After a drawn-out, six-month legal fight between the state of Illinois and the popular, online vehicle vendor Carvana, a formal settlement has been reached that could better protect consumers looking to purchase cars from their phones.
This agreement comes after a drama-filled year for the car seller known for its towering vehicle vending machines and quippy commercials.
Carvana brands itself as a one-stop-shop for buying or selling a used car online, but last year, it faced a barrage of complaints from state regulators, including here in Illinois.
Those complaints centered around Carvana customers who said it took the company months, even up to a year, to send them titling and registration documents necessary to legally drive the vehicles they purchased from the company online.
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The Secretary of State’s office said after receiving hundreds of complaints from Carvana’s customers, it launched an investigation, which resulted in a brief suspension of Carvana’s dealership license last year.
As part of the agreement, the Secretary of State’s office said Carvana admitted to violating state laws when it failed to transfer vehicle titles in a timely manner. Instead, the company issued temporary out-of-state registration permits for months at a time, which also violated state law, a spokesperson for the Secretary of State’s office confirmed.
Secretary of State Alexi Giannoulias said moving forward regulators “will not hesitate” to take action, including suspending or revoking Carvana’s dealership license, if the company is caught violating Illinois law again.
“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 wrote in a press release regarding the settlement. “I will do everything to ensure that proper safeguards are in place that protect Illinois consumers regardless of how they purchase a vehicle.”
Carvana also agreed to forfeit a quarter-million dollar bond it had previously paid the state, as well as increased licensing inspections by the Secretary of State Police. Those inspections will not have any effect on Carvana customer transactions, a spokesperson told NBC 5.
A spokesperson for Carvana told NBC 5 the agreement will allow it to continue its business here in Illinois, including at its car vending tower in Oak Brook.
“We look forward to working with Secretary Giannoulias to ensure customers continue having access to the best car buying and selling experience possible,” wrote Alan Hoffman, Carvana’s Head of Corporate Affairs.
The settlement agreement over Carvana’s dealership license will not impact criminal charges filed against one of the company’s executives, as a result of the Secretary of State’s investigation.
In a separate proceeding playing out in a DuPage Circuit courtroom, the DuPage County State’s Attorney is prosecuting more than 80 offenses against Carvana’s Vice President and General Counsel, Paul Breaux.
Breaux faces 54 misdemeanor traffic offenses including “improper use of out-of-state registration or title” and 28 petty offenses including “failure to transfer a vehicle title” among others, according to DuPage court records.
The Secretary of State’s office previously told NBC 5 that the misdemeanor charges can carry a maximum punishment of 30 days to six months in jail, court ordered supervision, as well as fines ranging from $1,000 to $1,500 per offense.
Carvana did not respond to NBC 5’s questions for Breaux about the criminal charges.
Breaux is due in court on Feb. 21 for a hearing on the case.