TrueCar is facing more litigation, this time in the Golden State.
The legal action against the company was filed by the California New Car Dealers Association for what the association claims are violations of sections of the California Vehicle Code governing dealer licensing, brokering, advertising and disclosure.
News of the suit was reported in several news reports Wednesday afternoon, including the , and , and later confirmed by AuSM.
In a statement, CNCDA said the suit — which was filed in the Los Angeles Superior Court Santa Monica branch — asks the court to mandate TrueCar comply with the aforementioned laws it alleges the company is breaking. TrueCar said in a statement released Wednesday that it is aware of the action and is "confident it can demonstrate the compliance of our business model with California law."
CNCDA alleges TrueCar is "violating key statutes and because of this, both the consumer and new car dealers are not being protected."
The association added: "Based on its conduct, TrueCar acts as a 'Dealer' and a 'Broker,' we believe TrueCar is in violation of existing consumer protection laws, as TrueCar does not have a Dealer or Auto Broker license."
Patricia Glaser of Glaser Weil, lead counsel on the case, filed the action.
"We will fight what we believe is this lack of transparency in the courts because it is clear to us and should be now clear to consumers that laws are being broken," said CNCDA president Brian Maas.
More from TrueCar Statement
TrueCar said in its statement that it, "has always been committed to improving the car-buying experience for all participants, including consumers, dealers and manufacturers."
It continued: "We are aware that a lawsuit was filed on behalf of the California New Car Dealers Association ("CNCDA"), a trade association that seeks a declaration from the Los Angeles Superior Court as to whether TrueCar qualifies as a dealer or autobroker under California law. To be clear, the complaint does not affirmatively seek any monetary relief from TrueCar, our network of Certified Dealer partners, or anyone else."
The company continued: "TrueCar is confident it can demonstrate the compliance of our business model with California law. We fail to understand how the CNCDA believes that it is serving the interests of its members by seeking a declaration that approximately half of those members are violating California law through their relationships with TrueCar.
"It is telling that the lawsuit was filed by a trade association and not by any actual California dealers, consumers, or governmental agency charged with the responsibility for enforcing the very laws that are at issue in the lawsuit. We believe the reason is simple: TrueCar operates in compliance with California law," its statement said.
"TrueCar has invested a tremendous amount of resources to ensure its compliance with all applicable laws, including specifically the laws at issue in this litigation. TrueCar has always proactively maintained an open dialogue with the regulators charged with the oversight of these laws in order to answer any questions regulators may have regarding TrueCar’s operations and the compliance of those operations with applicable law. These regulators understand our business model and have taken no enforcement action against us since we began operating in California in 2005," the statement continued.
"The California Legislative Counsel Bureau has previously considered whether a web-based service that operates in the same manner as TrueCar constitutes an autobroker under California law. Contrary to the allegations in the CNCDA’s complaint, the Legislative Counsel Bureau concluded that the operation of such a service ‘does not constitute autobrokering’ and the operator of the service ‘is not a dealer’ within the meaning of applicable law," the statement adds.
"As recently as October 2014, TrueCar met with representatives of the California Department of Motor Vehicles, which is the regulatory body charged with enforcement of the statutes at-issue in the CNCDA’s complaint. After analyzing TrueCar’s business operations in depth, including specifically those challenged by this lawsuit, the DMV did not request that TrueCar make any changes to its California business operations," it added. "In short, we are proud of the service that we deliver to our users, participating dealers, affinity partners, and manufacturers. If this lawsuit is allowed to proceed we welcome the opportunity to address the issues raised and we expect to be fully vindicated."