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Acting Pennsylvania Attorney General Pappert Sues PA Warranty Company Accused of Not Providing and/or Deceiving Car Buyers About Coverage

HARRISBURG, Pa., Jan. 20, 2004 -- Acting Attorney General Jerry Pappert today announced that a seven-count lawsuit has been filed against a Westmoreland County used car warranty company accused of failing to honor its warranties, failing to disclose key terms and conditions of its warranties and misrepresenting other warranty coverage terms.

The lawsuit follows an investigation into complaints from nearly 30 consumers located in Adams, Allegheny, Armstrong, Berks, Butler, Cambria, Cumberland, Erie, Luzerne, Mercer, Monroe, Snyder, Wayne and Westmoreland counties.

Pappert identified the defendant as C.A.R.S. Protection Plus Inc. (CARS), with a registered business address of 7408 Saltsburg Road, Pittsburgh, and a principal place of business at 4431 William Penn Highway, Murrysville, Westmoreland County. The defendant is accused of violating Pennsylvania's Unfair Trade Practices and Consumer Protection Law.

According to agents with the Bureau of Consumer Protection, "CARS" promotes, advertises and sells limited used car warranties to consumers through authorized car dealers. Consumers may choose between five different warranties that range in price, deductible and provided coverage. The car dealers are authorized to sell the warranties above the wholesale price. Consumers obtain the warranties from the dealer on the date of purchase.

  The Commonwealth accuses "CARS" of violating state law by:

   - Failing to disclose to consumers that it will only pay a certain
     amount for labor charges regardless of the amount charged by the
     repair shop. The consumer is required to pay the difference in the
     labor rates.

   - Failing to disclose to consumers that the company determines if the
     repair parts are new, used or rebuilt. Some repair shops discourage
     consumers from installing used or rebuilt parts.

   - Failing to disclose to consumers that the company reserves the right
     to supply replacement parts. Some repair shops will not accept the
     provided parts and consumers are required to pay the difference
     between the "CARS" parts and the actual parts installed.

   - Failing to warrant the replacement parts provided by the company
     causing some consumers to pay additional expenses repairing and/or
     replacing parts that are defective.

   - Failing to provide coverage for pre-existing conditions on vehicles,
     regardless of the consumers' lack of knowledge of the condition at the
     time of purchase.

   - Failing to clearly disclose to consumers that their warranty coverage
     begins the day the warranty is approved, not the day the warranty is
     purchased.

   - Failing to honor the refund procedures in its warranties.

"In our view, these warranties are clearly deceptive," Pappert said. "In some cases, legitimate repair claims were rejected. In other instances, where the claims were accepted, consumers were required to pay additional expenses. Had the coverage terms been fully disclosed, consumers may not have purchased these warranties in the first place."

Pappert said one Wayne County couple told his office that their car was involved in an accident and even though they provided the required insurance record and documentation that the vehicle was totaled, the defendant refused to fully refund the remaining portion of the warranty.

  The lawsuit asks the court to order the defendant to:

   - Immediately cease conducting business in violation of Pennsylvania's
     Consumer Protection Law.
   - Pay more than $25,000 in restitution to consumers who filed complaints,
     plus pay restitution to others who come forward with proof that they
     were similarly harmed.
   - Pay civil penalties of $1,000 per violation and $3,000 for each
     violation involving a consumer age 60 or older.
   - Pay the Commonwealth's investigation costs.

The lawsuit was filed in Commonwealth Court. The case is being handled by Deputy Attorney General Amy L. Schulman of Pappert's Bureau of Consumer Protection Office in Pittsburgh.