Pa. AG Sues Contractor in Home Improvement Scheme

July 29, 2005

Pennsylvania Attorney General Tom Corbett has filed a civil lawsuit against a Northampton County home improvement contractor accused of performing shoddy or incomplete work and using illegal sales contracts, illegal telephone solicitations and an illegal lottery drawing to attract customers to his window, siding and home security system businesses.

The suit follows an investigation through 2004 into dozens of complaints from consumers located in Berks, Lackawanna, Lehigh, Luzerne, Monroe, Montgomery, Northampton and Wyoming counties.

Corbett identified the defendants as Rodney A. Haney and his business R.A. Haney Inc., of Bethlehem, Northampton County. The lawsuit accuses Haney of violating Pennsylvania’s Consumer Protection Law, Plain Language Consumer Contract Act, Home Improvement Finance Act and the Telemarketing Registration Act.

According to agents with Corbett’s Bureau of Consumer Protection, Haney engaged in numerous deceptive and misleading sales tactics to attract customers to his business. In many cases, he reportedly failed to perform the promised contracted work or refund consumers who were left with poor construction and/or incomplete projects.

Investigators said Haney indirectly promoted his business by providing homeowners with various flyers that encouraged consumers to obtain a free copy of the new “Consumer Advisory Report.” The flyers do not identify Haney as the source of the material. Some of the flyers state “HOMEOWNERS BEWARE” and “PROTECT YOURSELF” against “HOME IMPROVEMENT RIP OFFS” or “SAVE THOUSANDS OF DOLLARS” on home improvements by reading the report before buying new windows, doors, siding, roofing, or security and solar systems.

The flyers include a toll-free telephone number for consumers to call before a certain date to obtain the report at no cost. The flyer claims that the “Consumer Advisory Report” retails for as much as $19.95. In reality, the report was available for free regardless of the deadline given, and it is not an objective independently produced brochure but a sales piece put together by Haney to lure consumers to his business.

Haney, through 2004 allegedly contacted consumers by telephone to confirm that they received the flyers and “Consumer Advisory” or a similar sales piece that was referred to as a “Consumer Awareness Report.” Consumers allegedly received calls from the defendant who failed to check if they were on the state’s “Do Not Call” list. Haney is accused of failing to purchase Pennsylvania’s “no call” registry before conducting his telemarketing activities to promote his sales.

The lawsuit claims that Haney failed to properly inform consumers of their right to cancel the contracts and used language that was confusing or misleading. Consumers complained that they were misinformed about when the clock started on their right to cancel the contract. In addition, some consumers said when they cancelled the contract the defendant attempted to lure them into another contract by offering different terms or changing the terms.

Those who received the “Consumer Advisory Report” said the packet included an offer by the defendant to qualify for a monthly lottery drawing to receive one or more products valued at $1,000. The contest claimed that at the end of the year, the winners would also have an opportunity to win a house full of windows, a solar or home security system, sunroom or full siding. The suit claims that the defendant never conducted the promised homeowner lottery drawing.

A separate daily drawing for thousands of dollars in cash and free home improvements was similarly promised by the defendant but never held. The state lottery statute makes it illegal for a person to setup or maintain any lottery game or publish any advertisement of any lottery game.

Corbett’s office learned that Haney, in his sales materials, claimed that homeowners who contacted him for an estimate on work would receive $200 worth of grocery coupons plus be included in the monthly lottery drawings. The complaint claims that the offer violates the Home Improvement Finance Act which states that gifts, bonus awards, merchandise or other inducements to enter into a home improvement installment contract are strictly prohibited.

According to the lawsuit, Haney’s contracts included deceptive and illegal language that required the consumer to relinquish his or her rights even if the defendant failed to honor the terms. The alleged illegal language included declarations that if the consumer defaulted on the contract he or she would be subject to “the most drastic and powerful remedies of the law,” including liens against their homes and sales of real estate and personal property without a court hearing. This “confession of judgment” clause is prohibited under state law because it waives the consumers’ right to assert a legal defense to an action.

In addition, Haney is accused of violating the Plain Language Consumer Contract Act by using unintelligible language and insufficient sized type that confused and deceived homeowners. The complaint claims that the contracts were also illegal by stating that a consumer cannot transfer the titles to their homes until payment is made in full and that the equity in their homes will be considered security for the contracts. The contracts further seek to eliminate Haney’s liability should his services result in any interior or exterior damage to the consumers’ property.

Corbett said the lawsuit asks the court to require the defendants to:

– Pay full restitution to consumers who filed complaints plus pay restitution to those who come forward with proof of similar harm.

– Pay civil penalties of $1,000 per violation and $3,000 for each violation involving a consumer age 60 or older.

– Forfeit all profits derived as a result of the alleged illegal business practices.

– Pay the Commonwealth’s investigation costs.

– Cease operating in the Commonwealth until restitution, civil penalties and investigation costs are paid.

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