AG issues advisory to car dealerships warning them of unfair and deceptive practices that violate the law

Pennsylvania Attorney General Josh Shapiro issued an advisory this week to car dealerships in the state warning them of unfair and deceptive practices that violate the state’s Consumer Protection Law.

“We’ve seen a large increase in demand for new and used cars here in Pennsylvania, and while the vast majority of dealerships are following the rules, there has also been an increase in complaints from consumers noticing bad practices,” Shapiro said in a news release.

Shapiro’s office has received 590 complaints so far this year about unfair and deceptive practices related to car dealerships. If that amount keep up, the state will receive around 3,540 complaints by the end of the year, easily outpacing the last three years. In 2019, there were 3,559 complaints, in 2020 there were 2,558 and in 2021 there were 2,948.

Legal Action was taken in 20 of the cases in 2019, 14 in 2020, six in 2021 and three so far this year.

“We are putting these dealerships on notice: shift gears and be sure that you are following the law and treating consumers fairly,” Shapiro said.

• READ MORE:Used car industry in ‘unprecedented’ times as high demand, low inventory send prices soaring
• READ MORE:‘Our industry has changed’: High demand, low volume leaves dealership lots empty, but cars are still available

Under the state’s Consumer Protection Law and regulations, Shapiro advised that both new and used car dealerships must:

• Represent and advertise goods or services at their actual price, comply with the terms of warranties given to the buyer; and not engage in fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding.
• Honor the terms of any contract with a consumer regarding the lease of a vehicle, including a consumer’s right to purchase the vehicle under the specific terms of the contract.
• Sell a motor vehicle under the terms or conditions, including price or warranty, which a motor vehicle manufacturer or dealer has advertised or otherwise represented.
• Disclose any hidden charges in any advertised price of a vehicle, as well as the expiration date of any advertised price.
• Not increase the price of a motor vehicle after the contract has been accepted by the dealer or an authorized representative, unless the increase is due to a change in the law which requires the addition of new equipment or increases transportation costs or existing taxes.

Melanie Stine, a spokesperson for the Pennsylvania Automotive Association said that she agrees that the vast majority of car dealerships are following the rules.

Stine said that the Pennsylvania Automotive Association, which represents the 950 franchised new car and heavy-duty truck dealers in the state has also worked with the Office of the Attorney General to update an advertising guide for its dealer members which focuses on automotive industry trade practice regulations and their practical applications. She said that her organization is helping to educate dealerships on advertising laws.

“Dealer advertising can be a challenging activity in terms of legal compliance because it is heavily regulated at the federal and state level, and the Pennsylvania Automotive Association works to educate dealers so they can comply with the law,” she said.

Officials at the MidAtlantic Regional Dealers Association, which represents independent car dealers in Pennsylvania, Maryland and Delaware couldn’t immediately be reached for comment.

The car industry in Pennsylvania over the last year has seen a shortage in new car inventory due to the international microchip shortage and other reasons related to the COVID-19 pandemic. And the new car industry has had a domino effect on used cars, which have also experienced low inventory. And the used car industry has also seen a giant boost in prices – 40 percent on average year over year.

“We’ve seen an increase in demand for used cars here in Pennsylvania,” Shapiro said in a different news release last month. “And with that comes an increase in scammers. Scammers are shifting into high gear to try and take advantage of Pennsylvanians looking to buy a used car and it’s my job as the people’s lawyer to stop them.”

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The attorney general’s office offer the following tips when buying a used car:

• Assess your needs as to what kind of car and features you want and how long you will use the vehicle
• Make a budget for the purchase, operation, and maintenance costs.
• Check on the seller’s reputation and reliability first.
• Ask for any available repair and maintenance records
• Check the title to make sure the person selling the car is the legal owner.
• Inspect the car in daylight and good weather.
• Check the car for rust or cracks.
• Inspect the tires, battery, doors, windows, heating and cooling, lights, exhaust, and fluids to make sure they are functioning properly.
• Have a mechanic inspect the car before purchase.
• Road test the car before you commit to buying.
• Read and understand any written agreement.
• Understand if there is a warranty and what it covers.
• If you are required to make a deposit, ask if it is refundable, and make sure the deposit is included in the contract.

Consumers who believe that a car dealership has violated the law can file a complaint at www.attorneygeneral.gov/submit-a-complaint or by calling the Bureau of Consumer Protection at 800-441-2555.

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