I-Team: Online Car Seller Carvana Hit With Dozens Of State Violations As Customers Report Paperwork Troubles

FRISCO, Texas (CBSDFW.COM)  - The fast growing online used car dealer Carvana is under investigation by Texas regulators after selling vehicles some of its customers say they legally cannot drive.

Dozens of Carvana customers have filed complaints with the state for months-long delays in getting their vehicle's title and registration.

Stuck with expired and at times out-of-state temporary tags, Carvana customers told the CBS 11 I-Team they are worried about being ticketed or towed.

A Carvana spokesperson told the I-Team the company is "firmly committed to continuous improvement" but did not answer questions about the delays in paperwork.

Since 2019, according to state records, the Texas Department of Motor Vehicles has cited Carvana with more than 30 violations along with issuing more than $10,000 in fines for violating state registration laws.

State officials confirmed with the I-Team TxDMV has additional "open investigations involving Carvana."

Similar paperwork issues have been reported in other states.

In Michigan, Carvana was placed on 18-month probation for violating vehicle registration laws, according to records from Michigan Department of State.

In North Carolina, title and registration violations resulted in the state banning Carvana's Raleigh location from selling cars for six months as regulators suspended the dealership's license, according to court records.

While Carvana did not provide the I-Team with an explanation for the violations, the company's November letter to shareholders provided some insight.

According to the company letter, in recent years, Carvana has experienced an explosive growth in sales – buying and selling three times as many cars as it did two years ago.

Company reports show this growth has led to "significant operational constraints" which has impacted the processing of titles and registrations.

"It's been terrible" - Texas customers fear being ticketed without car title

Alan Boyce's wife had always dreamed of owning a yellow Chevy Camaro, so when Boyce found the perfect car on Carvana.com he clicked on it and bought it.

A few weeks later, his wife's dream car arrived at their front door at their home in Little Elm.

"When I first showed it to my wife, she started tearing up," Boyce said. "I was like this is done. We are keeping this car."

But then one morning, Boyce woke up to find their new Camaro had been towed.

"When we went to leave for work Monday, we didn't have a car," he explained.

Boyce discovered the reason his car was towed is because the VIN on the temporary tag did not match the VIN on his car. The VIN was also wrong on the vehicle's title.

Boyce said he immediately called Carvana and the company overnighted him a new temporary tag.

However, the new tag also had the wrong VIN.

Carvana then sent him an Arizona temporary tag which also had the wrong VIN.

It's been three months since Boyce bought the car and he still does not have the a correct vehicle title.

Boyce said his wife does not even want to drive the car as she is worried about being ticketed or having the car towed again.

"It's been more than a headache," Boyce said, "It's been terrible. What if the car was run by a police officer and he sees none of the numbers match and my wife gets arrested for stealing a car."

Under Texas law, a car dealer has 30 days from the sale of a vehicle to file the title and registration paperwork and 45 days if the vehicle in financed.

In the meantime, the dealer must provide a buyer with one, and only one, temporary Texas tag.

The CBS 11 I-Team spoke with nearly a dozen Texas customers who say they bought a car from Carvana in past year that legally they cannot drive.

Stuck with expired temporary tags, some say they waited for more than a year for Carvana to file the registration paperwork.

"I made my car payments on time. I got insurance. I did the things I was supposed to do and I counted on them to do the things that they were supposed to do. And that didn't happen," explained Sherriel Kelly, who said it took Carvana 15 months to give her a correct vehicle title.

The Texas Attorney General has received dozens of complaints from Carvana customers about delays in getting their title and registration.

Nationwide, the Better Business Bureau has received hundreds of complaints about this issue.

When the I-Team asked Carvana about this, a company spokesperson said, "Carvana has pioneered online car buying by continuously delivering exceptional experiences, and we have bought and sold well over a million cars with customers while achieving an industry-leading Net Promoter Score (NPS) and a 4.7 out of five star customer experience rating average. That said, we remain firmly committed to continuous improvement and will stay hard at work making the best car buying and shopping experience available even better."

Other fast growing online car sellers face similar state violations

Carvana is not the only online used auto retailer that has been hit with recent violations from the Texas Department of Motor Vehicles.

In the past two years, according to state records, Vroom has also been cited more than 20 times for similar registration and title violations.

A Vroom spokesperson told the I-Team, "Our goal is for every customer to enjoy their vehicle from the moment their purchase is complete. As consumers turn more and more to buying cars online, we are investing significantly in our people, processes and operations so every step in getting a customer's vehicle arriving in their driveway, including titles, registrations and plates, is as stress-free as possible and an experience they deserve."

The TxDMV investigates complaints against vehicle dealers licensed to sell vehicles in Texas.

For the fastest processing of your complaint, go to the Motor Vehicle Dealer Online Complaint System.

For additional information with enforcement actions, you can call the TxDMV (888) 368-4689 or (512) 465-4204.