A legal battle is heating up between Carvana and both the Michigan Department of State and Secretary of State Jocelyn Benson. Last week, the beleaguered used car seller filed suit against Benson, seeking a temporary restraining order from Michigan’s courts to keep the state from taking away Carvana’s license to sell cars. On Monday, the state fired back, noting that the suspension is because Carvana needs to show that it’s following the law when selling cars. On Wednesday, the court denied Carvana’s request. It’s only the latest in a wild rollercoaster of legal issues for Carvana. So let’s look into why Michigan and so many others are at war with the company.
If you’ve purchased a used car from a dealership anytime in the past decade, perhaps you’ve heard of Carvana. Maybe you’ve even seen the company’s tall glass towers that “dispense” used cars like a vending machine. Companies like Carvana, Vroom, and Shift sell cars using a no-haggle model like CarMax does. But these companies handle the transaction differently by taking the buying process online. You can wake up and buy a car from Carvana without even rolling out of bed. And you can have it dropped off at your home. There are no high-pressure sales tactics, and there’s no sitting in a dealership wasting away your valuable time getting the runaround (obviously this doesn’t happen with all dealerships, but it does sometimes happen).
This was already an attractive model for many buyers, but the COVID-19 pandemic supercharged it. With dealers shutting their doors early on and social distancing becoming the norm, the concept of buying and receiving a car without dealing with people in-person became extremely popular. Carvana saw a huge spike in sales, and other used car dealers like CarMax copied Carvana’s online model to get in on the action. My wife even picked up her Toyota Prius from Carvana, and it was one of the most painless car buying experiences I’ve ever seen.
But not everyone who has done business with Carvana has had such positive results. Some buyers have sued, alleging in their suits that they received vehicles that weren’t nearly as described, while other buyers allege in a class action lawsuit that they didn’t receive necessary documents to drive legally. And as ABC 7 Denver reported, one person allegedly received a stolen vehicle from Carvana.
As you’re about to read, the online used car dealership has also gotten in hot water with a number of jurisdictions in America for allegedly selling cars without following state and local laws.
Carvana’s Roots
Carvana was founded in 2012 by Ben Huston, Ernest Garcia III, and Ryan Keeton in 2012. Garcia is the son of Ernest Garcia II, the owner of another controversial used car dealership, DriveTime. DriveTime–which specializes in subprime car deals–was infamously fined $8 million after harassing customers with constant calls (including at their workplaces), resulting in at least one person getting terminated, reported BuzzFeed News in 2014. It also regularly reported inaccurate information to credit bureaus and failed to correct such information when notified.
DriveTime became majority owner of Carvana in 2013. Today, Carvana is a publicly-traded company, but as Bloomberg Business notes, the father-son duo still run the business.
First Signs Of Trouble
Carvana’s problems started before the recent headlines and even before the pandemic. As Carvana gained popularity, customers on online forums like Reddit began discussing buying experiences, but they didn’t seem much different than buying from any used car dealer, really. Some cars were great, some not so much.
In 2018, Carvana caught the attention of the Commonwealth of Pennsylvania, specifically the state’s Department of Banking and Securities, Compliance Office. The state says it found that Carvana failed to operate within the state’s Consumer Credit Code. Pennsylvania said Carvana had entered into installment sales contracts with customers since 2014 without having a license to do so. From Pennsylvania’s filing:
The Office contends that Carvana entered into installment sale contracts with Pennsylvania consumers while not licensed as an installment seller in Pennsylvania from January 2014 to present.
Carvana believes it was not required to be licensed pursuant to the CCC for financing vehicle sales if it did not have a dealership in Pennsylvania.
Carvana argued that it didn’t need a license since it sold cars to Pennsylvanians, but wasn’t a Pennsylvania dealership. The dealer entered into a settlement agreement with the state, where Carvana paid Pennsylvania $117,375 in fines and Pennsylvania granted Carvana a license.
Title And Registration Issues Erupt
In 2019 and 2020, Carvana customers on Reddit began reporting title delays and sometimes just not receiving a title at all. This apparently escalated to the point when in 2021, Carvana’s handling of vehicle documents became national news. In December 2021, News 4 JAX reported that the Florida Department of Highway Safety and Motor Vehicles was suing Carvana because the company allegedly took too long to issue titles and other documents. Florida law requires dealers to turn over title and registration documents to buyers within 30 days, and Carvana was allegedly failing to do that, WFLA reports. According to WFLA, Florida state regulators claim that Carvana’s document issues in Florida went back to February 2020 and even though the state issued titles on time, Carvana took up to eight months to deliver them. From WFLA:
For weeks, Carvana has been in the hot seat over undelivered titles, keeping some Tampa Bay area buyers from registering their vehicles. For some, the long wait meant they had to stop driving cars they were stuck paying for.
