The Michigan Department of State has suspended the license of a Novi dealership for online used-car retailer Carvana “for imminent harm to the public,” according to a news release from the agency.
The dealership in question — which in 2020 debuted with one of Carvana’s signature car “vending machines” — is at 26890 Adell Center Drive and has been suspended for what the state said were “several alleged violations of the Michigan Vehicle Code.” Those violations were discovered during an investigation by the agency into complaints from multiple consumers that the dealership had failed to properly handle title transfers.
MDOS alleges it discovered the following violations in the course of its investigation:
- 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. Those acts allegedly included Carvana employees destroying title applications and all applicable documents pertaining to the sale of three vehicles that Carvana took back after they were sold to customers.
- 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.
In a statement, Carvana denied the state’s allegations, calling them “baseless and reckless” and saying the company “strongly disagree(s) with the state’s heavy-handed and abrupt effort to shut down a growing Michigan business with tens of thousands of customers over what amounts to technical, paperwork violations involving title and transfer issues.” The company —– which is facing similar issues in Illinois — noted it has worked with state officials and regulatory agencies in many states and encountered what it views as “arcane and outdated regulations.”
The company claims it has corrected “99 percent of the technical paperwork violations cited in the state’s report and welcome(s) the opportunity to address the state’s ongoing concerns through constructive dialogue, changes to outdated regulations through legislation, or in the courts.”
Carvana “urge(s) the Secretary of State to begin dialogue to resolve this matter as expeditiously as possible. Meanwhile we will continue serving our customers, creating jobs and investing in Michigan while this matter is being resolved.”
Meanwhile, the department said that issues with the dealership started in February 2021, when regulatory staff inspected the business and “assessed multiple notices of non-compliance.” In May 2021, Carvana agreed to an 18-month probation agreement to resolve the issues — a process that carried a $2,500 administrative fine and the company admitting to several code violations.
One of the requirements of the agreement, according to MDOS, was that all employees of the dealership that handled paperwork under the department’s dealer training program.
Following discussions between the company and the department after Carvana allegedly violated the initial agreement, the parties agreed to a six-month probation extension under which Carvana would pay a $5,000 administrative fine and admit to “several more” code violations, according to the state.
MDOS said it then received several no-title complaints from consumers, prompting the investigation resulting in the dealership’s license being suspended. The department will seek to have the dealership’s license revoked at an administrative hearing, according to the release.
The department is encouraging consumers who have a complaint against Carvana to call the Office of Investigative Services automotive complaint line at 517-335-1410.
Carvana faces similar allegations in Illinois. Automotive News reported last month that the Illinois Secretary of State filed dozens of criminal charges against Carvana executive Paul Breaux — who the Michigan Department of State identified as the owner of the Novi dealership — related to alleged motor vehicle licensing and records violations. Illinois previously suspended Carvana’s dealer license following investigations into consumer complaints, though the company is now allowed to sell vehicles in the state under “strict guidelines.”
Carvana opened its Novi dealership in October 2020, marking the company’s first physical location in the state. The dealership features an eight-story brick-and-glass tower from which customers could pick up their cars in person after placing their orders online.
jgrzelewski@detroitnews.com
Twitter: @JGrzelewski