CarMax Dealerships Settle Consumer Protection Lawsuit For $1.1 Million: RivCo DA

RIVERSIDE, CA — A network of car dealerships owned by CarMax is now on the hook for $1.1 million to settle a civil lawsuit led by the Riverside County District Attorney's Office, officials announced Wednesday.

The lawsuit alleged that CarMax dealerships violated state law by failing to submit the required documentation to transfer the registration and ownership of used vehicles to new owners in a timely manner, according to Riverside County District Attorney Michael A. Hestrin.

Dealers are required to submit an application to the Department of Motor Vehicles (DMV) to transfer the vehicle's registration within 30 days of the date of sale. Transfer of the certificate of ownership, also referred to as a “pink slip,” must also follow the same deadline unless the application is returned by the DMV for missing information, the DA said.

As part of the settlement, CarMax will pay $1,100,000, including $900,000 in civil penalties, $150,000 for investigative costs, and $50,000 to support consumer protection in the state.

CarMax cooperated with the investigation and has begun addressing the issues identified, according to the Riverside County District Attorney's Office.

CarMax has agreed to improve its business practices to ensure compliance with the state's consumer protection laws. According to Hestrin's office, the new measures include:

• Placing sales hold on vehicles when the dealership does not have possession of the title or a clear ability to obtain it within the required timeframe
• Completing necessary smog checks or VIN verifications prior to sale
• Maintaining sufficient staffing to process ownership transfers
• And designating a senior-level manager to oversee compliance.

In an email to Patch on March 25, CarMax responded to the settlement with a statement.

"CarMax is dedicated to delivering the most customer-centric car buying experience in the industry, and that commitment includes timely vehicle title and registration processing," company officials wrote.

"CarMax has resolved a civil matter with California District Attorneys related to allegations regarding vehicle title processing timelines in California. The resolution does not include any admission of wrongdoing.

The timeframe covered by this matter includes periods during the COVID-19 pandemic, when vehicle title processing was impacted industrywide by disruptions, including DMV closures and process changes, third party processing backlogs, and reduced staffing, which were outside of CarMax’s control. During and since that time, we have strengthened our systems, processes, and oversight to better support timely title delivery, and we remain focused on continuously improving the systems and processes that support our customers."

The case was handled in Riverside County by Deputy District Attorney Evan Goldsmith of the Consumer Protection Unit, and involved multiple district attorneys' offices, including Los Angeles, San Francisco, Santa Clara, Sonoma and Ventura counties. Santa Clara County Superior Court entered the judgment as part of a settlement of the civil lawsuit.