A coalition of nonprofit consumer-advocacy and public-interest organizations submitted a letter to the Colorado Motor Vehicle Dealer Board on Thursday, January 24 demanding that the board take action to cease an abusive tactic employed by the Colorado auto dealer industry.
In particular, the letter addresses “yo-yo” clauses, which dealers use to sell a car conditioned on obtaining financing, and then when financing falls through, apply leverage to impose worse financing terms or extract fees for use of the car if consumers decide to return it. State law sought to improve transparency around “yo-yo” clauses by requiring dealers to use model disclosures written by the Colorado MVDB. But the Colorado MVDB, which is made up of industry participants, issued model disclosures that charge daily fees for use of the car starting from when a consumer takes the car off the lot, and not when the consumer learns that financing fell through. The coalition, which includes the Center for Public Interest Law at the University of San Diego, the Center for Responsible Lending, Consumer Federation of America, Justice Catalyst, the National Consumer Law Center, and U.S. Public Interest Research Group, hopes the letter will encourage the Colorado MVDB to change the form, which has already significantly harmed consumers.