State suspends license of Carvana Novi

NOVI — The license of the Carvana dealership in Novi was suspended Oct. 7 by the Michigan Department of State as a result of several alleged violations of the Michigan Vehicle Code.

The violations were discovered by Michigan Department of State staff during an investigation of multiple customer complaints regarding missing titles, according to a press release from the department.

Carvana LLC, located at 26890 Adell Center Drive, which is owned by Paul W. Breaux, is accused of multiple violations. The accusations include: 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; and failing to apply for title and registration within 15 days of delivery.

According to the state, Carvana has failed to apply for titles within 15 days of delivery 112 times since agreeing to an earlier probation extension. The company is also accused of violating the terms of an earlier probation agreement 127 times. Carvana employees admitted to destroying title applications and all applicable documents pertaining to the sale of three vehicles that were sold to customers, and the company took the vehicles back, according to a state press release.

“These continued violations create an ongoing imminent threat to the public health, safety or welfare of the public, requiring emergency action,” a Michigan Department of State press release states.

The dealership has been under investigation and on probation with the state several times since February 2021, when Michigan Department of State regulatory staff found multiple issues of noncompliance during a general compliance inspection.  In May 2021, the company agreed to enter into an 18-month probationary period, admitted to several violations of the state code, and paid a $2,500 fine. Under the probationary agreement, all dealership employees that handled paperwork were required to attend the Michigan Department of State dealer training program.

In January, officials from both the company and the state were in discussion of violations of that probation. On Feb. 7, Carvana agreed to extend the original probationary period by six months. The dealership paid a $5,000 administrative fine and admitted to several more violations of the code, according to the state.

Since then, the Michigan Department of State has received several no-title complaints from consumers, and it conducted an investigation that resulted in the current violations and suspension of the dealer’s license.

The Michigan Department of State plans to seek to have the dealer’s license revoked at an administrative hearing.

Carvana is urging the state to begin conversations to resolve the matter as quickly as possible, a Carvana spokesperson told the Novi Note via email.

The Carvana spokesperson said the company is “always extremely focused on the safety and satisfaction of our millions of customers.” She said they work collaboratively with state leaders and regulatory agencies in many states across the country. According to the spokesperson, in most instances the violations are a result of “arcane and outdated regulations,” which she said have “struggled to keep pace” with the company’s “innovative” business model, technology and customer demand for a new way to shop for, buy and trade-in used vehicles.

“We reject the Michigan Secretary of State’s allegations as baseless and reckless and we strongly disagree 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 spokesperson stated. “We have already corrected 99 percent of the technical paperwork violations cited in the state’s report and welcome the opportunity to address the state’s ongoing concerns through constructive dialogue, changes to outdated regulations through legislation, or in the courts.”

According to the state, consumers who have a complaint against Carvana, or who have purchased a vehicle from that dealer and have had problems obtaining the title, are encouraged to call the Office of Investigative Services automotive complaint line at (517) 335-1410.