Now, Better Call Behnken has learned state regulators have reached a settlement agreement with Carvana over similar complaints, dating back to February 2020.
Two days after our first report, the state filed an administrative complaint, citing Carvana’s Jacksonville location and Carvana’s CEO, Earnest C. Garcia III, for failing to transfer titles within 30 days, as is required by Florida law.
In that complaint, twelve consumers’ situations were named. Those consumers waited between three and eight months before finally receiving titles. All of those titles were issued by November 2020.
This meant that customers couldn’t even drive the cars that they purchased.
That Florida report mentions similar title issues reported in California, Michigan, North Carolina, Pennsylvania, and Texas. In Texas reports look awfully familiar, with customers purchasing vehicles from Carvana in 2020 and apparently only sometimes receiving documents. KPRC Houston profiled a Texas Carvana customer who purchased a 2018 Hyundai Elantra. They were reportedly forced to drive on numerous temporary license plates while waiting for documents from Carvana. From KPRC Houston:
22-year-old Peyton Harden is happy with this 2018 Hyundai Elantra she purchased from Carvana in August of 2020, she just can’t drive it.
“She’s already been told once by a police officer not to be driving the car. It needed to be tagged. She had it for over a year,” said mom Jessica Boom.
In Texas, car dealers are required to submit a title and registration application to the county tax office within 30 to 45 days of the date of sale. But some 455 days after she purchased the vehicle Peyton’s mom says Carvana still can’t get the title to this Elantra.
“They can’t issue any more temporary tags. They can’t. They can’t tag it. What are we doing? Why aren’t you fixing this?” said Boom.
Eventually, the Hyundai’s owner was no longer able to get temporary plates and was not able to legally drive the car. After the customer waited for a year, Carvana allegedly still hadn’t sent the paperwork and eventually the dealer took the car back.
Also in 2021, WRAL reports, the North Carolina Division of Motor Vehicles says it found that Carvana didn’t deliver titles on time, issued out-of-state temporary license plates for North Carolina customers, and even tried to sell a vehicle without getting it a state inspection. From the North Carolina Division of Motor Vehicles (Note: The petitioner is Carvana and the Respondents include the North Carolina Division of Motor Vehicles):
On or about 10 June May 2021, Respondents served an administrative Decision on Petitioner finding that Petitioner committed two Type I violations and one Type II violation. Specifically, Respondent found a Type I violation under N.C.G.S. §§ 20-294(2) and(11) based on Petitioner’s failure to timely deliver title work to Respondent Division as required by N.C.G.S. § 20-75; a Type I violation under N.C.G.S. § 20-294(6) for an unfair method of competition or unfair deceptive act or practice for issuing an out-of-state temporary tags/plates for a vehicle sold to a North Carolina resident; and one Type II violation under N.C.G.S. §§ 20-294(2) and (6) by offering a motor vehicle for sale without a North Carolina State Inspection as required by N.C.G.S. § 20-183.4C. Based on these violations, Respondent Division revoked Petitioner’s Dealer License and entered a civil penalty of $500.00. Petitioner was also ordered to pay the required $200.00 administrative hearing fee.
The investigation led to a 180-day suspension of Carvana’s Raleigh operations.
Illinois Suspends Carvana’s License, Twice
The Illinois Secretary of State was next to take aim at Carvana. Here in Illinois, dealerships have 20 days to provide customers titles. Like in the aforementioned states, Fox Business reports, Carvana allegedly failed to do that. From the news site:
Illinois Secretary of State office said Monday it suspended Carvana’s license to operate in the state after investigating consumer complaints.
The Phoenix, Arizona-based company failed to get buyers their titles withing a 20-day period specified under law, and in some cases were between four and six months late, Henry Haupt, spokesman for the Illinois Secretary of State, said, according to FOX 32 Chicago. He said Carvana unlawfully issued purchasers temporary vehicle registrations from other states, causing some customers to be ticketed after those temporary registrations expired after 90 days.
Here in Illinois, when you get a temporary license plate, it’s expected that you will receive your real plates before the plate expires in 90 days. But because Carvana was apparently not always able to fulfill this obligation, Illinois residents ended up driving around in vehicles purchased from Carvana without valid plates.
