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SHOPSMART AUTOS – CUSTOMER INFORMATION – OCTOBER 30, 2021 (PT.1)

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Carvana Faces Government Scrutiny and Fines Following Consumer Complaints Established in 2012, the company has become well-known for its tall glass towers that dispense cars purchased through the website. Within the past year, its sales have taken off, helped in part by a surge in used-car demand and a greater willingness among car buyers to shop for vehicles online during the Covid-19 pandemic. ’It makes me wish I’d just gone to the car lot,’ said Laura Simmons, a Carvana customer who has been waiting months for the company to supply necessary paperwork. Carvana said it sold more than 200,000 vehicles in the first half of 2021, compared with roughly 244,000 for all of last year. On Wall Street, its model has proven popular with investors. At one point this summer, the company’s valuation surpassed that of Ford Motor Co. before the stock pulled back within the past month. As of the close of trading on Thursday, it was worth $52.1 billion. Carvana isn’t the only online auto retailer encountering customer-satisfaction complaints, and at least one has a higher rate of such grievances. The BBB has collected 663 consumer complaints on Vroom Inc., another online-only car seller, based in New York City, this year through September. The BBB has an advisory on its website warning of a pattern of complaints about Vroom. The company said it sold 33,772 vehicles in the first half of the year. The reports included customer claims that the car they received didn’t match the photos from Vroom’s site, unresponsive customer service and not receiving the paperwork needed to register vehicles. “Our goal is for every customer to be 100% satisfied with their Vroom experience,” a Vroom spokesman said. “As consumers turn more and more to buying cars online, we are investing significantly in our people, processes and operations to ensure we can deliver the experience our customers deserve.” Carvana’s six-month sales ban in Raleigh came after North Carolina officials found the company failed to provide title paperwork to the state’s Division of Motor Vehicles, sold a vehicle without a state inspection and issued out-of-state temporary tags on a vehicle sold to a state resident. State officials in North Carolina said the actions violated its dealer-licensing laws. Issues with temporary registrations and insurance information led to the other North Carolina probation. Last month, Carvana settled a different complaint in Florida after the state’s motor-vehicles department found it had failed to provide title paperwork to 12 customers for up to eight months. The company paid a $6,000 fine. In a different call with analysts in August, a Carvana executive discussed the North Carolina sanction as an outlier. “This was a relatively unusual action but is also pretty small in scope, relatively speaking,” said Mike Levin, the company’s vice president of investor relations. The Carvana spokeswoman declined to comment on the Florida settlement. Some Carvana customers who have encountered difficulties say they rarely speak with the same person twice when calling the company or have to spend several hours on multiple calls before speaking to someone who can help. As a result, these customers say, they wind up frustrated with no way to resolve issues in person. Joe Sachs, an air-traffic controller in the Charlotte, N.C., area, said he had planned to sell his family’s minivan to Carvana, but paperwork errors by the company at first prevented the deal from going through. Even though the deal hadn’t closed, Carvana deposited payment in his account soon after, Mr. Sachs said. Not only was the payment itself a mistake, the amount was around $400 short of the price he and Carvana had agreed on, he said. While at work the next day, he said, he received a panicked text from his wife with a picture attached. In the picture, a tow truck was hauling their 2017 Chrysler Pacifica out of their neighborhood. He said the van was towed without its keys or title. Mr. Sachs said he called Carvana and said he was considering reporting the vehicle as stolen to the police. After he spoke by phone with several customer-service employees, the correct payments and documents were overnighted to him, he said, and Carvana kept the car. “At the heart of it, I just wanted a face-to-face interaction,” Mr. Sachs said. For Brian Thompson, a Carvana buyer in Michigan, the hassle of trying to troubleshoot with the company got to be too much, he said. Mr. Thompson said he’d used Carvana last year and generally found the experience to be easy. It was his more recent purchase of a Lincoln MKZ in January that he said soured him on the company. For months, he said, Carvana provided him with temporary registrations from Georgia, Tennessee and Arizona in lieu of registering his car in Michigan. He said it also didn’t provide a title, while Michigan state law requires buyers to title vehicles with the state within 15 days. After several months of back and forth with Carvana, Mr. Thompson said he filed a complaint with the Michigan attorney general’s office. He said he was soon called by a state investigator, who was interested in Carvana’s use of out-ofstate temporary registrations. The state of Michigan in May fined Carvana $2,500 for seven violations of state rules for vehicle dealers, including improperly issuing temporary registrations, state records show. Carvana also agreed to an 18-month probation, during which the state can suspend or revoke the company’s license to sell cars if it fails to comply with Michigan law. Neither measure was announced publicly at the time. In September, about eight months after his purchase, Mr. Thompson received plates and the title for his car, which by then he wanted to sell. “I loved the car, but I hated the experience so much I didn’t want it anymore,” he said. “It was horrible.”

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