CONSUMER LAW
Vehicle Financing Fraud
Yo-Yo Financing, TILA Violations & Trade-In Payoff Fraud
The financing desk is where many car dealers make their real money — and where many of the most serious consumer violations occur. Federal and Florida law impose strict disclosure requirements on auto lenders and dealers. When those requirements are violated, you may be entitled to rescind the transaction, recover damages, and collect your attorney fees.
Yo-Yo Financing / Spot Delivery Scams
Yo-yo financing — also called a spot delivery scam — occurs when a dealer lets you drive the car home on a conditional basis, then calls you days or weeks later to say the financing 'fell through' and demands that you return the car or sign a new contract at a higher interest rate or with worse terms. This practice is deceptive and may violate FDUTPA, the Truth in Lending Act (TILA), and Florida's motor vehicle dealer statutes. If the dealer already reported the trade-in or spent your down payment, you may have additional claims. Courts have found that conditioning a sale on financing approval without clearly disclosing that condition — and then using the threat of repossession to force a consumer into worse terms — is an unfair trade practice.
Truth in Lending Act (TILA) — 15 U.S.C. § 1601
TILA requires creditors to clearly and conspicuously disclose the annual percentage rate (APR), finance charge, amount financed, total of payments, and payment schedule before you sign a retail installment contract. Violations include burying fees in the finance charge, misstating the APR, failing to disclose prepayment penalties, and misrepresenting the total cost of the loan. A TILA violation entitles you to rescind the transaction within three years in certain cases, recover twice the finance charge (up to $2,000 per violation in individual actions), and collect attorney fees.
Trade-In Payoff Fraud
When you trade in a vehicle with an outstanding loan, the dealer promises to pay off that loan. If the dealer fails to pay off the loan promptly — or pockets the payoff and leaves you responsible for a loan on a car you no longer own — you may have claims for breach of contract, fraud, and FDUTPA violations. This situation can destroy your credit and expose you to collection actions on a debt you believed was satisfied.
Interest Rate Markups and Dealer Reserve
Dealers often receive a 'buy rate' from a lender and then mark up the interest rate before presenting it to you. While some markup is legal, dealers who mark up rates based on race, national origin, or other protected characteristics violate the Equal Credit Opportunity Act (ECOA). Additionally, if the dealer misrepresents the rate as the 'best available' or as a rate set by the lender, that misrepresentation may be actionable under FDUTPA.
Remedies
Depending on the violation, remedies may include rescission of the retail installment contract, recovery of all finance charges paid, statutory damages under TILA, actual damages under FDUTPA, and attorney fees. In cases involving intentional fraud, punitive damages may also be available.
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