Industry News & Trends

Colorado Department of Revenue Cites TrueCar Advertising Violations

It doesn’t seem like TrueCar is going to have such a Merry Christmas this year.

Since Jeff wrote about TrueCar and some of their tatics back in June – Edmunds TMV vs TrueCar – Dealers, wake up! , others are helping to bring this situation to the fore front. It’s great to see our industry come together and express our concerns and opinions around this TrueCar debacle. I can’t recall another time where dealers and industry goo-roos have reached and leverage so many channels of online news and social to not only express their opinions but also help amplify the message.

The automotive industry has been energized and polarized surrounding the TrueCar business model.  Since dealers are for and against the model, it is very important to follow the legal implications of the TrueCar process.

As promised, I told you that various State regulators and Dealer Associations were drafting letters to their constituents and members warning of potential legal concerns.

The Colorado Department of Revenue issued this letter on December 15, 2011 and I expect more similar letters to follow.   The TrueCar discussion is now moving into a legal discussion with dealers facing potential fines for participating on a model that regulators may deem as violating State laws.

Take a peek at this letter and share your thoughts.  I’ll have a few more letters to share in the coming weeks as they are drafted and published.

Colorado Department Revenue Motor Vehicle VS TrueCarColorado Department Revenue VS TrueCar

For a larger version of the letter view it on the Colorado Government site.

Addition by Jeff Kershner…

Another TrueCar UPDATE: Group 1, the nation’s fourth-largest auto retailer, last week ordered all participating stores to cut ties with – Click here to read the article. I had heard about this last friday and sent out a tweet that received several responses (follow @dealerrefresh on twitter). This apparently was brought to light during a meeting with their local Honda Representatives.

OEMs and Governments, oh my.  
  • Z
  • December 19, 2011
There's more on the Louisiana and Maryland
  • Anonymous
  • December 19, 2011
Kansas too!!!  : )
I hope more states and OEM's get on the bandwagon. We need it!

Has anyone check their web stats lately? Not looking good for us boys.

They are going through the roof.
Hey Blake, is Ohio looking at this?
Looking into it. I called OADA. I'll let you know.
I spoke to OADA this am, GCADA (Cleveland) already told their dealers to avoid.  OADA sees potential issues with Ohio Bird-dog laws as well
Good looking out Kevin.
  • Anonymous
  • December 22, 2011
Forwarding the info to Massachusetts AG's office.
Same violations exist in Massachusetts regarding invoice advertising, etc, etc.
Expect a similar response from Massachusetts.
Wish I had thought of this.
  • Anonymous
  • December 23, 2011
Received yesterday a warning from Mass State Auto Dealers regarding TrueCar advertising and the violations of the Attorney General regulations.  See below:
There is now an additional wrinkle to TrueCar’s relationship with Massachusetts
dealers – vehicle price advertisements. These advertisements include text, for
example, that put consumers on notice that Dealer X has the consumer’s vehicle
at some amount “below invoice”. Under the Massachusetts Attorney General’s
regulations, dealers may not use terms such as “dealer’s cost”, “wholesale”,
“invoice price”, “factory billing” or other similar terms unless the cost or
price standard represents the total consideration paid by the dealer to the
manufacturer, where no hold back or rebate has been or will be paid and the
advertisement discloses the exact figure of the standard. Plus, if advertising
price, the advertisement must include all charges necessary or usual prior to
delivery (e.g. freight, handling, vehicle prep, and documentary prep.) Under
the AG’s advertising regulations there are a number of other requirements that
apply concerning terminology and font size, which have been discussed in other
bulletins and educational materials made available to dealers in recent
years.The TrueCar price advertisements have dealers' names attached to
them with the prohibited language. Such third-party vendor agreements that you
may have executed do not excuse you from potential liability, and it can be
rather expensive as the last round of AG advertising enforcements proved.
It appears that TrueCar's existence in its current form is limited.