Consumer Groups Call on Federal Trade Commission to Ban Deceptive “Yo-Yo” Auto Sales Practices Consumers’ Federation of America

Washington, DC – Consumer Federation of America joins the National Association of Consumer Advocates, Center for Responsible Lending, Consumers for Auto Reliability and Safety, National Consumer Law Center and US PIRG in urging the Federal Trade Commission (FTC) to issue a new rule that prohibits deceptive “yo-yo” or on-time delivery practices by car dealerships.

When a consumer signs a credit agreement disclosing the cost of financing and pulls the car off the lot, the deal appears to be complete from the consumer’s perspective. Some resellers, however, use a deceptive tactic where they know at the time of sale that the deal may not be final. The dealership calls the consumer days, weeks, or even months later to tell them that they have to pay an additional fee or a higher interest rate to keep the car, or that the deal needs to be canceled completely and that the consumer must return the car. This process of subjecting a consumer to back and forth with the dealer pushes consumers to pay more than they expected and agreed to and adds significant stress and uncertainty to an already complicated financial transaction. and expensive.

“Sales of yo-yos often harm consumers by lowering their credit scores, forcing them to forfeit their hard-earned down payments and jeopardizing their primary means of transportation,” said Erin Witte, chief consumer protection officer. consumers for the Consumer Federation of America.

In the petition, consumer advocates called on the FTC to issue a rule requiring dealers to add language to consumer credit agreements stating that the terms of the agreement are final, even if the contract is assigned to a third. Violations would be enforceable by the FTC. The petition provides concrete examples of consumer experiences with on-time deliveries, including a case where a consumer was repeatedly sent to the dealership with requests to sign new contracts, provide a co-signer, and new financial documents. After more than 40 days, the dealer said the case had failed and threatened to file a stolen vehicle report unless the consumer returned the car.

“The proposed rule would help reduce the cost of purchasing vehicles and level the playing field between consumers and auto dealers,” Witte continued. Consumer advocates have also pointed out that the practice undermines federal laws such as the Truth in Lending Act, which requires timely disclosure of clear and specific financial terms.

“Certainty, transparency and clarity of terms of sale, particularly financing details, are key to facilitating a smooth, incident-free and injury-free process for all parties in this seemingly complex process,” the consumer groups said. in support of the petition.


Contact: Erin Witte, 202-596-9807

Aurora J. William