HomeMy WebLinkAbout01-5594COMMONWEALTH OF PENNSYLVANIA
ACTING BY ATTORNEY GENERAL
D. MICHAEL FISHER,
Plaintiff
SPANKEY'S AUTO SALES, INC.
701 EAST LOCUST STREET
MECHANICSBURG, PA 17055
Respondent
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY,
PENNSYLVANIA
CIVIL ACTION -- EQUITY
No.
EQUITY 2001
ASSURANCE OF VOLUNTARY COMPLIANCE
WHEREAS, the Commonwealth of Pennsylvania, acting by Attorney General D.
Michael Fisher, through the Bureau of Consumer Protection ("Commonwealth"), has caused
an investigation to be made into the business practices of Spankey's Auto Sale, Inc.
("Respondent"), pursuant to the Unfair Trade Practices and Consumer Protection Law, 73
P.S. §§ 201-1--201-9.3 ("Consumer Protection Law"), and the Automotive Industry Trade
Practices Regulations, 37 Pa. Code §§ 301.1--301.6 ("Auto Regs'); and
WHEREAS, the Respondent, Spankey's Auto Sales, Inc., is a business incorporated
under the laws of Pennsylvania which engages in and has engaged in trade and commerce
within the Commonwealth through the ownership and operation of motor vehicle dealerships
and has a principle place of business located at 701 East Locust Street, Mechanicsburg, PA
17055; and
WHEREAS, based upon its investigation, the Commonwealth asserts that the
Respondent engaged in conduct violative of the Consumer Protection Law, 73 P.S. §§ 201-
1--201-9.3, and the Auto Regs, 37 Pa. Code §§ 301.1--301.6, as more fully set forth herein:
1. From October, 1998, through January, 1999, the Respondent sent an
advertisement via direct mail to more than 15,000 consumers. The advertisement claimed:
"AUTO LOAN PRE-APPROVAL" and "YOU ARE APPROVED.' The advertisement
claimed that the consumers had been selected to receive a "unique" loan package from
Evergreen Automotive Acceptance. The advertisement is attached hereto as Exhibit A.
2. The Respondent's advertisement stated that the loan offer was limited to
vehicles purchased from Spankey's Auto Center.
3. The Respondent's advertisement also claimed that each person had been
approved for a loan of up to $17,000.00. All the consumer had to do to obtain the loan was
present the advertisement to the Respondent and meet the qualifications listed in a box printed
on the side of the letter. Those qualifications included a valid driver's licence, proof of
income, proof of employment, proof of residency, a current phone bill, and title for the trade-
in vehicle.
4.
The Respondent's advertisement stated in a Post Script printed under the
signature and name of J. Rainey, Vice President of Underwriting, that failure to respond by
the dates listed therein would result in, "the cancellation of your $17,000 loan approval. You
may qualify for more."
5. The Respondent's advertisement also appeared as though it had been stamped in
red ink with a stamp reading "APPROVED" and citing an approval number.
6. The Respondent's advertisement was accompanied by a document intended to
resemble a loan check from Evergreen and the Respondent which stated "Approved up to
$17,000."
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7. The Respondent's advertisement contained other restrictions in much smaller
print at the bottom of the letter. These restrictions included certain equity requirements and an
obligation to purchase full coverage insurance on the new vehicle.
8. The Respondent's inconspicuous disclaimer also revealed that consumers were
really only approved for a loan of $1,000.00. The Respondent's disclaimer contradicted the
more prominent claims that consumers were approved for or up to $17,000.00.
9. The Commonwealth alleges that the Respondent's advertisement misrepresented
and caused a likelihood of confusion and misunderstanding as to whether Evergreen had pre-
approved credit up to $17,000.00 or more if they were able to meet the above-stated
preconditions in violation of the Consumer Protection Law as defined at § 201-2(4)(v) and
(xxi).
10. The Commonwealth alleges that the Respondent's advertisement used different
type and location to obscure or make misleading material facts by referring consumers to the
conditions printed in a box to the side of the advertisement and then placing additional
conditions and limitations in small print at the bottom of the advertisement in violation of
the Auto Regs as set forth at 37 Pa. Code § 301.2(1) and the Consumer Protection Law as
defined at 73 P.S. § 201-2(4)(xxi).
