Is spot delivery legal?
In Michigan, spot delivery (or yo-yo scams) are illegal. Both the Department of Financial and Insurance Services, as well as the Department of State, have issued position papers explaining that these practices violate Michigan law. Specifically, the act of retaking and re-titling a vehicle without a breach by the consumer violates the Michigan Motor Vehicle Code and its provisions concerning the proper issuance of titles. Additionally, the Michigan Motor Vehicle Sales Finance Act prohibits contract provisions that would allow a dealership to treat an installment contract as conditional. A taking of a consumer's vehicle without a default by that consumer is a conversion and can be remedied through the courts.
Why do car dealers spot deliver cars?
Most often, dealers spot deliver cars because they are overly eager to lock down a consumer before that consumer can buy a car elsewhere. In many cases, consumers are in the dealership late in the evening, after the the finance companies have closed up. In those instances, the dealers cannot get an approval for a proposed deal. And rather than allowing the consumer to walk away, and possibly begin shopping elsewhere, the finance manager lies about an approval and has the consumer sign paperwork for a deal. If the dealer is unable to get an approval after signing up the consumer, the dealership will work on getting the car back, sometimes with lies and tricks, and sometimes with a tow truck and repo agents.