The Spot Delivery or “Yo-Yo” Scam A widespread practice among car dealers Ohio was a "green light" state for defrauding car buyers. Now SB 117, by limiting damages above out-of-pocket costs, has made dishonest dealing even more profitable.

One widespread practice in the car dealer industry is the spot delivery or “yo-yo” scam. In this scam, the dealer tells the consumer that financing is approved, and allows the customer to take the car home. The dealer takes possession of the consumer’s down payment and trade-in. A few days later, the dealer calls the consumer back (the “yo-yo”) and says the financing fell through. The dealer offers to arrange different financing at a higher cost to the consumer and a higher profit to the dealer. Many consumers agree to the higher priced deal under threat of losing their down payment and trade, and out of embarrassment over the (often false) claim that the problem is caused by the consumer’s bad credit rating. Consumers who refuse the new deal are accused of breaching the contract, and the dealer pockets the deposit.

Deceptive spot delivery or yo-yo practices are highly profitable to car dealers. When an Ohio jury heard 14 witnesses describe an Akron area car dealer’s repeated practice of cheating its customers with that scam and issued a substantial judgment against the dealer, other car dealers around the state were alarmed about this threat to this profitable but dishonest practice. The Ohio Automobile Dealers Association joined with the car dealer to challenge the jury’s verdict on appeal. The appellate court confirmed the jury’s findings that the car dealer committed 11 separate illegal acts in the course of the yo yo transaction, but strictly limited the damages consumers can recover as a result of the dishonest conduct.

After the court reduced the amount the dealer would have to pay to pocket change, a nationwide car dealer group, the National Automotive Finance Association, put a report on its website called “Spot Delivery in these United States: Legal Updates and Trends in Spot Deliveries.” Written by an auto industry lawyer, the report includes a color coded map of the U.S., with each state colored red, yellow, or green for whether car dealers can engage in such practices in that state. Ohio is one of only fourteen states colored green for “green light” or “go.” The report points to the appellate court’s damage limitation as its authority for designating Ohio as a green-light state — although the practice is clearly illegal, Ohio gets a green light because there is no price to pay if the dealer gets caught.

If State Bill 117 is allowed to stand, the damage limitation will be a “green light” for dishonest businesses to cheat consumers with virtual impunity. Our Legislature gave a green light to cheaters — telling them “go ahead, cheat all you want.”

It is up to Ohio consumers to step on the brakes and to say NO to cheating and lying.