As a result, on May 10, 2022, Illinois banned Carvana from selling cars in the state. The ban was lifted on May 26, 2022, only to be reinstated on July 18, 2022, WTTW reports. Why? According to the Secretary of State’s office and reported by WTTW, Carvana breached guidelines put in place when the original ban was lifted. Those violations are:
— Issuing temporary registration plates of another state to Illinois residents, which is illegal.
— Issuing temporary registration plates without going through a licensed remitter as required by the stay agreement.
— Failing to process title and registration paperwork through the Secretary of State upon sale of a vehicle to Illinois customers, as is required by Illinois law.
Illinois did lift the ban again, but not before Carvana Vice President Paul Breaux was charged with 27 counts of failure to transfer vehicle titles and with 50 counts of improper use of titling and registration.
Since I’m an Illinois resident, I checked out Carvana’s site during the ban. Up at top was a banner from Carvana asking Illinois residents to stand up for the company. Weirdly, I found myself able to choose any car and get right up to the payment part of the process. At no point did the site say that I couldn’t purchase a car, though maybe a purchase would not have gone through.
More Than Just Unregistered, Untitled Cars
Earlier this year, Carvana found itself in another kind of trouble after it, ABC 7 Denver reports, allegedly sold a stolen vehicle to a customer. From ABC 7 Denver:
A Denver man says Carvana, an online used car retailer, sold him a stolen car with serious damage that he only later discovered.
[…]
Police reports show the car had been stolen in Memphis seven months before [Dennis Atencio] bought it from Carvana.
“This was a Hertz Rental Car that was at the Memphis Airport and had been stolen, then somehow got a title in California,” said Matt Osborne, a consumer protection attorney. “So, there are multiple open titles on this car.”
Atencio was able to get the car back but said he then found out the car was not only stolen but had also sustained prior damage.
As reported by ABC 7 Denver, a 2019 GMC Terrain with VIN 3GKALVEV0KL243167 was stolen from Hertz at Memphis International Airport in Memphis, Tennessee.
That car made it out to California, where someone was somehow able to get a title for it. The car was then sold to Carvana, and then it got into the hands of a Colorado resident. According to a lawsuit, the vehicle’s owner only discovered that the car was stolen when a tow truck came and dragged it away. The vehicle owner did receive the car back, just to get rid of it later because they found the car wasn’t just stolen, but it was previously wrecked, with the damage poorly repaired. Carvana’s listing for the vehicle is still up, and doesn’t note damage history.
Somehow, things get even weirder, and it involves Pure Michigan.
Michigan Suspends Carvana’s License
Carvana’s legal problems in Michigan began in February 2021 when, as Automotive News reports, state regulators performed a general compliance inspection. And just like in all of these other states, regulators found that Carvana was playing loose with the law, and allegedly not giving Michigan residents their titles. From Automotive News:
The Michigan Department of State said Carvana’s license was suspended for multiple violations of the Michigan Vehicle Code, including failing to make application for title and registration within 15 days of delivery, failing to maintain odometer records, improperly issuing temporary registrations and failing to have records available for inspection, among other violations.
The state said the issues at hand date to at least February 2021. Carvana entered an 18-month probation with the state in May 2021, followed by a six-month probation extension reached in February 2022. Since then, the department said, it has received additional titling complaints from consumers, which led to the current actions.
On May 7, 2021, Detroit Free Press notes, Carvana entered into an 18-month probation agreement with the state, admitting to several violations of Michigan’s vehicle code. Carvana paid a $2,500 fine and agreed to an 18-month probation period, from Detroit Free Press:
In May 2021, Carvana entered an 18-month probation agreement with a $2,500 administrative fine and admitted to several violations of the code, according to the media release. One of the stipulations of the probation agreement was that all dealership employees who handled paperwork would attend the department’s dealer training program.
Not long after this, Michigan regulators continued to receive reports of missing titles. This sparked a broader investigation, where the state found that Carvana broke its probation. Carvana admitted to breaking state laws again, paid another fine, and added an additional six months to its probation. Then, Carvana broke its probation again. From Detroit Free Press:
But the state said the dealership violated the probation agreement, so the state held a second preliminary conference with multiple Carvana representatives in January. The state department continued to work with Carvana on compliance and on Feb. 7, Carvana representatives signed a six-month probation extension with a $5,000 administrative fine and admission of several more violations of the state’s code.
But state officials received several complaints from consumers even after the probation extension, it said. So the state conducted another investigation that led to the current violations and suspension.
