Last year, the Michigan Department of State called Carvana an “imminent threat” to the public as the company committed “fraudulent acts” and violated the terms of an earlier probation agreement 127 times. As a result, their dealer license was suspended and the department promised to seek its revocation.
Now, the state has effectively washed their hands clean of the situation as part of an agreement with Carvana.
Speaking to the Detroit Free Press, Carvana’s senior associate general counsel said the company voluntarily surrendered their dealer license for three years. After that time period, the company can apply for a Michigan dealer license once again.
The move was confirmed by Jake Rollow, the chief external affairs officer for Michigan Secretary of State Jocelyn Benson, who told the publication “To save taxpayer dollars … it is standard practice for our department to offer plea deals to dealerships that violate the law and are likely to have their licenses revoked.” He went on to say the Carvana dealership “agreed it had violated the law and to have its dealer license revoked, and be barred from reapplying for a new license for three years.” It also appears the company agreed to pay a $10,000 (£8,186 / €9,208) fine.
While this would seemingly prevent Carvana from doing business in Michigan, that’s not the case. Quite the opposite as Michigan residents will still be able to purchase a car online and have it delivered to them. The paper says this is possible “due to Michigan law allowing e-commerce activity.”
Furthermore, Carvana will effectively eschew Michigan regulators by using its Arizona license to do business in the Great Lakes state. This appears to involve a few hoops as customers will get “temporary plates and paperwork from Arizona after their purchase,” which they can then switch over to Michigan documents by visiting their local Secretary of State office.
Carvana’s Chris Olson told the publication they “offer [an] Arizona-based program in 18 states” and they’re “happy to do this model.” He added the company is trying to address its paperwork problems with new training, safeguards, and dedicated staff. That was one of the big issues in Michigan, where the state noted Carvana failed to make applications for titles and registrations within 15 days of delivery for 112 customers.
