Carmax Settles Consumer Protection Case for $1.1 Million

Peo v CarMax Complaint (PDF, 456 KB)

Peo v CarMax Final Judgment (PDF, 751 KB)

Sonoma County District Attorney Carla Rodriguez, along with the District Attorneys of Santa Clara, Los Angeles, Riverside, San Francisco, and Ventura Counties, announced today the settlement of a consumer protection lawsuit against CarMax, which was approved by the Santa Clara Superior Court. The defendant will pay $1.1 million to settle a civil law enforcement complaint alleging that CarMax failed to timely transfer registrations and ownership documents for used car buyers across California.

The civil complaint filed in Santa Clara County Superior Court alleged that CarMax violated California law by failing to submit applications to the Department of Motor Vehicles within the statutory deadlines and by failing to timely deliver certificates of ownership to consumers. Prosecutors alleged that these violations constituted unlawful and unfair business practices under California’s Unfair Competition Law.

District Attorney Rodriguez stated, “Used car buyers have the right to receive transfer of ownership on time. Our Environmental and Consumer Law Division is working with other District Attorney’s Offices throughout California to hold companies accountable and enforce California’s consumer protection laws.”

California law requires used vehicle dealers to submit an application to transfer registration to the DMV within 30 days of the date of sale. If an application is returned for correction, dealers must resubmit it within specified statutory timeframes. Dealers are also required to ensure timely delivery of the certificate of ownership, commonly known as the pink slip, in accordance with those same deadlines. Until ownership is transferred, a customer cannot resell, refinance, or use their vehicle as collateral for a loan.

According to the complaint, CarMax failed in thousands of instances dating back to 2019 to:

• Submit applications to transfer registration within 30 days of sale.
• Timely resubmit corrected applications when the original filings were submitted late.
• Deliver certificates of ownership within the statutory deadlines.

The $1.1 million settlement includes $900,000 in civil penalties, $150,000 in investigative costs, and $50,000 in cy pres restitution to support consumer protection enforcement efforts statewide. In addition to the monetary payment, the injunctive terms require CarMax to create and enforce policies to protect consumers to ensure they will receive registration and ownership paperwork in a timely manner. These includes: placing a “hold” on the sale of used vehicles when they do not have title in hand or a clear path to getting it within 30 days; requiring that a smog check or VIN verification is performed prior to any sale; training salespeople to ensure that vehicles on “hold” are not sold until it is lifted; and ensuring that a designated employee at the level of regional senior manager or higher is responsible for overall compliance.

Deputy District Attorney Jessica Washington was the prosecutor for the Sonoma County District Attorney.

Contact Information