Michigan’s Department of State says that Carvana was found to violate the law and its probation quite a lot. These violations include, from the Detroit Free Press:
– Failing to make application for title and registration within 15 days of delivery for 112 customers since agreeing to an earlier probation extension.
– Committing fraud in connection with selling or otherwise dealing in vehicles where Carvana employees admitted to destroying title applications and all applicable documents pertaining to the sale of three vehicles that were sold to customers and Carvana took the vehicles back.
– Failing to maintain odometer records.
– Improperly issuing temporary registrations.
– Failing to have records available for inspection during reasonable or established business hours.
– Possessing improper odometer disclosure records on which the odometer disclosure had been signed on behalf of the car buyer.
– Violating terms of a probation agreement 127 times.
Thus, on October 7, 2022 Michigan suspended Carvana’s license in the state, initially blocking it from selling cars from its Novi dealership. In a statement about the license suspension, Michigan Department of State said: “These continued violations create an ongoing imminent threat to the public health, safety or welfare of the public, requiring emergency action.”
[Editor’s Note: Here’s a look at the notification I, a Michigan resident, receive when jumping onto Carvana’s website:
-DT]
In response to its suspension, Carvana has released this statement to the WXYZ News:
At Carvana, we are always extremely focused on the safety and satisfaction of our millions of customers. We work collaboratively and in strong partnership with state leaders and regulatory agencies in many states across the country. In most instances, arcane and outdated regulations have struggled to keep pace with our innovative business model, technology and surging customer demand for a new, convenient and accessible way to shop, buy and trade-in used vehicles.
We reject the Michigan Secretary of State’s allegations as baseless and reckless and we strongly disagree with the state’s heavy-handed and abrupt effort to shut down a growing Michigan business with tens of thousands of customers over what amounts to technical, paperwork violations involving title and transfer issues.
We have already corrected 99 percent of the technical paperwork violations cited in the state’s report and welcome the opportunity to address the state’s ongoing concerns through constructive dialogue, changes to outdated regulations through legislation, or in the courts.
We urge the Secretary of State to begin dialogue to resolve this matter as expeditiously as possible. Meanwhile we will continue serving our customers, creating jobs and investing in Michigan while this matter is being resolved.
True to Carvana’s word, operations reportedly continued despite the license suspension.
In response to the suspension, on October 13, Carvana filed a motion for an injunction in the state Court of Claims, MLive reports. The dealership seeks a temporary restraining order to lift its suspension and to prevent the state from suspending its license again during the legal proceedings. Carvana claims Michigan’s Secretary of State violated its own rules and due process requirements when the state suspended Carvana’s license. The dealer further characterizes the Secretary of State’s statements about Carvana’s operations as “false and reckless.” In Carvana’s filing, it reportedly says that the suspension causes irreparable harm to the company.
As Automotive News reports, Michigan is considering to revoke Carvana’s license entirely due to the repeated offenses. In a filing on Monday, the Michigan Department of State and Secretary of State Jocelyn Benson argue that they did have the authority to suspend Carvana’s license. The state points out the fact that Carvana was and still is breaking state laws and residents still aren’t getting titles or registrations. The state notes that since October 10, it received 90 more complaints about Carvana. The state has also said this, from Automotive News:
“The Michigan Department of State protects consumers when they make what are often among their family’s most significant purchases and buy a car,” a department statement issued Oct. 10 said. “The department does this in strict accordance with state and federal laws and does not provide special treatment to any dealership, including large, national corporations. Department staff met with Carvana on multiple occasions to explain Michigan law and suggest pathways to compliance. But instead Carvana continued selling vehicles without titles to scores of Michigan families, putting the residents at risk of legal violations, fines, and other penalties.”
The state notes in the Automotive News report that the suspension isn’t a final decision, and Carvana will have the opportunity to show the state that it’s operating within the law on Thursday. If that conference isn’t productive, then the state will follow through on its plan to seek revocation of Carvana’s license next month. In response to the claim of irreparable harm, Michigan says that the fact that Carvana is entitled to a preliminary conference and a prompt administrative hearing demonstrates that irreparable harm is not being done.
