CA Dealer Group Sues TrueCar

[craigh]

http://www.fool.com/investing/gener...nc-sued-again-is-it-playing-by-the-rules.aspx

So, is TrueCar playing by the rules? If history serves as any indicator, the answer is yes.

The California Legislative Counsel Bureau concluded that the operation of such a Web-based service "does not constitute autobrokering" and the company or operator of said service "is not a dealer," TrueCar said in a press release responding to the lawsuit.

I'm not familiar with California Legislative Counsel Bureau - corporate lawyers?

http://www.autonews.com/assets/PDF/CA99615520.PDF

12. CVC section 285, subdivision (a), defines a "dealer" as a person who: "For commission, money, or other thing of value, sells, exchanges, buys, or offers for sale, negotiates or attempts to negotiate, a sale or exchange of an interest in, a vehicle subject to registration, a motorcycle, snowmobile, or all-terrain vehicle subject to identification under this code, or a trailer subject to identification pursuant to Section 5014.1, or induces or attempts to induce any person to buy or exchange an interest in a vehicle and, who receives or expects to receive a commission, money, brokerage fees, profit, or any other thing of value, from either the seller or purchaser of the vehicle."

This applies to almost everyone. Cars.com charges a fee to advertise your cars.
I don't think this case just sets a precedent for people going after TrueCar, it represents the ability to go after any company that advertises vehicles or attempts to solicit leads on your behalf.

https://www.dmv.ca.gov/portal/dmv/detail/pubs/vctop/vc/d1/285 (source of above complaint)

Dealer
285. Dealer" is a person not otherwise expressly excluded by Section 286 who:

(a) For commission, money, or other thing of value, sells, exchanges, buys, or offers for sale, negotiates or attempts to negotiate, a sale or exchange of an interest in, a vehicle subject to registration, a motorcycle, snowmobile, or all-terrain vehicle subject to identification under this code, or a trailer subject to identification pursuant to Section 5014.1, or induces or attempts to induce any person to buy or exchange an interest in a vehicle and, who receives or expects to receive a commission, money, brokerage fees, profit, or any other thing of value, from either the seller or purchaser of the vehicle.

(b) Is engaged wholly or in part in the business of selling vehicles or buying or taking in trade, vehicles for the purpose of resale, selling, or offering for sale, or consigned to be sold, or otherwise dealing in vehicles, whether or not the vehicles are owned by the person.

I'm not a lawyer and I don't know if they have to meet the criteria of (a) and (b), but I don't know that TrueCar meets the dealer criteria (b) since they don't necessarily sell vehicles, take in trades, offer for sale, etc. This may be the differentiating factor between a classifieds site and a dealer - if they're dealing in specific stock numbers or just general availability of new car pricing.

I may be totally off base.

 

[Tallcool1]

http://www.fool.com/investing/gener...nc-sued-again-is-it-playing-by-the-rules.aspx



I'm not familiar with California Legislative Counsel Bureau - corporate lawyers?

http://www.autonews.com/assets/PDF/CA99615520.PDF



This applies to almost everyone. Cars.com charges a fee to advertise your cars.
I don't think this case just sets a precedent for people going after TrueCar, it represents the ability to go after any company that advertises vehicles or attempts to solicit leads on your behalf.

https://www.dmv.ca.gov/portal/dmv/detail/pubs/vctop/vc/d1/285 (source of above complaint)



I'm not a lawyer and I don't know if they have to meet the criteria of (a) and (b), but I don't know that TrueCar meets the dealer criteria (b) since they don't necessarily sell vehicles, take in trades, offer for sale, etc. This may be the differentiating factor between a classifieds site and a dealer - if they're dealing in specific stock numbers or just general availability of new car pricing.

I may be totally off base.

In my opinion, it is pretty clear what the California Dealer Code defines as a dealer and broker. You can read, research, and tear it apart 100 different ways, but the California Dealers Association is hanging its hat on this Code.

The difference between the Classified sites and TrueCar is how they generate revenue. Classified sites are on a subscription basis in that you can pay them $1,000's a month for 10 leads that become sales, or no leads whatsoever. You are paying for the right to post your inventory on their site regardless of the outcome. TrueCar......well, you know how their deal works. There is a big difference between these business models.

I do not believe this case has any bearing on the subscription based listing sites.