A consumer drove away from the dealership and thought there was nothing left to do except wait for the arrival of his permanent registration and title.
A few weeks later, somebody from the dealership called to say that the deal had fallen through and that he would need to come back to sign new paperwork.
The consumer was confused. He thought he had already signed whatever paperwork was necessary, and he couldn’t imagine why he needed to go back to the dealer. When he returned to the dealership, the finance manager insisted that he needed to make a larger down payment in order for the lender to finance the deal. The consumer had already shown off his new vehicle to his friends and family and would be mortified to have to return the vehicle to the dealership.
This is a type of financing fraud known as a yo-yo transaction because, after the dealer let you go with the vehicle, the dealer snaps back on the transaction with a sudden change. It could be that the dealership is no longer willing to sell the vehicle at the original price, that a larger down payment is now required, or that the interest rate has gone up.
In any event, if any of the material terms of the contract have changed, you may have a cause of action under the Truth in Lending Act. The Truth in Lending Act (“TILA”) is a federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending agreement and all costs. The statute is contained in Title I of the Consumer Credit Protection Act, as amended, 15 USC §§ 1601 et seq. The regulations implementing the statute, known as “Regulation Z,” are codified at 12 C.F.R. § 1026. The purpose of TILA is to promote the informed use of consumer credit by requiring disclosures about its terms and costs. TILA provides for statutory damages, actual damages, and attorney fees for its violations.