I reached out to Carvana for comment on the content of this story, and a representative gave me this statement:
On Thursday, Carvana filed a motion to immediately stop the Secretary of State’s illegal and irresponsible attempt to shut down a growing Michigan business with tens of thousands of customers over what amounts to technical paperwork violations involving title and transfer issues. The Secretary of State has brazenly violated state law in addition to its own rules, regulations and due process requirements while making false and reckless statements through press releases rather than engaging in constructive dialogue to remedy what are essentially technical paperwork issues. The arbitrary and abrupt actions of the Secretary of State have angered and disappointed our customers, some of whom have literally been stranded without a vehicle they had counted on to get them to work, doctors’ appointments or the grocery store. We respectfully ask the courts to hold the Secretary of State accountable, halt its disruptive actions and compel state bureaucrats to work collaboratively with Carvana and our customers to remedy these technical issues as quickly as possible. We’re confident the facts and the truth will come to light through the court process, and with our modernized, industry-leading Carvana customer experience, we look forward to our continued growth, job creation and investment across Michigan.
Finally, on Wednesday, the court dealt a blow to Carvana when it, as reported by the Detroit Free Press, denied the dealership’s request for a temporary restraining order, asserting that the state did not break the law issuing the suspension. From the Detroit Free Press:
On Wednesday, Michigan Court of Claims Judge Thomas Cameron ruled the “defendant’s decision to suspend plaintiff’s license without a hearing is statutorily permitted and therefore declines to find a violation of plaintiff’sdue process rights.”
Cameron also said that Carvana did not offer any evidence to support its claim that the suspension caused “irreparable injury to its goodwill” or how this loss affects its “overall economic well-being.” Cameron wrote: “Plaintiff states it ‘is the second-largest used car retailer in the United States and has sold over 1 million vehicles.’ Thus, plaintiff’s assertion that it suffered loss of goodwill due to the suspension is insufficient to show irreparable harm, in particular because plaintiff’s Michigan-based sales are a subset of its overall operations. Moreover, the suspension affects plaintiff’s sales only at its vending machine in Novi, but not its overall online sales.”
The state is allowing Carvana is allowed to sell vehicles to Michigan customers, but only from its online operation. Carvana is currently barred from selling cars from its vending machine in Novi. With that said, the state says it’s still getting complaints despite the suspension, from Detroit Free Press:
Michigan Department of State spokeswoman Aneta Kiersnowski Crisp said the state has received more than 100 complaints from consumers since suspending the dealership. She issued a previously released statement in reaction to the ruling that said the state protects consumers in strict accordance with state and federal laws.
“Department staff met with Carvana on multiple occasions to explain Michigan law and suggest pathways to compliance,” Crisp said. “But instead Carvana continued selling vehicles without titles to scores of Michigan families, putting the residents at risk of legal violations, fines and other penalties.”
An administrative hearing on the case is set for November 22. Michigan says that Carvana provided some of the information that the state requested, but no further details about this hearing have been released at this time.
It’s Not All Bad
We’ve reached the end of all of the trials and tribulations currently facing Carvana. It looks scary, but we should also note that it’s not all bad news with Carvana. Remember, in late 2021, my wife financed a Toyota Prius from the company. It had 90,000 miles back then and wears almost 20,000 more miles today.
Our experience has been mostly good. Buying the Prius from Carvana couldn’t have been more painless, and the vehicle showed up at our door in a timely manner. And sure enough, the promise of a touchless delivery was also true. The Prius was licensed and ready to go. In a stark contrast to the stories told above, Sheryl received her documents and permanent license plates on time without any fuss.
The Prius had a few more problems than noted. There were a few extra scratches, dings, as well as a headlight with water in it. The electrical system also had a baffling problem where turning on the rear defroster caused a loss of all radio reception. We weren’t worried about these issues because Carvana sells its vehicles with a 100-day warranty. In theory, it should have meant that we could have gotten the car fixed for free.
Carvana warranties are administered by another DriveTime spin-off, SilverRock. Our SilverRock warranty was a strange one, where the company told us that it will only pay for repairs at a Pep Boys or an independent shop of its choosing. None of the shops chosen by SilverRock were willing to touch the Prius. We were given the option to have the car repaired at a Toyota dealership, then after the fact ask SilverRock for the possibility to get reimbursed. Sheryl was going to take that route, but found herself too busy and didn’t get to the dealer in time.
But that’s fine, as we actually ended up solving all of the car’s electrical issues by buying it a new 12V battery. The 12V battery that was already in the car was manufactured about five months before Carvana bought the Prius. I never figured out why that battery was bad–perhaps the car sat and the battery died–but the new one is working great.
That Prius is certainly the most reliable car in our fleet, too. Since the new 12V battery, we’ve driven the car all over the country and it hasn’t skipped a beat. This car and this experience is a great example of what can go well with Carvana.
