- CarMax will pay $1.1 million to settle a California title transfer lawsuit.
- Some buyers couldn’t prove legal ownership of cars they had already paid for.
- Prosecutors from 6 counties cited thousands of missed DMV filing deadlines.
Buying a used car can sometimes feel a bit nerve-wracking. Going through a reputable dealer is supposed to alleviate some of those fears. According to prosecutors in California, buying from CarMax was anything but a smooth process for some buyers.
Plenty of customers bought and paid for cars that they didn’t legally own for months after the transaction. Now, CarMax is paying a seven-figure settlement and avoiding any admission of wrongdoing.
The judgment, approved March 24 in Santa Clara County Superior Court, resolves a lawsuit alleging that CarMax repeatedly failed to submit registration and title transfer documents to the California DMV within the deadlines required by state law. In some cases, delays allegedly stretched far beyond the allowed timeframe, meaning buyers couldn’t legally prove ownership of vehicles they had already paid for.
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California law requires dealers to submit transfer applications within 30 days of a sale. If, for some reason, the DMV rejects that paperwork, the dealer must re-submit it within a specific window. Prosecutors from six different counties say CarMax missed those deadlines literally thousands of times, dating back to 2019. In their eyes, that violates the state’s Unfair Competition Law and consumer protection statutes.
Affected buyers were in a tough spot. Until the transfer legally happens through the DMV, these buyers can’t resell the cars, use them as collateral, or simply prove legal ownership. In other words, it takes a simple title exchange and turns it into a massive question mark for buyers who thought the deal was done when they left the lot.
As a part of the settlement, CarMax agreed to pay $900,000 in civil penalties, $150,000 in investigative costs, and $50,000 toward consumer protection enforcement. Perhaps more importantly, the company must change how it handles used-car sales in California.
New rules include placing sales holds on vehicles without a clear title, making sure smog checks and VIN verifications are completed before sale, keeping enough staff to process paperwork, and assigning a senior manager to oversee compliance. CarMax cooperated with the investigation and settled the case without admitting wrongdoing.
