The new TrueCar: How things will change
To satisfy regulators in various states, TrueCar for the past month has been working on changes to its Web site and methods.
The regulators said the online shopping service -- and dealers who used the service -- could violate laws established in recent decades to protect the interests of dealers and consumers.
In the past two months, TrueCar suspended service for periods in Colorado, Oklahoma, Louisiana and Nebraska as it worked to comply with laws in those states. As of late last week, service was still suspended in Colorado and Louisiana.
TrueCar CEO Scott Painter has said that the changes to TrueCar's methods will be completed by mid-February.
TrueCar has been offering vehicle price data and lowest-price offers from area TrueCar dealers since April 2010.
Under usual TrueCar procedures, dealers pay TrueCar $299 when a TrueCar lead turns into a new-car sale. But some states prohibit a practice called bird-dogging, in which dealerships pay fees to third parties contingent upon sales.
In these states, which Painter has estimated could be as many as 20, TrueCar now charges dealers subscription fees that aren't tied to sales.
Various states also prohibit or limit brokering, in which a consumer pays a third party to find a vehicle and negotiate a sale. TrueCar also will switch to subscriptions for dealers in those states.
TrueCar wants to maintain the $299-per-sale fee wherever possible, but Painter has said the company will allow dealers to switch to a subscription fee if they choose. Dealers pay TrueCar $399 when a lead turns into a used-car sale.
Also, consumer-protection laws in many states prohibit retailers from using the term "invoice" in advertising. TrueCar said in early January that the term will remain on vehicle research pages and pricing graphs but will be removed from discounts promised to shoppers. Instead, the offers will display a potential discount from a vehicle's sticker price. To get an actual price quote, shoppers will have to contact a dealer.
Painter also is trying to make TrueCar more dealer-friendly. The company has begun inviting dealers to join a national dealer council to create a better forum for dealer input. Also in the works are more changes to the Web site to make it easier for dealers to market service, proximity to customers and other factors, instead of solely focusing on price.
Another thorny issue has been TrueCar's access to dealership management systems, the computers that contain information such as customer names, addresses and Social Security numbers; dealer inventories; and company payroll.
Painter has said the company will limit the data it extracts from dealer computer systems.
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