DIFS and Spot Delivery or Yo-Yo Scams

In a widely distributed opinion letter, the Michigan Department of Commerce, Financial Institutions' Bureau, stated that in the Bureau's opinion, it is unlawful for a motor vehicle installment seller to condition a sale on the seller's subsequent success in selling the retail installment sales contract to a third party purchaser of the contract. Murray Brown Letter (1989).

In a consumer information DFIS bulletin, 4-11-00, the State of Michigan also warns consumers about spot delivery, stating: “[T]he dealer has the choice whether to assign the contract. The dealer has sole control over the effort it will make to assign a contract. A motor vehicle installment sale contract conditioned upon the contract's assignment to a finance company violates the [Motor Vehicle Sales Finance Act]. Such a provision is not enforceable.  [T]he contract is not void. It is legally You are still responsible for making the payments as required by the contract. If the dealer requests that you return to sign a new contract, you are not required to do so.”

In a memo authored by Department of Insurance and Financial Services confirmed that spot deliveries violate Michigan's Motor Vehicle Sales Finance Act and that the threats of repossession operate as illegal demand acceleration clauses or demand features.

Secretary of State and Spot Delivery or Yo-Yo Scams

The Michigan Secretary of State Dealer Manual, § 3-3.4, expressly prohibits dealers from repossessing vehicle based on their inability to sell a consumer's installment contract. The repossession and retitling of the vehicle constitute a violation of the Michigan Motor Vehicle Code and the dealer's license.  

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