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Compliance

Okla. Commission Says TrueCar Violates Dealer Rules

January 12, 2012

Oklahoma became the latest state to put the brakes on TrueCar, with the state’s motor vehicle commission deeming the service in violation of the state’s dealer licensing laws.

The commission, which requested that TrueCar immediately suspend its service in the state, ruled yesterday that TrueCar’s service violates Oklahoma’s brokering prohibition. It also raised concerns about possible advertising violations, including TrueCar’s use of the terms “dealer’s cost,” “Invoice,” and “Invoice Price.”

Oklahoma dealers face fines of up to $1,000 per occurrence or suspension of their license if they are found to be in violation of the state’s laws and rules.

The commission’s ruling came a day after Virginia’s  dealer board ruled TrueCar’s bill model violated the state’s dealer licensing laws, which prohibit third-party services from acting on behalf of the dealer in the sale of a motor vehicle.

“The dealer should not be paying them because they are not licensed salespeople,” said Gould, who added that the state will not seek retroactive prosecution against TrueCar dealers. “They can’t compensate anyone other than those two.”

Colorado was expected to raise the same issues during its board meeting meeting today, and other states, such as California, Indiana, Louisiana, Nebraska, Ohio and Wisconsin, also are reviewing TrueCar’s service.

Scott Painter, founder of TrueCar, maintained that his company’s service does not equate to a broker, dealer, sales agency or buying service in an e-mail exchange last week. He described the service as more of a marketing channel that competes against traditional advertising and lead-generation services.

In a press release issued after the Virginia board’s ruling, he said the company has changed its billing model there to a subscription fee that is not tied to sales. He told F&I and Showroom magazine last week that it would propose the same model, which also is employed in Texas, to Colorado’s board.

“TrueCar is committed to never putting our dealer partners at risk, which means we will always work closely with regulators to identify a workable solution or either suspend service,” read Painter’s statement in the release. “We also want consumers and dealer partners to know that it’s business as usual in Virginia and price guarantees will be honored at TrueCar dealerships.”

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