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Friday, 30 December 2011

USA: Consolidator website's dubious practices reflect on dealers

The Internet is replete with websites that serve to bring together the offerings of traders who have things to sell: the word "parasite" came briefly to mind as I typed that, but comparison and consolidation websites can serve a useful purpose. They reduce consumer search costs, don't they? But what if they don't operate according to the sort of standards that one might expect?

The Colorado Department of Revenue Auto Industry Division has published a statement (thanks to Automotive News for the story) about how dealers might be affected when they advertise cars through sites like one called TrueCar. It noted several specific violations of advertising rules, and also the potential for "bait and switch" violations - getting a customer into the showroom by advertising a car that's already sold, then selling them something else. The important point is that in the particular case the dealers were responsible for what was being said on the TrueCar site on their behalf. They might not have been aware of what TrueCar said, and they might not have realised that it was their responsibility to ensure it was accurate.

The position in Colorado (and elsewhere in the US) is different in that motor vehicle dealers have to be licensed, and TrueCar wasn't. But that's only part of the story.  Although the law isn't exactly the same, similar principles could catch dealers out in the UK if they weren't careful.

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