Colorado regulators have identified a number of advertising violations on TrueCar's Internet shopping site and have warned dealers who sell through TrueCar that they risk fines for potential violations of state laws governing bait-and-switch sales practices.
Fearing fines for its members, the Colorado Automobile Dealers Association alerted them to the potential violations on Dec. 16.
On Dec. 15, the Colorado Department of Revenue said TrueCar shoppers assured of a specific price on a vehicle could arrive at a dealership only to find the vehicle no longer available. Attempts to sell the shopper another vehicle could constitute a bait-and-switch violation.
Failure to include a vehicle stock number on the Internet ad violates state law, the department said. It also said TrueCar fails to include in ads all costs in the advertised vehicle price and said TrueCar does not hold necessary state licenses.
In the event of consumer complaints, the department letter said, the state's Motor Vehicle Dealer Board "will hold the dealer accountable for any violations."
Regulators and dealer associations in other states, such as Virginia and Wisconsin, also are looking at TrueCar's business methods to determine if they comply with state rules.
Last week TrueCar said in a statement that it is "not a broker, traditional advertiser or lead generation company. We do not arrange or negotiate sales for dealers, nor do we advertise vehicles for sale. Rather, TrueCar is an Internet marketing company -- the dealer's window through the Internet to customers searching for vehicles."
The company also said it is working with regulators in many states and "making changes accordingly."
In January, TrueCar will extend its reach by becoming Yahoo.com's partner on the Internet search giant's auto shopping site. TrueCar says participating U.S. dealers will sell about 250,000 vehicles this year from TrueCar leads.
Since June, monthly visits to TrueCar.com have grown sixfold, the company says, and in December participating dealers will sell more than 30,000 total new and used vehicles -- up 63 percent from June sales. TrueCar says its site has had 3.4 million unique visitors in the last 30 days.
David Barkholz contributed to this report