CarMax Hit With $1.1M In Penalties For Dragging Feet On Crucial DMV Paperwork: DA

Used car giant CarMax will pay $1.1 million to resolve a lawsuit filed by several California counties claiming it repeatedly missed deadlines to file paperwork transferring vehicles to their new owners.

CarMax has around 250 locations nationwide, including over 30 in California, where it sells used cars.

In California, used car dealers must submit to the Department of Motor Vehicles an application to transfer registration and the certificate of ownership to a buyer within 30 days of the date of sale, according to prosecutors.

If the application is rejected by the DMV, the dealership is required to submit a corrected application within 30 days from the date the application was first returned by the DMV or within 50 days of the vehicle sale, whichever is later.

The lawsuit — filed by the district attorneys in Los Angeles, Santa Clara, San Francisco, Ventura, Sonoma and Riverside counties — claimed CarMax repeatedly failed to meet those deadlines.

Under the judgement signed by a judge Tuesday, Carmax "must comply with consumer protection laws and implement specific new policies to help ensure that used vehicles sold are registered and transferred to consumers on time," which includes:

• "Placing a sales hold on used vehicles for which they do not have a title in hand or a clear path to getting it within 30 days or where there is a missing smog certificate, VIN verification or weight certificate, as applicable
• "Having a sufficient number of employees at all times to process registration and title paperwork; and
• "Designating an employee at the level of regional senior manager or higher to be responsible for ensuring compliance," according to the Los Angeles County District Attorney's Office.

CarMax must also pay penalties: $900,000 in civil penalties, $150,000 in investigative costs to the prosecuting agencies and $50,000 in restitution to the Consumer Protection Prosecution Trust Fund.

“This judgment sends the clear message that car dealerships must follow California law or pay the price,” Los Angeles County District Attorney Nathan J. Hochman said. “Consumers who buy a used car rightfully expect the dealership to comply with California law and transfer registration and ownership on time."

CarMax did not admit wrongdoing in the case.

In a statement provided to Patch, CarMax said it is committed to timely vehicle title and registration processing.

"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 statement reads.