Prevost and Shaff

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There are two primary areas you could have been adversely affected by a car dealership. One is called “cash price violations” and the other is called “yo-yo sales.” Both are illegal.

A cash price violation occurs when a dealer simply raises the price of the car to cover-up negative equity in a trade. If you are “upside down,” or owe more than the trade is worth this must be disclosed by the dealer in a legal way. It cannot be handled by simply increasing the price of both the new car and the trade to create false equity in the trade.

A cash price violation also occurs when an “acquisition fee” is added to the price of the car. Sib-prime lenders sometimes require the dealer to pay an up-front fee in order to secure a loan. The dealer then can be inclined to increase the price of the car to cover the fee. This is expressly prohibited by statute. If this has happened to you, you are enttitled to recover three times the fee, plus attorney’s fees and costs of court.

A yo-yo sale or sometimes referred to as a “spot sale” occures when a dealer lets the customer sign purchase contract and the dealership with the new car, then calls the customer later to say the financing fell through and they will have to come in and sign another deal. This obviously can put you in an embarassing situation of having to either give the car back or sign a new deal.

In this case, the dealer might say that the customer cannot back out. This is not true. The dealer may also convey to the customer that their trade-in has alrady been sold, forcing the customer to either have no car or to sign the new and less favorable contract. This is called “de-horsing” and violates state law.

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