The California New Car Dealers Association is suing TrueCar Inc., accusing the vehicle-shopping site of breaking California laws on dealer licensing, brokering, advertising and disclosure.
The dealers association filed the 12-page lawsuit last week in Los Angeles Superior Court. Because of TrueCar's alleged violations, "both the consumer and new car dealers are not being protected," the association said. The suit asks that the court order TrueCar to comply with California law.
"It's about somebody out there who's acting as a dealer and an auto broker but refuses to be licensed as such," Brian Maas, president of the California New Car Dealers Association, told Automotive News. "This is not about enriching the association. It's about 'Tell us what the law is, your honor,' so we can accordingly tell our dealers what to do."
TrueCar plans to "vigorously defend" itself in court and expects to be fully vindicated, said Johnny Stephenson, TrueCar's chief risk officer.
The company has invested "tremendous resources" in ensuring it's compliant with all laws and regulations, Stephenson told Automotive News.
The lawsuit asks for a court injunction restraining TrueCar from conducting business as a dealer or broker.
TrueCar enables its shoppers to fetch guaranteed vehicle prices from its certified dealer network. In most states, dealers that convert TrueCar shoppers into sales pay $299 per new vehicle and $399 per used vehicle sold.