Texas Appeals Court Rejects Dealer Take-Back Tactics, aka "yo-yo" transactions

A Texas court of appeals recently sent a strong message in a case involving Bayway Chevrolet, a dealership in Pearland, Texas. In McCarthy v. Wisch Auto Group, Inc. d/b/a Bayway Chevrolet, the Houston Fourteenth Court of Appeals pushed back against the idea that a dealer can make a sale look final, hand over the keys, and then later act like the deal was never really done because financing fell through.

This case is a good example of what people often call yo-yo financing. The buyer thinks the deal is complete, signs the papers, and leaves with the car. Then later the dealer tries to change the terms, demand the vehicle back, or otherwise unwind the deal. The court reversed important parts of the lower court’s ruling and revived claims involving deceptive trade practices, fraud, debt collection violations, trade-in payoff problems, and part of a federal credit claim.

The appeal was decided by the Houston court of appeals, but the trial court was the 149th District Court of Brazoria County, which sits in Angleton, Texas.

In plain English, the message of the case is this: a dealer should not be able to tell a buyer the deal is done, only to try to change the rules later when financing problems come up. For Texas consumers, this is an important case because it shows courts are willing to look closely at these kinds of dealer tactics.