11. The Commonwealth alleges that the Respondent advertised with the intent not to
sell as advertised when it represented that consumers who met the stated preconditions had
received pre-approval for a loan from Evergreen in violation of the Consumer Protection Law
as defined at 73 P.S. § 201-2(4)(ix).
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12. From at least November, 1998, through April, 1999, the Respondent engaged in
a referral program in order to attract new customers.
13. Under this program, the Respondent offered $100 to anyone who physically
brought another person into the dealership. The Respondent also offered $50 to consumers
who had a potential customer come into the dealership and present one of the Respondent's
business cards on the consumer's behalf. The referral payment was predicated upon the
person referred to the dealership buying a car and was advertised to consumers prior to the
time of sale. The program resulted in the Respondent paying 26 referrals in either the $50 or
$100 range during the aforementioned months in violation of the Consumer Protection Law as
defined at § 73 P.S. § 201-2(4)(xii).
14. During the 2000 Christmas season, the Respondent offered to give consumers
Toys-R-Us gift certificates with the purchase of a car. In 2001, the Respondent offered "free"
tax preparation with the purchase of a car. According to Federal regulations, "[i]f a product
or service usually is sold at a price arrived at through bargaining, rather than at a regular
price, it is improper to represent that another product or service is being offered 'Free' with
the sale." 16 CFR § 251. l(g). Even if a seller uses a word or term other than "free," which
tends to convey the impression to the consumer that the item is in fact "free," such as the
Respondent's offer to give gift certificates with the purchase of a car, it is nevertheless
considered a violation of Federal regulations. 16 CFR § 253.1(i). Violations of these Federal
regulations are regarded as a per se violations of the Consumer Protection Law as defined at
73 P.S. §201-2(4)(xxi).
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WHEREAS, the Respondent desires to comply with these civil laws of the
Commonwealth of Pennsylvania; and
WHEREAS, the Commonwealth is agreeable in this matter to accept this Assurance of
Voluntary Compliance, pursuant to § 201-5 of the Consumer Protection Law, in lieu of
commencing proceedings pursuant to § 201-4 of the Consumer Protection Law; and
WHEREAS, under the Consumer Protection Law, this Assurance of Voluntary
Compliance shall not be considered an admission of a violation for any purpose.
NOW THEREFORE, while engaging in trade or commerce within the Commonwealth
of Pennsylvania, the Respondent agrees for itself, its officers, successors, partners, agents,
present and future corporations, representatives, employees and all other persons acting on its
behalf, jointly or individually, directly or indirectly, or through any corporate or business
device, as follows:
I. The Respondent shall comply with any and all provisions of the Consumer
Protection Law and the Auto Regs, and is permanently enjoined from violating the Consumer
Protection Law or Auto Regs in a same or similar manner as set forth above.
II. The Respondent shall be permanently enjoined from using the advertisement in
Exhibit A and from making any similar claims about financing for consumers unless such
claims are true and not misleading. The Respondent shall clearly and conspicuously disclose
any criteria or qualifications for obtaining financing or savings in any and all future
advertisements, solicitations, or any other sales or promotional materials or communications
which make such claims.
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III. In making any disclaimers in future advertisements, solicitations, or any other
sales or promotional materials or communications, the Respondent shall be permanently
enjoined from using different type and location to obscure or make misleading material facts.
IV. Upon signing this Assurance of Voluntary Compliance, the Respondent shall
pay $5,000.00 to the Commonwealth as civil penalties.
V. Upon signing this Assurance of Voluntary Compliance, the Respondent shall
pay $15,000.00 to the Commonwealth as costs of investigation and/or for future public
protection purposes.
VI. All monies owed by the Respondent under this Assurance shall be paid by
certified check, cashier's check or money order, made payable to the Commonwealth of
Pennsylvania, and delivered to the Bureau of Consumer Protection, 301 Chestnut Street, Suite
105, Harrisburg, PA 17101.
VII. This Court shall maintain jurisdiction over the subject matter of this Assurance
of Voluntary Compliance and over the Respondent for the purpose of enforcing this Assurance
of Voluntary Compliance.
VIII. Provided that nothing contained herein shall be construed to waive any
individual right of action by a consumer or a local, state, federal, or other governmental
entity.
