EDITOR’S NOTE: A spokesperson from Carvana has issued a statement in response to the actions of MDOS.
The Michigan Department of State (MDOS) today suspended the license of an Oakland County vehicle dealer for imminent harm to the public, the government agency said in a press release.
Carvana LLC, owned by Paul Breaux at 26890 Adell Center Drive in Novi, has been suspended for several alleged violations of the Michigan Vehicle Code, which were discovered during an investigation by MDOS regulatory staff of multiple no-title complaints from consumers. According to MDOS, the violations include:
- Failing to make application for title and registration within 15 days of delivery for 112 customers since agreeing to an earlier probation extension
- Committing fraudulent acts in connection with selling or otherwise dealing in vehicles where Carvana employees admitted to destroying title applications and all applicable documents pertaining to the sale of three vehicles that were sold to customers and Carvana took the vehicles back
- Failing to maintain odometer records
- Improperly issuing temporary registrations
- Failing to have records available for inspection during reasonable or established business hours
possessing improper odometer disclosure records on which the odometer disclosure had been signed on behalf of the purchaser violating terms of a probation agreement 127 times
According to a release from the Michigan Secretary of State, continued violations created an “ongoing imminent threat to the public health, safety or welfare of the public, requiring emergency action.”
A representative from Carvana responded to the suspension via email.
“The State’s action represents another example of gross regulatory overreach that in no way benefits the State’s consumers,” the Carvana spokesperson said. “Over 98% of our Michigan customers receive their registration in a timely manner and the State’s suspension is based on isolated incidents representing 1% of our Michigan sales. The suspension papers were served without notice and in violation of Carvana’s due process. Carvana is ready and willing to discuss a swift resolution with the State, as we’ve already solved the concerns outlined in the notice. In the meantime, Carvana will continue to fulfill orders for Michigan customers who are on our schedule.”
The MDOS release states the dealership’s issues began in February 2021, when MDOS regulatory staff conducted a general compliance inspection and assessed multiple notices of non-compliance.
“MDOS and Carvana representatives had a preliminary conference March 23, 2021 to address the violations and on May 7, 2021, Carvana entered an 18-month probation agreement with a $2,500 administrative fine and admission of several violations of the Code,” the MDOS release states. “One of the stipulations was that all dealership employees that handled paperwork would attend the department’s dealer training program. After the dealership violated the probation agreement, MDOS held a second preliminary conference with multiple Carvana representatives on January 11, 2022. The department continued to work with Carvana on compliance and on February 7, 2022, Carvana representatives signed a six-month probation extension with a $5,000 administrative fine and admission of several more violations of the Code.”
Following the signing of the probation extension, MDOS said it received several no-title complaints from consumers and conducted the investigation that led to the current violations and suspension. The department will seek revocation of the dealer’s license at an administrative hearing.
The Carvana spokesperson said the company plans to file a lawsuit against Michigan to block the suspension.
“Carvana pioneered online car buying by providing exceptional customer experiences, and we’ve grown faster than any used car retailer in U.S. history to become the second largest in the country while achieving an industry-leading Net Promoter Score (NPS) and a 4.7 out of five star customer experience rating average,” the Carvana spokesperson said. “We look forward to continuing to make the best car buying and shopping experience available even better.”
MDOS is asking consumers who have a complaint against Carvana, or who have purchased a vehicle from that dealer and have had problems obtaining the title, to call the Office of Investigative Services automotive complaint line at 517-335-1410.
By Ryan Yuenger
ryany@wsjm.com
