Pa. AG Puts the Brakes on Practices of Car Dealers

November 15, 2005

Pennsylvania Attorney General Tom Corbett announced the filing of a civil lawsuit against a New Jersey couple accused of using false and misleading advertising, selling defective vehicles and failing to honor guarantee and warranty agreements in the sale of new and used vehicles at two Value Kia locations in Southeastern Pennsylvania.

The suit follows reported complaints from dozens of consumers located throughout Philadelphia, plus Berks, Chester, Delaware, Lancaster, Lehigh and Montgomery counties.

Attorney General Tom Corbett identified the defendants as Oleg and Angela Shtutman, Cherry Hill, New Jersey, and Metro Auto Sales Inc., doing business as Value Kia located at 6501 Essington Ave., Philadelphia, and 1951 East Lincoln Highway, Coatesville, Chester County. The suit accuses the defendants of violating Pennsylvania’s Unfair Trade Practices and Consumer Protection Law and Automotive Industry Trade Practices.

The defendants through 2005 reportedly advertised and promoted the sale of new and used vehicles on the Internet and in print, radio and TV ads. Investigators said the ads falsely promised rebates, incentives and free gifts.

The ads included claims such as: “Free Vehicle with any vehicle purchase;” “Up to $12,000 off new cars;” “YOU CHOOSE! . $1,500 cash with any vehicle purchase or 60″ color projection television.just $1 with any vehicle purchase.” Other ads offered consumers a five carat diamond tennis bracelet, up to 60% off new cars, and free gas for one-full-year with every new and used vehicle sold.

“These ads were designed to lure prospective car buyers to their showrooms with promises of great deals and prizes, however the defendants failed to make good on many of the sales incentives,” Corbett said. “Consumers arrived at the dealerships expecting to receive the free gifts or deals only to be told that they had to meet a host of conditions to qualify for the offers. Very rarely, if ever, were car buyers able to meet all or even some of the conditions to purchase the cars and trucks as advertised.”

One couple filed a complaint after they were denied the $12,000 rebate that was offered in one of the defendant’s newspaper ads. The couple said that they traveled to the Coatsville dealership because of the specific rebate offer. After they test drove a new Kia SUV, the sales representative asked them a series of questions including whether they had previously owned a Kia. When the couple responded no, they were reportedly told that they did not qualify for the $12,000 rebate which was reserved for former Kia customers, a condition that was not disclosed in the ad.

Corbett said, “The use of undisclosed conditions and other deceptive sales tactics are illegal in Pennsylvania and hurt the auto sales industry especially those dealers who comply with the law.”

The lawsuit accuses the defendants of:

* Failing to disclose exact conditions of sale incentives in ads or promotions.
* Failing to honor sales incentives including rebates, free gifts and price reductions even if consumers meet the qualifying conditions.

* Failing to sell vehicles at the advertised prices.
* Failing to pay set price advertised for trade-ins.

The Commonwealth also claims that the defendants falsely represented that a vehicle was roadworthy at the time of sale. In some cases, the defendants sold vehicles with a variety of defects including faulty brakes, engines, transmissions and airbags. After the problems were identified, the defendants allegedly failed to adequately repair the problems.

In several instances when repairs were made, the defendants allegedly charged consumers for work that should have been covered under the warranty. In other instances, consumers complained that the defendants repeatedly failed to correct the defects during the warranty period and then charged them for repairs made outside the warranty. Still others said that the defendants failed to provide them with their actual warranty documents.

One Philadelphia consumer who purchased a used Kia Sportage from the defendants complained that the vehicle had steering problems, wheel vibrations, loss of power and speed, electrical problems, engine cutoff and difficulty restarting.

On one occasion, the defendants reportedly charged the consumer $1,200 for repairs though claimed that the vehicle did not have the problems the consumer described. Within 48-hours, the consumer’s vehicle had the same problems and had to be towed to the dealership. Twelve days later, the vehicle was returned to the consumer and told it was repaired. That same day, the consumer’s reportedly car shut off while driving and blocked a bridge. As a result, police impounded the vehicle.

In addition, the defendants on numerous occasions failed to supply consumers with proper registration and permanent license plates in a timely manner. Other allegations include claims that the sales taxes and transfer and registration fees were not turned over to the proper Commonwealth agency within the time allowed by law.

The complaint asks the court to require the defendants to:

* Pay full restitution to eligible consumers who have filed complaints or who come forward with complaints in the case.
* Pay civil penalties of $1,000 per violation and $3,000 for each violation involving a consumer age 60 or older.
* Permanently enjoin defendants from violating Pennsylvania’s Consumer Protection Law and Automotive Industry Trade Practices.
* Forfeit all profits derived from the alleged illegal business practices.
* Pay the Commonwealth’s costs of investigation.

Corbett urged consumers who suspect that they may be entitled to restitution in this case to contact the Bureau of Consumer Protection at 1-800-441-2555 to obtain a complaint form. Consumers with access to the Internet may file a complaint electronically by visiting

The lawsuit was filed in Philadelphia Court of Common Pleas.

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