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We handle cases across the United States. Allen Stewart is licensed to practice law in Texas, California, New York, Pennsylvania, Missouri, North Carolina, Ohio and Arizona.

CDA, TrueCar Settle Lawsuit over Billing Model

The California New Car Dealers Association reached a settlement with TrueCar Inc., with TrueCar agreeing to change its billing model from a pay-per-sale with a cap to a flat-fee subscription model by Jan. 1, 2019.

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The lawsuit, filed by the association against the third-party vehicle shopping site, accused TrueCar of breaking California laws on dealer licensing, brokering, advertising and disclosure.

The suit, filed in Los Angeles County Superior Court in 2015, had sought a court injunction restraining TrueCar from doing business as a dealer or broker because TrueCar was acting as a dealer and broker in car sales transactions but did not have the proper licensing for the business.

“Either they should get licensed or stop doing business,” said Patricia Glaser, attorney for the car dealers group.

The lawsuit alleged that TrueCar’s advertising was false and misleading advertising, claiming “no surprise or hidden fees” which is false, because TrueCar received a fee on each sale made through its website.

The CNCDA, based in Sacramento, represents more than 1,100 dealers. Litigation in the suit was a lengthy process and included a TrueCar motion to dismiss and amended complaints filed by the CNCDA.

“This litigation afforded us the opportunity to thoroughly examine TrueCar’s user experience and business practices,” said Brian Maas, President of CNCDA. “The agreement reached with TrueCar, together with the other adjustments to its business model made by TrueCar after CNCDA initiated this litigation, satisfactorily resolve our previously expressed concerns regarding the existing TrueCar business model, which is currently a pay-per-sale model with a cap.”

As part of the agreement, TrueCar will double the indemnity it provides to California dealers who participate in its program, to $50,000, up from $25,000.

“We believe that through the doubling of the indemnity TrueCar offers to participating California dealers, we have procured another valuable benefit for our members through this litigation.  We are pleased that we are now able to put this matter behind us,” Maas said.

TrueCar, headquartered in Santa Monica, Calif., operates its a branded website with a nationwide network of more than 15,000 certified dealers. The company also powers car-buying programs for service organizations such as USAA, AARP, American Express, AAA and Sam’s Club.

The car-buying company enables shoppers to get guaranteed vehicle prices from its certified dealer network, and pays dealers that convert TrueCar shoppers into sales. Rates paid to the dealers are $299 per new vehicle and $399 for each used vehicle sold.

TrueCar CEO Chip Perry said the company “is pleased that the litigation has been resolved to the parties’ mutual satisfaction, and we look forward to continuing to serve our dealer customers in the state of California.”

Lemon law attorneys help their clients by dealing directly with the manufacturer on the clients’ behalf, working to promptly resolve the issue and get their clients back on the road. Thanks to the Magnuson-Moss Warranty Act, attorneys can seek their fees directly from the manufacturer, meaning a client can obtain legal counsel without having to pay attorneys’ fees directly out of pocket.


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