NEW YORK (TheStreet) -- TrueCar Inc. (TRUE), the online vehicle-buying website whose shares have been traded publicly for a little more than a year, is facing a spate of lawsuits from dealers, shareholders and trade organizations.
The legal assault is symptomatic of the turmoil in automotive retailing as more and more consumers rely on the Internet -- as opposed to browsing at dealerships -- for shopping information, price discovery and, in some cases, vehicle purchasing. As such, profit margins on vehicle sales have shrunk, and dealers have been forced to adjust.
TrueCar shares were priced at $9 a share in mid-May 2014, well below the expected range of $12-$14. Since peaking at near $24 in late 2014, the share price has declined steadily to the current level of about $13.
In March, car dealers representing 117 franchises in New York filed a lawsuit accusing True Car of falsely advertising that consumers can buy vehicles without haggling or price negotiations. Some of the dealers formerly cooperated with TrueCar as affiliates. A TrueCar spokesman said the lawsuit, which seeks $250 million in damages, is "without merit."
Another lawsuit, filed in California in May by the California New Car Dealers Association, accused TrueCar of acting as a dealer and a broker without the requisite license. The action asked the court to enjoin the company from operating without a license. The company plans to "vigorously" defend itself and expects to be vindicated, a spokesman said.