The Holiday Season is upon us, and many people will be shopping for cars. Do not fall prey to the “yo-yo scam.”
So what is a “yo-yo scam” anyway? Many people are not familiar with the term. But the scam is something you need to be aware of so that you are not taken advantage of the next time you go shopping for a new (or pre-owned) car.
A typical yo-yo scam looks like this: after negotiating a contract, the car dealership tells the consumer that she is “all set” to buy the car she has carefully selected to take home and that her credit application has been approved. The consumer signs the contract, pays the dealer the down payment and proudly drives home in her new set of wheels. She shows her shiny new car off her to her friends, family, and co-workers, and maybe even posts about it on Facebook. A few days or even a few weeks later, the car dealer calls and says, “There is a problem with the bank. Your application was not approved.” or “Your financing fell through”
At this stage, several things can happen. Sometimes the dealer tells the consumer she has to return the car but the dealership keeps the down payment. Other times the dealer may tell the consumer she has to pay a bigger down payment or sign a new contract to keep the car. The new contract will probably have a higher interest rate. If the consumer does not accept the dealer’s new terms, the dealer may threaten to call the police and report the car stolen. Or the dealer may literally come to the consumer’s house in the middle of the night and take the car from the driveway or at their office while co-workers are watching.
This type of auto dealer fraud is known as a “Yo-Yo,” because the dealership pulls on the string and takes the car back. Yo-Yo scams harm consumers and violate the law. Car dealers violate state and federal laws when they sell a car to a consumer and then try to change the deal or they make the consumer give the car back. Consumers victimized by this scam can sue the dealership for damages and attorney’s fees.
How to Protect Yourself:
Here are several things you can do to make sure you don’t get into a situation like this.
Never drive a car off the lot without approved financing. If you can’t get immediate financing, wait until the financing is approved. Arrange your own financing before going the dealership if you can.
Read every document you are asked to sign and get copies. A dealer may tell you that the contracts contain propriety information, so you cannot have a copy. This is not true. You have a right to a copy of any document you sign.
Never sign any documents that are not completely filled in. Draw a line through any blank spaces.