NOW THEREFORE, without making an admission of any violation for any purpose,
the Respondent agrees by the signing of this Assurance of Voluntary Compliance that it shall
henceforth abide by each of the aforementioned provisions and that the breach of any one of
these terms of this Assurance of Voluntary Compliance shall be sufficient warrant for the
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Commonwealth of Pennsylvania to petition this Court to assess the penalties provided for
under §§ 201-8,201-9, and 201-9.1 of the Consumer Protection Law and to order any other
equitable relief which the Court deems necessary or proper.
This Assurance of Voluntary Compliance shall have the same force and effect as a
Permanent Injunction issued pursuant to § 201-4 of the Consumer Protection Law.
Witness the following signatures this h~-'L''~'/ day of August, 2001.
FOR THE PLAINTIFF:
FOR THE RESPONDENT:
BY: D. MICHAEL FISHER BY:
D. MICHAEL FISHER
ATTORNEY GENERAL
D~ON LEGGET~i', CEO
SPANKEY'S AUTO SALES, INC.
BY: FRANK T. DONAGHUE
FRANK T. DONAGHUE
CHIEF DEPUTY ATTORNEY GENERAL
BY:
DEPUTY ATTORNEY GENERAL
ATTORNEY I.D. Ng. 69158
AA?PI L. FLITTON
UTY ATTORNEY GENERAL
TORNEY I.D. No. 58131
OFFICE OF ATTORNEY GENERAL
BUREAU OF CONSUMER PROTECTION
301 CHESTNUT STREET, SUITE 105
HARRISBURG, PA 17101
717-787-7109
D:\MyFiles\FORMS\AVC\Spankeys. wpd 10 1300
BY:
LAWRENCE R. WIEDER, ESQ.
McNEES, WALLACE & NURICK
100 PINE STREET
P.O. BOX 1166
HARRISBURG, PA 17108q166
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EXHIBIT A
Automo rive Acceptance
A LITO I.,OAIV P £-A J IrAL,
Congratulations!
This le:ter will serve as notification of an auto *~iv.m~ce
arrangement being made ava/}able tt~ a select gtc ut:, of
indivJduals. A ~ique loan package k~ ':~h'~g oiJ~r~c, to
you exd usively by Evergree~ AutomoHve Acceptance.
Thi, lim:~ted offer is befl~.g made ~,n coniunedon with
Spankey's The Used C~r Gia~lt located at IY02
Harrisbm'g Pike, Ci~lisle, PA. (B,.~;d e t~e Embers)
ms ]s the ~ dealer aulhorized Io fulfill '"
before Thut~a)5 ~tober 15, 17)8. Yrlda~ Octot~r j 6
1995, Sa~rday. October 17, !998, and
October 19, 1998 from 10:~ a.m to 7:00 p.m .'
YVitI,. tiM.* leqter and compl[am.~ w['.h the simpb:
qualifications hated to ~e stde~ you are approired for an
auto loan of up to 817,000.00 t0~vnrd the puraJmse of a
ve~clt in st~. . '
~or tnq,aiHes and/or appointmems, phone ~
V.P. Undenvntin- O,q~ '"
This will be the only nodce ym~ wdl receive. Fa/lure
to respond on or before the 1Lst:ed dates wil! resuh
tn termination and eartcelladon of your 5;17,~'00.00
lo,at approval. Sbu may qttalify for a I,.igh::~t Jt,;*i~
l;lect;e presvn! the encld::ed t'4~rchase vc~ucher
upon entvri~ig the dealer~t:ip. Be prekareJ to .
accept immediate delivt.[~/ q{.?our re!co or used
vel.'.k;~' and bring !hc.(o!lo:z, in$' dochment.s' ~.o
complete yot, r trarlsacti¢~t:
Title of ttad.¢
Cm'r,mt and valid driver's lice.v, se
Proc, f of income (i e., check stub, W-2,
t-~( returr~s or any ciocuraent which ean
be Yertfied by your employer)
Proof of employment with current
employer for one ?'ear, or two years in
~laled field
On,~, )'ear resident ,'etificabon
r,
~ti/Tellt telephone bill
(717} 241-24~0
TO THE SUM OF
TO ~allda~ed upon emeri~
ORDER L~ , ~ Vi~coun
FINAL PROOF
O.K. TO PRrNT
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