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HomeMarketCarvana Sales Broke State Law in Illinois, According to New Settlement

Carvana Sales Broke State Law in Illinois, According to New Settlement

A Carvana “vending machine” with used-cars in Miami.

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Joe Raedle/Getty Images

has reached a settlement with Illinois over delays in transferring vehicle ownership to customers and its misuse of temporary license plates. The settlement requires the company admit that it broke state law and to surrender a $250,000 bond.

Under the deal with Illinois Secretary of State Alexi Giannoulias, the online car retailer must submit to special inspections to ensure it remains in compliance with state regulations and agrees to the immediate withdraw of its license to sell cars in the state if it’s found to have broken the law there again, state officials announced Tuesday. 

“The admission by Carvana demonstrates what we knew all along: that Carvana was violating the law in a manner that was harmful to Illinois consumers,” Giannoulias said in a press release.

Alan Hoffman, Carvana’s head of corporate affairs, said in a statement that the “agreement with the Secretary of State allows us to move forward in our journey to becoming the largest automotive retailer … We look forward to working with Secretary Giannoulias to ensure customers continue having access to the best car buying and selling experience possible.”

The settlement follows a similar agreement with the state of Michigan earlier this month in which Carvana also acknowledged that it had broken the law by failing to timely transfer car titles to its customers and by misusing temporary state license plates amid other violations.

Carvana has also faced license suspensions and other sanctions over such issues in additional states, including Pennsylvania and North Carolina. 

Barron’s has reported on how some Carvana customers haven’t been able to legally drive vehicles purchased from the company for months because Carvana failed to register cars in their names.

Illinois began investigating Carvana’s practices in February 2022, after customers alleged it was issuing out-of-state temporary registration permits, which is illegal in Illinois, and failing to transfer titles in a timely manner as required by the state’s vehicle code, the state said.

Carvana’s license to sell cars in Illinois was suspended the following month, but officials there placed a stay on that order after about two weeks, saying the company had come into compliance with state requirements.

That July, however, officials suspended Carvana’s license again, saying it violated the terms of the stay by again issuing out-of-state temporary plates to Illinois customers, and by missing required deadlines to process title and registration paperwork.

A judge blocked that suspension from taking full effect after Carvana argued in a lawsuit that Illinois overstepped its authority by suspending its dealer’s license without first holding an administrative hearing on the matter.

The agreement announced Tuesday resolves that case.

Carvana was separately charged last year by Illinois officials in a criminal complaint alleging dozens of instances where the company failed to transfer vehicle titles and other alleged offenses. A hearing for Carvana to respond to those allegations has been delayed multiple times and is now scheduled for February.

The company did not respond to requests for comment from Barron’s on the criminal case.

Write to Jacob Adelman at jacob.adelman@barrons.com

Credit: marketwatch.com

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