To: All Maryland Dealers
 
From: Peter Kitzmiller
 
Re: TrueCar/Zag
 
Date: January 4, 2012
 

It is the opinion of MADA that any vehicle referral program which requires a dealer to pay a fee only upon the sale of a vehicle violates Maryland's dealer licensing law. It is MADA's understanding that this is TrueCar/Zag's pricing structure.
 
Maryland licensing law is very clear.
 
In order to be a licensed dealer you must have a physical location and to be a new car dealer you must have an unexpired franchise agreement for the vehicles you are selling.
Maryland law further states that you may not sell vehicles unless you are a licensed salesperson and in order to get a license, a salesperson must be employed by a licensed Maryland dealer.
Section 15-314(d) states that a dealer or an agent or an employee of a dealer may not do any vehicle sales business with or through any person who is required to be licensed under this title if he knows that the person is not licensed.
 
These statutes have been upheld in court - Detroit Automotive Purchasing Service vs.Lee.
 
Numerous attorney general opinions have stated that car buying/referral services are unauthorized to the extent that they receive or expect to receive a commission or other compensation for their referrals.
 
MADA met with TrueCar/Zag officials at the June convention in Williamsburg and outlined our concerns that this payment method (dealer pays vendor only upon sale of vehicle) would be considered a commission paid to an unlicensed person for the sale of a vehicle which would put Maryland dealers in violation of the licensing law. We were told by TrueCar/Zag that changes were being made to the program; however, we are not aware of any changes as of this date.
 
MADA recently met with MVA and we expect a bulletin from them in the near future confirming long standing case law and attorney generals' opinions.
 
In conclusion MADA believes that any program in which the dealer pays on a per vehicle sales basis for a referral violates Maryland licensing law and would subject Maryland dealers to fines by MVA.