because your financing didn't go through. What's going on?

The Scam

This situation is known as a spot delivery or yo-yo sale. Both parties have done everything required by law to sell (or in your case, buy) the car. Then the dealer contacts you and says that you have to bring it back, but that you can still keep it if you pay another fee, a higher interest rate, or otherwise fall for some other monetary catch.

This fraud usually happens at small used car dealerships, though it does also sometimes happen at bigger ones, too. The problem, often related to your credit, is not your fault. Dealers frequently plan to finance the loan through the dealership with the intention of later selling it to an actual finance company. Sometimes, however, they find out that they won't be making as much on the sale as they had expected or that no finance company will buy the loan on the terms that you originally agreed to.

What to Do

Remember, you have a legally-binding contract with the dealer. By law, the dealer has to honor that contract just like you do. In many past cases, consumers who have gotten a lawyer and pursued legal actions have almost always won their cases, and they often get settlements between $50,000 and $100,000. So if this happens to you, there are two simple steps you should take:

  1. Contact a lawyer immediately
  2. Contact the North Carolina Attorney General's Office

The dealer will try to convince you that in order to keep the car, you have to void the original contract and sign a new one that includes higher fees and interest. Dealers often claim that they can't give you your old vehicle back either because it has either been auctioned or sold, but the reality is that no sale goes through that fast. The dealer more than likely has the car on one of its overflow lots.

Remember, always carefully read over your paperwork before signing it, and make sure to keep it after you drive off the lot. You never know when you might need it.