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Can I sue for Yo-Yo financing?

One of the most common car dealer scams—to the point that a lot of dealerships do this on almost every sale—is called the Yo-Yo financing scam. It’s also been called a “spot delivery” scam or a gimme-back scam. It works just like a Yo-Yo does: the car dealer gives you the car and tells you you’ve qualified for financing—and then takes it back a few days later, claiming the financing fell through. If you don’t give them the car back, they repossess it, charge you extremely high fees for every day you have it, or in a few cases have even had people arrested and start calling them thieves.

The whole point of the scam is to get you stuck with the car, but on worse terms. You get the car “on the spot.” Then you take it home, get used to it, show it off to your friends. You’ve made a big down payment on it. And suddenly the car dealer is calling you saying the financing didn’t work after all, you have to pay higher interest rates and more money, your monthly payment is going to go up, and if you don’t come in and sign a new contract, they’ll report you to the police.

This is a classic fraud. And yes, you may be able to sue over it, particularly if they lied to you and told you that you were already approved. If you’ve run into a yo yo financing scheme, call us at 657-845-3100, or e-mail us at contact@kneuppercovey.com. We don’t charge to evaluate cases, and you may have a legal claim.

What kinds of lawsuits can I file if I’m a victim of a yo-yo financing scam?

There are a few options we can use to help you, but it depends on what state you’re in.

First of all, if they’ve made any threats to you, particularly in writing, save them. In a lot of states you could have a legal claim under debt collection laws. For example, in California, the Rosenthal Fair Debt Collection Practices act prevents them from falsely threatening to have you arrested, from harassing you, or from various other tactics. Trying to get the car back could qualify as debt collection because a car is property. And the statute imposes a $1,000 penalty in addition to whatever your damages are, as well as makes them pay your attorney’s fees.

Second, most states have consumer protection laws and laws against fraud. In many states the statutes are extremely favorable to consumers, and they can’t lie to you, cheat you, or do schemes like this. The lemon laws in some states might cover this kind of scheme as well.

Third, there’s a kind of lawsuit called a “conversion” suit which essentially says someone stole your property. If the dealership took the car back but didn’t have the right to, you might have this kind of claim.

And fourth, there are a lot of federal statutes that we might find violations of in the financing paperwork. Laws like the Fair Credit Reporting Act, the Equal Credit Opportunity Act, or the Truth in Lending Act could give you the right to sue.

Our attorneys routinely sue car dealerships that engage in fraudulent practices like this. We also have a regular practice in arbitration, which is kind of like a miniature lawsuit. A lot of car dealership contracts have arbitration clauses. Sometimes we can get around them, but if we can’t, we know how to win in arbitration and get you a recovery even if we can’t go to court because of the contract.

If a car dealer scammed you or played tricks with the financing for your car, call Kneupper & Covey PC at 657-845-3100, or e-mail us at contact@kneuppercovey.com. We take most of our cases on contingency, meaning we only get paid if we win. We can take a look at your claim at no cost and see if we’ll be able to help.

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    If you have fallen victim to shady claims and advertising tactics contact us today for a free evaluation of your case.​