Spot delivery continues to be a hot button for federal and state regulators and particularly plaintiffs’ lawyers. To support their opposition, they have labeled all spot deliveries as “yo-yo sales”. That is nonsense.
The phrase “yo-yo sale” implies a delivery of a vehicle with no intention to assign the retail installment sale contract on the terms agreed between the dealer and the customer to force the customer to return and change the deal to enhance the dealer’s profit. That is different than the practice of spot delivering vehicles that involves delivering a vehicle prior to the completion of payment. Spot deliveries are the rule in the car business. Yo-yo sales are not.
Opposition to spot delivery serves a purpose for opponents, particularly plaintiffs’ lawyers who try to use it as an “out” for consumers with any complaint about a deal. Given this incentive, dealers must follow the rules and protect the right to spot deliver.
Where are the rules? In Virginia law that is embodied in the notice on your form buyer’s order. And in the laws enforced by the Federal Trade Commission which is charged with oversight of car dealers at the federal level as shown in a recent consent order between the agency and a California dealer group that agreed to pay a civil penalty of nearly $4 million. The group agreed to the stringent consent order as a result of admitting violations in advertising and sales practices, particularly spot deliveries that the FTC referred to as … no surprise … yo yo sales.
Here is a quiz to determine your knowledge of proper spot delivery practices.
- True or False? Unless spot delivery is prohibited by state law, a dealer has a right under state law to rescind a deal prior to titling the vehicle for the customer.
- True or False? Once we deliver a vehicle, we must seek approval from a finance or lease source.
- True or False? Even though we have determined to rescind a RISC or lease, we can negotiate a revision with a customer.
- True or False? Once we decide we must rescind a deal, we can retake the vehicle in any way we can.
- True or False? We have put the car out for pick up by a recovery service because we decided to rescind the deal, but we are unable to find it. We can report it stolen.
- True or False? We have a difficult customer who is finally agreeing to return the vehicle. Because of the extra work we had to do, we wish to keep the downpayment. We may do so if we can justify our expenses.
- True or False? We spot delivered a car. We have limited space to hold the trade. We decided to wholesale it on a string. That is permitted.
- True or False? Once I spot deliver the vehicle, I should not pay off the trade until the deal is complete.
- True or False? We have the vehicle back. Our policy is to charge half the federal allowance for mileage put on the vehicle, and we may do so.