TrueCar returns in all states but Louisiana
TrueCar Inc., whose business model ran afoul of regulators in several states last year, now is operating in 47 states after a series of modifications.
Regulators and dealer associations in at least eight states had said business practices of the online vehicle shopping site and lead generator were in possible violation of laws governing advertising, brokering and other matters.
The company now operates in all states except Louisiana, Alaska and Hawaii.
TrueCar remains idled in Louisiana, said Adrian LaPeyronnie III, a private-practice lawyer who serves as counsel to the Louisiana Motor Vehicle Commission. The company has never done business in Alaska and has no participating dealership in Hawaii. TrueCar also operates in the District of Columbia.
On the TrueCar site, shoppers choose a car. They are then referred to up to three participating dealerships
In Oklahoma, TrueCar came into compliance by shifting to a monthly subscription model with its participating dealers and dropping a pay-per-sale plan, said Roy Dockum, executive director of the Oklahoma Motor Vehicle Commission.
Under the pay-per-sale model, which TrueCar still uses in many states, dealers pay TrueCar $299 each time they sell a new vehicle to a TrueCar shopper. In some states, the payment violates bird-dog laws, which prohibit paying fees to third parties for leads that turn into sales.
With a subscription plan, dealers pay monthly fees based on the number of leads generated by TrueCar, Dockum said.
TrueCar also stopped using the term invoice pricing on its Oklahoma Web pages, another change sought by the state, Dockum said.
TrueCar is also operating in Colorado and Virginia, which had also raised questions about its model.
TrueCar declined to comment about the specifics of its state compliance efforts. "TrueCar takes compliance issues very seriously, and works actively with state regulators to address any questions that are raised regarding TrueCar's business model," the company said in a statement.
In March, TrueCar hired Pat Watson, former chief of the South Carolina Automobile Dealers Association, to improve relations with state and local dealer associations. It also created a dealer council in April to advise it on dealer issues.
Fine in Louisiana
In Louisiana, TrueCar is still on the sidelines despite a settlement with regulators earlier this year.
In January, TrueCar and its affiliate ZAG agreed to pay a $5,000 fine to settle state allegations that they violated Louisiana vehicle advertising regulations and rules requiring a license to sell vehicles in the state, according to documents obtained by Automotive News through the Louisiana Public Records Act.
Louisiana prohibits the use of the phrases "dealer invoice" and "dealer cost" in advertising, LaPeyronnie said.
Though TrueCar has proposed eliminating those phrases on its Louisiana online pages, those terms still appear on the national Web site, LaPeyronnie said.
LaPeyronnie said he believes that the national references continue to put TrueCar in violation of Louisiana regulations because those national pages are the lead-in to the state pages.
"They are all one advertisement," LaPeyronnie said, adding that it is his position as counsel and not the formal decision of the commission.
He said TrueCar has kept its Web site disabled in Louisiana while the dispute is being negotiated. He said he expects talks to continue in mid-June after the recess of the Louisiana legislature.
If a shopper tries to shop for a vehicle in Louisiana on the TrueCar site, a notice pops up that says the TrueCar service "is temporarily unavailable in your area."
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