AG files 29 legal actions against car dealers for deceptive business practices

HARRISBURG — Attorney General Bruce R. Beemer today announced the Office of Attorney General has filed 29 legal actions against individuals and automobile businesses accused of engaging in unlicensed car sales, selling unroadworthy vehicles and publishing deceptive advertisements.

The legal actions are the result of investigations conducted in 2016 by the Attorney General’s Bureau of Consumer Protection, which is tasked with investigating cases of unfair and deceptive business practices involving persons or organizations operating in the Commonwealth.

In addition to the legal actions, the Bureau of Consumer Protection in 2016 issued 130 warning letters to new and used motor vehicle dealers related to advertising and sales concerns.

These legal actions and warning letters involve businesses and individuals located in Allegheny, Cumberland, Dauphin, Delaware, Philadelphia and Lackawanna counties, among others. They are the result of an ongoing statewide initiative designed to detect automobile dealers engaging in deceptive business practices.

Agents with the Bureau of Consumer Protection reviewed online, television, radio and other forms of advertisements to ensure organizations are complying with relevant federal and state laws. Some of those include the Pennsylvania Board of Vehicles Act, the Pennsylvania Automotive Industry Trade Practices Regulations and the Unfair Trade Practices and Consumer Protection Law.

This initiative has been led by Deputy Attorney General Nicole R. DiTomo of the Attorney General’s Bureau of Consumer Protection. It is expected to continue in 2017.

Unlicensed sales

The Pennsylvania State Board of Vehicle Manufacturers, Dealers and Salespersons (“State Board”) requires any person, corporation, or other entity who is engaged in the business of buying, selling, or exchanging new or used vehicles to be licensed as a motor vehicle dealer. A person must be licensed by law if that person sells or negotiates the sale of five or more motor vehicles in a calendar year. Licensed salespeople may only sell motor vehicles for the dealership that they are associated with by the State Board. The Bureau in 2016 took legal action against 16 individuals and entities for allegedly conducting unlicensed sales within the Commonwealth. Some notable examples include:

  • Real McKoy Auto Sales, LLC (Delaware County) – Litigation is ongoing after a lawsuit was filed alleging  this company was selling motor vehicles without holding a dealer license from the State Board and was publishing advertisements without disclosing the business’ name.
  • New Kingstown Auto, LLC (Cumberland County) – Litigation is ongoing after a lawsuit was filed alleging this company publishes advertisements without disclosing the business’ name and allowed individuals to sell vehicles without being properly licensed.
  • Luxury Brokers International, LTD (Philadelphia County) – Individual salespeople were allegedly conducting business separate and apart from their associated dealership. An assurance of voluntary compliance, which is a legal settlement, was filed obtaining a $10,000 civil penalty.

Unroadworthy vehicle sales

The Auto Regulations explain that a motor vehicle offered for sale in the Commonwealth is represented to be roadworthy and the advertiser or seller shall disclose, prior to sale, specific conditions the advertiser or seller knows or should know exist in the vehicle. Issues that should be disclosed include whether the frame is bent, cracked or twisted; whether the engine block or head is cracked; whether the vehicle is unable to pass state inspection; whether the transmission is damaged, defective or deteriorated requiring replacement; whether the vehicle is flood damaged; or whether the differential is damaged, defective or deteriorated requiring replacement. Sellers who fail to disclose these conditions misrepresent to the buyer the quality of the vehicle. In 2016, the Bureau filed four legal actions against individuals and entities for allegedly selling unroadworthy vehicles. Some notable examples include:

  • Robert Ferri and Elite Motors USA (Lackawanna County) – Litigation is ongoing after a lawsuit was filed alleging the company was offering vehicles for sale that were not roadworthy and failed to provide consumers with appropriate financing terms as required by the Consumer Credit Code.
  • Ameri Motors, Inc. (Philadelphia County) – This company was allegedly offering vehicles for sale that were not roadworthy and was allegedly advertising vehicles “as-is” while at the same time offering limited warranties. An assurance of voluntary compliance was filed obtaining $24,000 in restitution for affected consumers.

Other misleading or deceptive conduct

The Consumer Protection Law prohibits any unfair methods of competition or unfair or deceptive acts or practices, such as engaging in any fraudulent or deceptive conduct, which creates a likelihood of confusion or of misunderstanding. Any person or entity whose business practices or advertisements are deemed misleading or deceptive could be subject to legal action. The Bureau in 2016 took legal action against nine individuals and entities for allegedly misleading or deceptive conduct within the Commonwealth. Some notable examples include:

  • Shelby Greer and A Complete Price Quote Transmission & Engine Repair (Allegheny County) – This repair shop was allegedly advertising that they were “licensed” to complete automotive repairs, when no such license exists in the Commonwealth. An assurance of voluntary compliance was filed obtaining a $1,000 civil penalty.
  • Yasse’s Auto Sales, LLC (Dauphin County) – This company was allegedly advertising vehicles for sale on Craigslist without disclosing a business name and caused confusion by offering limited warranties on vehicles sold “as-is.” An assurance of voluntary compliance was filed obtaining a $1,850 civil penalty.

Attorney General Beemer offered the following tips to consumers when they are purchasing a new or used vehicle:

  • Comparison shop – Use services like TrueCar, Edmunds, Kelly Blue Book and others to estimate the lowest price you should pay for a new or used vehicle. Research multiple dealerships and get quotes to determine which dealer has the best price.
  • Pay attention to advertising – Television and print ads do not spend a lot of time disclosing all of the terms of the agreement. Be mindful when an ad claims “1.9% APR” that it may be approved credit only or qualified buyers only. Ads will make enticing statements to reel you in.
  • Purchase from a licensed dealer – Make sure you verify that the vehicle you are about to purchase is being sold from a licensed dealer. Vehicles sold privately do not carry with them the same protections under the law as vehicles sold by licensed dealers. Many scam artists find vacant lots and post ads on Craigslist to give the appearance of a real dealership. You can verify whether a car dealer is licensed by the State Board by visiting dos.pa.gov.
  • Look over the vehicle – Whether you bring a mechanic along or conduct a thorough test drive, remember that most used vehicle purchases are outside of a manufacturer’s warranty and any needed repairs after purchase could be your responsibility. Also remember that Carfax and AutoCheck do not always provide a complete history of the vehicle, as not all of their sources report to them accurately and regularly. Be mindful to check for limited warranties offered by the dealer and review the terms of any third-party extended warranty plan that is offered at additional cost to make sure it covers a wide array of items.

Consumers who wish to file a complaint regarding their purchase of new or used motor vehicles are encouraged to call 1-800-441-2555 or go to www.attorneygeneral.gov to file a complaint online.

SOURCE: Attorney General’s Office