A California dealers group has filed a formal complaint with the state seeking to prevent Carjojo Corp., which the group calls a car broker, from using unauthorized data to advertise dealership vehicles at false prices.
The grievance comes after the California New Car Dealers Association discovered the company uses software to copy inventory data from dealership websites and then posts the vehicles to its own site at prices far below sticker prices.
Carjojo finds vehicles and effectively negotiates a price on behalf of consumers.
The association, which represents 1,110 new-car dealers in California, submitted a formal report Tuesday to the state’s Department of Motor Vehicles, citing several violations of both state and federal consumer-protection statutes.
The complaint, for example, said Carjojo had advertised a 2017 Toyota Corolla LE sedan in stock at City Toyota in Daly City for $15,478. In fact, the car had been sold months earlier, the association said.
“This isn’t the dealer’s ad, this is Carjojo’s ad,” Brian Maas, the association president, told Automotive News on Thursday. “But still, people come in expecting those prices to be honored.”
Vehicles on the broker’s website include vehicle identification numbers, which is prohibited under state law unless the seller owns the car. As an authorized broker, Carjojo doesn’t own the vehicles, Maas said.
He added that some vehicles are listed on Carjojo for several thousands of dollars less than the sticker price and are often linked to dealerships that don’t exist. “In certain cases, not even the vehicles existed,” Maas said. “And the price was nothing the dealer had ever advertised.”
Peter Levy, CEO of Carjojo, said, “Since I just received [the complaint], I can’t directly comment on it until we fully digest it.”
He said the Silicon Valley start-up provides car data to customers, but the exchange is ultimately up to the dealership.
“We’ve provided thousands of free leads to dealers,” Levy said. “Of course it is their job to make the sale.”
He added that Carjojo has received an influx of positive feedback in the several months it has been operating, with some customers claiming the company negotiated less-than-sticker prices for them.
“I believe what we do — deep analytics to predict prices based on a complex proprietary database and analysis, with an Internet portal — will ultimately be the prevailing way that new vehicles are purchased,” Levy said.
How Carjojo works
Levy previously founded IntelliChoice, which he said in the 1990s was one of the companies that made “factory invoice” available to consumers, which was “Controversial then, standard now.”
Here is how he explained Carjojo’s operation to Automotive News in January during the National Automobile Dealers Association’s annual convention.
Carjojo’s software tracks the roughly 3.7 million unsold new cars and light trucks on U.S. dealership lots at any given time, while also analyzing transaction prices and available incentives. “We know the lowest price a given car will be sold for,” Levy said in January, which allows the website to effectively tell the shopper, “You should be able to buy this car for this price.”
The shopper picks three specific vehicles, say Honda Civics, which can be at three different dealerships, and enters their credit card and other information. Carjojo then emails or texts each dealership in turn, asking if it is willing to sell that Civic at that price. If the first dealership says no but the second says yes, the consumer is alerted and advised to contact that dealership within 24 hours. The car is not held. The shopper pays Carjojo a fee of $199, but Carjojo does not buy the car itself or have any formal relationship with that or other dealerships.
Levy said the process allows consumers to avoid haggling over price, while sending customers to dealerships for cars at a price the dealerships agree to.
According to California state law, an auto broker must inform customers that they do not posses the vehicles and that they can only arrange, negotiate and assist with car sales. But, Maas said, the association found the website mislead buyers for multiple pages before disclosing that information.
“They can tell folks ‘We can get you a Honda Accord,’ but they can’t say they have the actual cars or the VINs,” Maas said.
On its site, Carjojo offers this explanation of how it differs from typical auto brokers: “Carjojo is data driven, does not take a penny from any dealer, and treats all dealers the same. The broker is not data driven but is relationship driven, and works to protect and promote his relationship with his set of ‘in’ dealers. You get a lower price and a larger vehicle selection with Carjojo.”
It added, “Carjojo is an auto broker like an orchestra is a barbershop quartet.”
Cease and desist
Along with the letter sent to the DMV, the association also delivered a cease and desist notice to Carjojo, in which the company is asked to stop “all unauthorized and/or illegal advertisement of our dealership’s vehicles.”
A copy of the letter was mailed to every dealer member of the association, with a request that they forward it to Carjojo on behalf of their dealership.
“There’s no disclosure that Carjojo got the information [on vehicles] in the way that they did,” Maas said. “And they certainly did it without the dealer’s permission.”
James B. Treece contributed to this report.