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Colorado lawmakers to crack down on out-of-state online car dealers like Carvana

Senate Bill 23-019 requires online dealers to follow same rules as in-state dealers
Posted at 5:03 PM, Feb 15, 2023
and last updated 2023-02-15 20:41:46-05

DENVER — A bill to crack down on out-of-state online car retailers, such as Carvana, is on its way to Governor Jared Polis's desk.

For the past year, Contact Denver7 has been exposing what state regulators called "systematic issues" with Carvana.

Earlier this week, the Colorado state legislature passed Senate Bill 23-019 to help catch up with technology and put online car dealers on notice. The bill will offer new protections for Colorado customers buying vehicles from out-of-state online retailers

"Consumers need to know that they have recourse," said Sen. Chris Kolker, D-Arapahoe County, who co-sponsored SB 23-019. "It came from constituents, their complaints. The Department of Revenue forced something to happen, so thank you for your reporting. It really helped get something done."

Under the new proposal, out-of-state online dealers would be subject to the same regulations as in-state dealerships through the Motor Vehicle Dealer Board when selling to a Colorado consumer. The bill does not require those dealers to obtain a Colorado business license or have a physical location in Colorado, but it requires them to follow Colorado laws and the board's rules.

If out-of-state car dealers break Colorado law, the board could issue a cease-and-desist order, followed by a hearing with the dealer board.

"This would level the playing field," said Chris Rouze, director of the Colorado Department of Revenue Auto Industry Division. "So a consumer can have confidence in the online transaction, because the online retailer would have to do such things as deliver the title in a timely manner, disclose the vehicle's history, and make odometer disclosures."

Carvana declined Contact Denver7's request for an interview, but an audio recording from one committee hearing last month shows a Carvana representative telling lawmakers that the company has improved title delivery timelines.

"We've made significant financial and process investments in Colorado," said Will Munsil, Carvana's senior council for government affairs. "We want to be clear, Carvana seeks to comply with national best practices for buying and selling used cars already subject to the regulatory regimes of most states. We've even worked with the DOR in the past to make sure customers who have problems have been resolved. As such, this legislation wouldn't impose any rules on us that we don't already seek to meet in every case."

But Sen. Kolker told Contact Denver7 that the bill was complaint-driven, and when the bill passes, those rules will be enforceable.

"This is a good example of the media and lawmakers and governmental agencies hearing about an issue, and the government helping to solve that through thoughtful legislation," said Rouze, who believes customers must take steps to protect themselves when buying cars.

The Colorado Department of Revenue has a consumer guide to aid in the vehicle-buying process.

Meanwhile, cars appeared in Carvana's Denver vending machine last month, but a spokesperson said the facility is not open yet.

In a statement to Contact Denver7, a Carvana spokesperson wrote, "We’re excited to welcome our first customers to our iconic Car Vending Machine very soon."

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