117 Dealers Suing TrueCar For $250M

A lawsuit in New York has pitted dealers against TrueCar. 117 dealerships have sued TrueCar in New York district court for $250 million dollars over major concerns about their business practices. This suit, first reported on by the Automotive News, alleges that TrueCar engaged in false advertising and created unfair competition.

The lawsuit reads that dealers end up in competition with TrueCar in directly and indirectly “in sales of new automobiles to consumers." The suit reads in part, “TrueCar’s advertisements falsely claim that consumers using its services can purchase an automobile with no haggling and “no negotiation" and that TrueCar benefits consumers by removing surprises at the dealership." The suit goes on to indicate that TrueCar just provides dealers with leads and customer contact info and that consumers still have to “haggle" with TrueCar affiliated dealerships prior to their vehicle purchase. The allegation is that consumers are turned off by this and leave dealerships where they didn’t expect to negotiate. The result? According to the lawsuit it’s lost sales and “harm to the plaintiffs’ goodwill."

According to a statement emailed to DrivingSales News, Alan Ohnsman, a spokesperson for TrueCar responded to the lawsuit. In an email this morning, Ohnsman said, “We are aware that a complaint has been filed on behalf of a group of dealers who are not on the TrueCar program. We believe the complaint is without merit. We will vigorously defend the lawsuit and our business practices and we expect to be fully vindicated."

The dealerships involved in the TrueCar lawsuit aren’t current customers of TrueCar, however it’s reported that some of the dealers are former TrueCar customers. However, the suit does measure perceived losses by the dealerships due to the business practices at TrueCar. The attorney representing the dealers, Lenoard L. Bellavia, estimated the damages to around $432,000 per store over a four-year period. This figure was reached by considering TrueCar cost each dealership three sales per month with a gross profit on each sale at around $2,000. In the lawsuit, the plaintiffs (dealers) are seeking monetary relief in excess of $250 million dollars, reimbursement of attorney fees as well as repayment of perceived damages to the individual dealerships. In addition the suit seeks all of the profits TrueCar earned using alleged false methods of advertisement and creation of an environment of unfair competition.

The website for the firm that Lenoard L. Bellavia, who represents the 117 dealers is a part of, dealerlaw.com, mentions a potentially larger suit. It also seems to seek others to “join the planned mass class action against TrueCar." This begs the question, is this just the beginning? Will other suits against TrueCar begin to show up? What has your experience been like with TrueCar?

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