LOS ANGELES -- A group of 100 auto dealerships that are part of TrueCar’s network are suing the online car-buying service for not disclosing to consumers the nature of the fees that dealers pay the company for each sale.
The suit, filed today in state court in Los Angeles, alleges that TrueCar is engaged in “deceptive business practices” because its advertising touts transparent pricing but doesn’t disclose the transactions fees of $299 for new cars and $399 for used cars that many dealers pay TrueCar for each sale handled through the buying service.
According to the suit, because these fees are often passed along to the consumer and reflected in the dealer-set price that TrueCar presents to buyers, failure to disclose them violates California’s deceptive-practice statutes. The plaintiffs allege that consumers who learn of the fees are more inclined to complete their purchases at dealerships outside the TrueCar network.
The suit, filed by Bellavia, Blatt & Crossett in Mineola, N.Y., and another law firm, lists 100 dealerships as plaintiffs and seeks a court order requiring TrueCar to disclose the fees in all of its advertising.
TrueCar spokesman Alan Ohnsman said today that the company hadn’t yet seen the lawsuit and therefore couldn’t comment.
But he added: “We have invested substantial resources in our compliance efforts and have proactively engaged in dialogues about our business model with regulatory authorities and dealer associations across the country. We have high confidence that we’re compliant with all laws applicable to our business.”
The suit follows one filed in May by the California New Car Dealers Association alleging that TrueCar was operating without the proper licenses, and another suit -- also filed by Bellavia -- in March on behalf of 117 non-TrueCar dealers, alleging false advertising. TrueCar has called both suits meritless.
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