VA Motor Vehicle Dealer Board to take on legality of vehicle purchase referrals by TrueCar at its January meeting

VA Motor Vehicle Dealer Board to take on legality of vehicle purchase referrals by TrueCar at its January meeting

The Virginia Motor Vehicle Dealer Board, which reviews new and used car dealer practices in the commonwealth, will be looking into the practice of vehicle purchase referrals to dealers with an eye toward unlicensed vehicle sales activities. TrueCar Inc., a California based business engaged in vehicle sale referrals with dealers in Virginia and other states, was notified by MVDB that the dealer board will be evaluating their business model as it has been operating in Virginia to determine if it violates the law. The meeting, to be held at the Department of Motor Vehicles in Richmond, is scheduled January 9, 2012. If TrueCars business model is found to be violative of the law, MVDB says it will notify dealers across the state of their risk of being found out of compliance with vehicle sales laws for engaging in retail sales referrals resulting in enforcement actions.

Maryland, with similar prohibitions against vehicle sales by unlicensed sales agents is expected to initiate a similar investigation of vehicle referrals through the Motor Vehicle Administration. Other states are looking at vehicle sale referral activities the way Virginia is, given the exponential expansion of the practice over the Internet.

Correspondingly, certain automakers are reviewing the practice of referrals with their dealers concerned that such services could undermine manufacturer sales programs.

Irrespective of any government regulatory agencys interest and involvement in the business practices of contractors and service providers, or related automaker franchiser concerns, dealers are reminded that the antitrust laws absolutely prohibit concerted activity and agreements between competitors as to which service providers and contractors to engage or not engage.