For another personal Carvana story, back in 2018, a friend bought a 2016 Honda Civic Touring from Carvana and the car was even better than my wife’s Prius. Back then, I had the pleasure of frequently driving the car. It looked and drove like new. My friend chose Carvana because they didn’t want to visit a dealership and haggle with a salesman. And like with Sheryl, the process was so easy that they were able to buy a car from bed and receive it right at their front door.
Sheryl and my friend aren’t alone. If you check out sites that aggregate customer reviews like Consumer Affairs, Dealer Rater, or even Reddit, you’ll see that a lot of Carvana customers have similarly had a good experience. This is to say that Carvana experiences aren’t totally bad; when everything works smoothly, it seems people adore the idea of not having to sit in a dealership and haggle with someone who haggles for a living.
Businesses, like any human enterprise, are prone to mistakes. The best you can hope for is that when a mistake is made that it’s corrected quickly and fully. The quantity and similarity of issues with Carvana seem to indicate that as they’ve expanded they have not been able to maintain the experience we had.
I am making 80 US dollars per hr. to complete some internet services from home. I did not ever think it would even be achievable however my confidant mate got $13k only in four weeks easily doing this best assignment and also she convinced me to avail. Look extra details
going to this website.
I’ve purchased two vehicles from Carvana. The first, BMW Z4, had few issues other than them cheaply replacing just one tire and making for the most terrifying drive ever, and delays on the registration.
The second (Jeep Wrangler), was a complete mess, which involved government agencies in Michigan and Arizona. From a blown engine the day after purchase (with two engine replacements and five repair shops in a two month span), to evidence of tampering with the odometer and rolling the mileage back a dozen thousand miles or so before selling the vehicle to me, to the refund finally happening; however, not before reversing my funds, showing that I had a past due balance, and them threatening to contact credit bureaus for a past due balance that they initiated lol.
Needless to say, August 11th through yesterday (Jeep pickup), was a wild ride.
For anyone that wants a stress inducing read, I have a six page Word document that is a great read lol, as not only did I get to deal with terrible service from Carvana, I got to pair that with SilverRock (warranty provider), Carvana Roadside Assistance (towing management), and Bridgecrest (Financing)… Lol I swear all parties were against me on that one.
I told my family I’m making a Netflix miniseries on it, as it also involves COVID, being stranded on the highway in Fowlerville, nearly missing my brother-in-law’s wedding, and being informed that my mileage has an issue on my birthday lol.
Your story, and others I’ve read, tell me Just Say No to Carvana if you’re a buyer. I’ve always thought the “vending machine” buildings were the stupidest thing ever. According to https://www.ibj.com/blogs/property-lines/69941-carvana-building-automotive-vending-machine-in-indianapolis they cost about $5M each. If you amortize that over 5000 car sales per location (not sure how long that would require) that’s $1000 cost per car that the customer is paying for. 10K sales = $500 per car, etc.
“Carvana is currently barred from selling cars from its vending machine in Novi”
– You may live to see man-made horrors beyond your comprehension
This title thing is really weird as a UK resident. We have a form called a V5C that we sign off and send to the DVLA who send a letter back confirming the vehicle is sold and issuing a new V5C in our name. It’s probably easier given we don’t register by state, it’s all done centrally (except Northern Ireland because… troubles).
“Butbutbutbut – we’d have PAY people! And TRAIN them! And facrissake SUPERVISE them! Which’d mean WE have to learn how to do it first! Do you know what that’d COST? And who’s got time for all that? Dang gummint al’ays gettin’ in the way of simple businessmen tryna provide a service an’ make a few dollars!”
I believe this to be a reasonable facsimile of the thinking and arguing of the born-shady company discussed here. Anyone think I’m wrong?
The adult in me understands everything printed here. The child in me wants to see the giant vending machine in action.
Mercedes, I just wanted to compliment you on this article, it was really well researched, balanced and I actually learned some things. Also congrats on getting married!!
Sorry. Probably a stupid question from a non US person here but what are Carvana gaining by not issuing the titles? Or are they just arguing that they are too badly organised to get them transferred?
I don’t think they gain anything, even leaving aside the lawsuits and reputational hit. I think they just don’t care enough to do a good job. If I had to guess, that division of the company is probably a shambolic mess of people who are engaged primarily in covering their own asses rather than getting the job done. I would also guess that two or three of the worst actors are so deeply entrenched that fixing the mess would require more boat-rocking than anyone has the stomach for. Also, the big bosses don’t really give a shit.
It’s less a considered strategy, and more a result of dysfunctional corporate culture, is what I’m saying.
