Hyundai pressured its dealers to “artificially inflate” its electric vehicle sales figures, instituting a system in which dealers who “played ball” were rewarded while those who refused were “punished,” a new lawsuit alleges.

The lawsuit, which was filed in federal court in Chicago by Napleton Aurora Imports in Illinois and affiliated franchises, says that Hyundai has issued numerous press releases touting the “fake” numbers that purport to show year-over-year growth in EV sales.

Dealers who declined to participate in the alleged ruse were put at a competitive disadvantage, including being forced to push unpopular vehicles or denied wholesale price discounts for customers.

Hyundai “has emphasized sales-volume growth in its Hyundai branded EVs, leading the public to believe these increasing EV sales are occurring organically because of the desirability of Hyundai EVs and customer demand for these vehicles,” the lawsuit says. “That is a false narrative. Instead of organic growth fueled by desirable vehicles and consumer demand, [Hyundai Motor America] created a multitiered scheme to cause its dealers to report false sales.”

The news comes as Hyundai’s sales in the US have decreased in the last quarter, even as the company has reported an increase in EV sales. In June, Hyundai said it sold 4,669 electric cars in the US, a nearly 9 percent increase compared to the same month last year. The company said its EV sales have climbed 33 percent so far this year.

The alleged scheme involved a “secret program” in which dealers were asked to falsely report unsold vehicles as “sold” to a customer or placed into a loaner service, only to reverse the “sale” the following month. The plaintiffs say they believe the illegal program is being used by Hyundai throughout its US operations.

The lawsuit cites transcripts from phone calls involving Hyundai sales managers pressuring a dealership employee to take part in the scheme. The sales manager said “he was ‘kinda up against a wall we gotta hit a number for the press and for the Koreans,’” the suit says. The sales manager also said “he felt ‘slimy for even proposing this,’ but [Hyundai Motor America] was asking dealers to ‘steal some inventory.’”

Before the lawsuit, Hyundai was in the process of trying to terminate two Napleton dealership franchises in Florida after a Napleton executive was sentenced to five years probation stemming from accusations of criminal sexual battery, according to Reuters.

In its response, Hyundai said it was asking Napleton to pause its lawsuit while it conducts an internal investigation. The dealership refused after Hyundai declined to back out of its litigation seeking to terminate the two Florida dealerships, a company spokesperson said.

“We do not condone any intentional falsification of sales reporting data and have launched an immediate investigation,” spokesperson Michael Stewart said in an email. “We intend to take any and all corrective and remedial actions required based on that investigation.”

Update July 10th: Added statement from Hyundai spokesperson.