US: TrueCar sued by dealers for deceptive advertisements image

Numerous auto dealers in the US have been complaining for a long period that online data provider TrueCar offers its captive dealers an unfair advantage on the market.

Now it also appears that the latter sales outlets are also unhappy with the company, filing a suit that could cost the online data provider $250 million. According to a lawsuit filling in the US District Court in New York, 117 of its partnering dealers allege TrueCar made false claims in advertisements and supported and created unfair competition – as the company’s ads assert that customers “can purchase an automobile with no haggling and ‘no negotiation’.” The action states that claim isn’t accurate as TrueCar gives the dealers sales leads and customer contact information but doesn’t also eliminate the “haggling” process. TrueCar’s website, which boasts that users on average saved $3,221 in 2014 by using its services, usually gives the viewer the possibility to find the type of vehicle of interest. It then gives the Manufacturer’s Suggested Retail Price, similar vehicle selling prices in the area, what price range the user should expect and the dealer/dealers that have the model in the area.

According to the plaintiffs’ lawyer, Leonard Bellavia, each dealership involved in the lawsuit have lost around $432,000 – if the dealers don’t agree on TureCar’s initial estimate of the price the deal usually collapses and the customer most likely walks away with a negative perception of the dealership. The lost amount has been considered on an average of three lost sales per month and a potential profit of $2,000.