Yep. Hanlon’s razor and all that.
What I want to know is, are the cars in the tower really that colorful? Or are they all silver and have colored lights shining on them? Because that would be kinda fraudulent too…
It’s ridiculous how willfully incompetent so many of these tech companies are. Carvana has a great business model! All they have to do is follow the law in the places where they do business, just like everyone else. They won’t, though. Not can’t—plenty of other businesses manage to buy and sell cars without breaking the law—but won’t. Even when they’re put on notice, fined, or have their license suspended, they refuse to stop being sketchy.
All they have to do is keep their nose clean, and they have a great business. It’s perfectly possible. They just don’t want to. Uber is the same way, to give another example.
I would never buy from Carvana at this point. Sure, plenty of people have good experiences, but it’s a crapshoot, and the consequences of losing the bet are potentially pretty severe. Same as I wouldn’t rent from Hertz—sure, I probably won’t get arrested over a clerical error, but why take the risk when there are plenty of other companies out there?
I think… its JUST like OL Musky. He set the model for someone “selling” a car… in the most “frictionless” way possible…
He believes that he can do, as he pleases with whatever he chooses and there are no consequences. Uber and Lyft are among the incompetant, oblivious tech companies.
P.S
It just occured to me,
TORCH: Story Idea for you. Does Carvana sell cars by their Name, Make and or Model (BMW 3 series). Do they or WOULD they ever offer the 318, 328, 330 or M3 versions side by side of each other? Or would they just offer the model they choose to… right after it passes through the Wholesaler Line….
Personally, Im quite bothered by the idea of the B-roll / MFR Static pic that dealers use to bait you into the stealership. Why am I bothered by it… cause the picture thats shown isnt a representation of what you are getting….
AND… if DriveTime is using the same people and same ethics then I guess thats what is coming out of Carvana.
“ Now, Better Call Behnken has learned state regulators have reached a settlement agreement with Carvana over similar complaints,”
Better call who now? Somebody owes America’s best lawyer an apology.
Carvana is building a brand-new “vending machine” in Schaumburg, but I wonder if they’ll get their Illinois operation straight enough to ever open it.
It looks like Michigan put Carvana on double secret probation.
I wonder what the percentage of unsatisfied customers there is. Is this a 0.5% or less error rate, or a “we don’t care” rate of 5% or more.
I love your writing, Mercedes, and this is a well-explained article.
That said, I’m not sure you can put yourself in the “no hassle purchase” category of customers. You simply did the work that the vendor was supposed-to do. Also, that 3rd party warranty sounds like crap. It’s a warranty in marketing terms only, but not actually useful to you. I hate when large companies contract out their crap so they can claim plausible deniability.
Carvana’s self-inflicted problems are much more than “technical paperwork violations”, as Mercedes points out, when the buyer cannot drive their new vehicle legally. Carvana engages in fraud when it fails to convey titles to new owners in a timely manner.
Almost as bad as Carvana not conveying hundreds of titles is trying to paint their failures as “technical paperwork violations.” It would be a lot smarter for one of the Garcia’s to stand in front of cameras and own Carvana’s mistakes, promise to do better, then fix their problems. Tracking and conveying titles isn’t rocket surgery. Trivializing problems in court filings and press releases is bad for everyone.
It sounds like they were admitting fault and paying the paltry fines…right up until they threatened to take away their business license. Then suddenly it was “technical paperwork violations”, which I guess is technically an accurate description of not giving your customers their title.
Typical “disrupter” story, spending too much time on “move fast and break things” and not enough on “slow down and fix your shit” (actual motto of Facebook Operations).
Keeping the paperwork in order and visiting DMV regularly is something a two person used car dealer operating out of a trailer can manage so “the second biggest used car retailer ” damn well ought to ve able to file a title in less than a month, and make possession of a,title a precondition for listing a car
So did you pay off the Prius? Did get the title from Carvana?
There are companies that handle these title paperwork for car dealers, they could’ve just hire one of those to handle all these instead of going through all the troubles.
The Prius is not paid off yet. However, we did receive all necessary documents (and the proper license plates) on time.
In some fairness to Carvana, I had to sue Mercedes-Benz Financial Services because it failed to send me the title to my 2012 Smart back when I paid it off years ago. MBFS had been saying for years that the title was “on the way.” Then, I just lost my patience and launched the suit. MBFS admitted that the title was actually lost six years ago, and it was assumed that I’d just give up.
