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TrueCar Swizzles Billing Model, After Pressure From States




Santa Monica-based TrueCar, the online auto buying site led by Scott Painter, said Monday that it is addressing compliance issues and concerns with its service with a change to its billing model. The firm said it will offer up a new, flat fee billing model in the Commonwealth of Virginia, a move which comes after a public complaint by the state, which was made public most recently in December, "reminding" the company that the laws of that state prohibit compensating anyone in connection with the sale of a motor vehicle, who is not licensed as a motor vehicle dealer or a salesperson. TrueCar said Virginia has been okay with flat fee billing since January of 2001.

TrueCar said it expects to roll the flat fee billing model out to certain states, advertising adjustments on the site, as well as a "consumer membership" program as part of a larger compliance program by the company. TrueCar has been running into issues with a number of states, because of their broker laws and laws against "bird-dogging"--where dealers pay people to refer car buyers to them. Virginia had determined in September of 2010 that TrueCar--operating at the time as Zag.com--was violating its "bird-dog" laws, although due to TrueCar's location does not have jurisdiction of the company, only dealers located in Virginia. TrueCar was charging dealerships a "success fee" for sales made due to leads from the site. TrueCar said is is "in discussions" with regulators in several states over its fee structure and/or advertising.


 

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