NBC 5 Responds

Judge Gives Carvana Green Light to Sell Cars in Illinois Ahead Of Late-August Hearing

The Illinois Secretary of State's office suspended popular used-car dealer Carvana's license twice since May over alleged misuse of temporary titles and license plates.

NBC Universal, Inc.

In a turn of events, a popular used car seller online has received the green light to operate in Illinois after its license was suspended by state officials last month.

Fortune 500 company Carvana recently succeeded in a DuPage Circuit courtroom after a judge approved the company’s request for a temporary restraining order against the Illinois Secretary of State’s office, thereby lifting a ban imposed on Illinois sales until Carvana has its day in court.

The Secretary of State suspended Carvana’s dealer’s license twice since May, banning the company from statewide sales until it addressed the complaints lodged against it.

Those complaints centered around customers in Illinois and across the country who have reported waiting months, and in some cases up to a year, for a vehicle’s title or registration after they purchased it.

In the meantime, customers reportedly received temporary out-of-state permits on several occasions, even though they are only meant to last 30-45 days typically. 

The Secretary of State’s Police Department told NBC 5 Responds it has received more than 300 complaints from Illinoisans waiting on titles or registration information.

In at least one case, the state said Carvana’s delay led to a customer who was cited by law enforcement for not having the proper documentation to drive.

While the state said the number of customer complaints are in the hundreds, attorneys representing Carvana have said in court that the number of title transfer violations it is responsible for are far fewer, and that the Secretary’s most recent suspension of its license violated state law.

The dispute between the state and Carvana has left customers stuck in the middle, particularly at a time when there are limited affordable options on the used car market.

Despite the state telling Carvana it was allowed to deliver cars to customers who made purchases on or before the date of the most recent suspension, July 18, many told NBC 5 the company was delaying deliveries.

"I purchased a car from Carvana and have been waiting for the delivery," one customer wrote to NBC 5 Responds on July 27. "They are now telling me that Illinois has suspended their ability to deliver the car that was purchased before the July 18th date. This is just ridiculous, I have been waiting since June and they have the car at the Oakbrook facility."

That customer just received the vehicle last week on Aug. 4, nearly two months since they made their original purchase.

When asked about delayed deliveries, Carvana insisted to NBC 5 by email that it plans to "deliver all cars sold before 7/18."

Many customers have told state regulators, and NBC 5 Responds, they waited months for a title or registration on their vehicle from CARVANA, something that normally should take days to receive. Lisa Parker has the story.

Through its creative commercials and towering vehicle vending machines, Carvana is known for its modern approach to buying or selling a used vehicle: All online with the tap or click of a button, branding itself as a way to "avoid the hassle of a typical 'used car dealer' experience."

The company argues that this new approach is the reason why its business model has been questioned here in Illinois and elsewhere.

In addition to the complaints reported by the Secretary’s office, NBC 5 Responds has also heard from many customers who said after they purchased a vehicle from Carvana, rather than receiving a title or permanent registration documentation within a month, they were issued out-of-state temporary tags on multiple occasions over many months.

Misuse of out-of-state temporary tags is also at the center of a class-action lawsuit filed against Carvana in January, representing drivers from across the country (Carvana has asked the judge in that case to dismiss the class-action lawsuit, and move the complaints out of court and into arbitration. The judge’s decision is expected in the coming months.)

A spokesperson for Carvana did not respond to NBC 5’s request for an on-camera interview about the state license ordeal, but said in an email that "Carvana has built its entire business around customer experience and shares the State’s commitment to reducing paperwork challenges as much as possible."

The spokesperson added that the company hopes to "improve the title and registration system itself for the benefit of everyone in Illinois who purchases a car."

In an interview with NBC 5, Illinois Secretary of State Police Captain Elmer Garza said the state took the step of suspending the company’s dealer’s license over that very system of titling and registering cars it sold to Illinois drivers.

"They weren't transferring the titles in a timely manner," Garza said. "The end result here is to take care of the consumer first."

In a recent July 25 court filing, Carvana asked a DuPage Circuit Court Judge to reverse the State’s suspension through a temporary restraining order, arguing that the Secretary of State "violated the Illinois Administrative Procedures Act," a state law that "requires a party to be given opportunity to be heard at a hearing prior to the suspension of its business license."

The only exception to that legal requirement is if "the public interest, safety, or welfare imperatively requires emergency action."

Carvana argued this high bar was not met by the state’s evidence, and that its delays in title transfers for vehicles did not put public safety in jeopardy.

"There is no emergency that imperatively requires the suspension of Carvana’s Licenses without a hearing," Carvana wrote in part in its motion for a temporary restraining order.

The motion continued, "The Suspension Order arises out of alleged recordkeeping violations... These alleged violations create no public safety issue, and the Secretary’s hypothetical assertions to the contrary cannot justify the use of emergency powers."

The Secretary of State disagrees with this sentiment, arguing that it is a matter of public safety in particular with law enforcement.

For example, in its response to Carvana’s motion, the state argued that, "Law enforcement would be unable to correctly identify a vehicle used to commit a crime if that vehicle is not properly registered."

The state added that "dealer plates cannot be adequately accounted for" and that this "jeopardizes the safety of the general public and law enforcement. Law enforcement conducting a roadside stop cannot properly identify the owner of the vehicle."

Carvana is known for its towering vehicle vending towers, like this one in Oak Brook, IL.

While absent a public hearing, many Carvana customers have filled that void, coming to the company’s defense online.

"Illinois has and will always be interested in money," a Facebook user commented on NBC 5’s page.

When asked about this, the state argued this is not a game of politics, it’s about Carvana following the law. 

"It's absolutely not the state playing politics," said Captain Garza. "It's absolutely the business practices of Carvana. We wouldn't be in this situation if they would do the right thing. Sell the vehicle. Transfer the title paperwork when they're supposed to."

DuPage Circuit Court Judge Bonnie Wheaton sided with Carvana on July 29, granting its motion and reversing the state’s suspension order, meaning the company can resume business until it has its day in court.

Carvana has an administrative hearing with the Secretary of State scheduled for August 30, and a separate criminal hearing with the DuPage Circuit Court on Aug. 31.

When asked for comment, the state reaffirmed that strict guidelines are still in place for any vehicles sold by Carvana between now and then.

"Due to the judge’s decision… The Secretary of State’s stay order has been reinstated, allowing Carvana to conduct business in Illinois under strict guidelines."

The state said those strict guidelines include not issuing temporary registration permits or license plates during the stay order, and registering titles through Illinois remitters or third party entities licensed in Illinois to process title transactions.

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