If you don’t mind saying, what was the end result of that lawsuit after MB admitted in court that they’d just been stringing you along with lies for years and years in the hopes that you’d go away?
The contrast in your article between the service you received and the practices of the company are sadly now standard business model for so called disruptive companies.
“Uber is so convenient and affordable” But look at their corporate ethics, or lack there of.
“I love being able to manage my relationship with the world through Facebook” Uhmmm…
Deceit and cheating are the new standards, but they get accepted by the consumer. Personally, I would feel dirty being a customer or user of so many businesses these days. The ethics are all gone.
I agree and try to put into practice what I hope to see in the world.
A bit of a shameless plug, but I helped design sagesr.com to run counter to all of this tracking and lock-in garbage. As a mental health assessment, it’s fully anonymous. To the point where we don’t even keep an email address on file.
Payment is clear and one time, it’s a website, not a garbage app. Clients receive a report instantly after finishing and have full access to all of their responses. Data can be deleted and the provided authentication code can be changed at any time.
Anyway, all this to say…we’re not all bad…We haven’t taken any VC/PE money, or we would be forced to do all that tracking crap too.
Wait… you’re telling me that there was a Hertz rental car that was actually stolen?
LOL
I was shocked, too.
I don’t understand why it takes states so long to issue ownerships and plates. I can walk into any Service Ontario with my signed UVIP (used vehicle information package), ownership signed by the previous owner, valid safety certificate and insurance card and walk out with my new ownership and plates in minutes. Dealerships have a person who does this of course and at most locations have their own line and dedicated person. No insurance or safety? Ownership is still issued in your name but is registered unfit and you won’t get plates.
Also, I like how you’ve slipped in that Sheryl has gone from fiancee to wife over the past few weeks. Congrats.
It’s the same in the US if you have a signed title and a bill of sale from the seller (in my state, and perhaps others) you just need the title.
The problem for dealers is the frequently deal with financed vehicles where the owner might not have a paper title, so it takes a couple days to get payment to the lienholder, then they have to clear the lien and send the title to Carvana, etc, etc. That’s why the states allow the dealership to give you a 30 day temp tag while all of this is going on. You then have the difficulties of scale where you don’t have enough people working to do keep track of the info for all the cars you’re selling nationwide and they things start backing up. So basically it boils down to Carvana not having enough title clerks to handle the volume of business they are doing. The states are helping them out by saying you can’t sell any more cars until you complete the paperwork for the cars you already sold.
So congratulations on marriage. Sorry if I missed the fiancée’s switch to wife in an earlier post.
The dollar amounts of the fines mentioned here need to be 10 times the amounts they are.
I think you dropped a zero on “100”. 😀
ONE HUNDRED BILLION DOLLARS!
*dramatic musical sting*
Just a tip from the former owner of a ’06 Prius. Keep a close eye on the oil level. As they age, they tend to use oil. Keep it topped up. However, do NOT overfill as excess oil will escape and foul the MAF sensor. They tend to start using oil around 150k miles. I failed to keep the oil topped up and at the same time the water pump began to not pump. The result was overheating and warping the head. Do not be me. I got 300k miles out of it, and still sold it for $1000 with cat failing, clearcoat failing, windshield cracked, and upholstery filthy.
-The Office contends that Carvana entered into installment sale contracts with Pennsylvaniac onsumers…
I know this is a typo, but after reading this I think that anyone from Pennsylvania should be referred to as a Pennsylvaniac.
This is awesome. The best words are often coined accidentally.
I’m a bit of a Pennsylvaniac myself and I’m not even from there. I just love the state.
What’s our code word for Colorado enthusiast, because I’m one of those, too.
Colo-Hot-Rodders
I have to say that selling to Carvana, for me, was a dream. I got thousands of dollars more for my car than I was being offered by any dealership. The most difficult part of my transaction was my location. I’m in Northern New Hampshire and had to drive down to meet the driver in Manchester about 60 miles from me. I picked an easily accecsible from the highway, public location for both of us, they drove up, looked over my car we did some digital signature magic and the funds were electronically in my account immediately. It was awesome.
I had a very large dealership not transfer my title on a new car I purchased and I only found out when it came time to re-new (and I couldn’t because the state had no idea I owned the car).
Dealt with the Secretary of State Police who said that this happens all the time. The dealer (Bob Rohrman in Illinois) ended up paying a fine and paying for my next year’s registration ($150).
It did make the carfax of the car look a little weird. I bought the car (a 2016 model) in December 2016 but Carfax didn’t show it sold and registered until January 2018 when this whole thing was resolved.