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Online vehicle retailers like Carvana claim to eliminate the hassles of buying through a traditional dealership. Ironically, one location in North Carolina just had its dealer license suspended, based on the trouble it caused for at least one customer. What’s more, another Carvana site nearby has been put on probation by the NC DMV.

The Raleigh dealership cannot sell cars until January 2022

Carvana's vending machine offers a novel pick-up experience for cars purchased on their website
Carvana’s vending machine offers a novel pick-up option for cars purchased on their website | Mark Ralston via Getty Images

An investigation by the North Carolina DMV revealed several violations at the Carvana location in Raleigh. According to a court document published by CBS 17, it sold a vehicle to a customer without the required state inspection. The dealer also neglected to send title paperwork to the DMV in a timely fashion. And on top of that, it issued an out-of-state temporary tag for a car sold to a North Carolina resident.

To address those infractions, the NC DMV has suspended Carvana Raleigh’s dealer license. They will not be able to sell or deliver vehicles from that location until January 29, 2022. According to an agreement with the DMV, the location is still permitted to process paperwork for its other three sites in North Carolina.

Carvana Charlotte is on probation

An eight story car vending machine, operated by the online used car dealer Carvana
An eight-story car vending machine, operated by the online used car dealer Carvana | Mark Ralston/AFP via Getty Images

According to CBS 17, Carvana’s location in Charlotte has been on probation with the NC DMV since Nov. 2020. The agency’s License and Theft Bureau reported issues with 30-day tags as well as insurance verification at the Mecklenburg county site. During the probation period that lasts until Nov. 2022, the dealer can operate normally but any infraction would result in a hearing.

“We’re pleased that we were able to reach a solution with the North Carolina DMV,” said Amy O’Hara of Carvana in a statement, per The Wall Street Journal. “We’re proud of the tens of thousands of North Carolina residents we’ve served since 2014 and are excited to continue delivering exceptional customer experiences there for many years to come.”

Online car buying hit a boom during the pandemic

Carvana logo displayed on a smartphone
Carvana | Rafael Henrique/SOPA Images/LightRocket via Getty Images

With social distancing measures in place, Carvana’s sales jumped 37% in 2020 over 2019, according to The Wall Street Journal. Its Q2 earnings in 2021 showed a net income of $45 million, marking its first profitable quarter. Demand and pricing for used cars have been surging, partly due to the semiconductor chip shortage. While that should normalize eventually, general consumer preference for e-commerce is definitely shifting in Carvana’s favor.

Regardless of where a car is purchased or how, buyers rightly expect the paperwork to be handled properly and promptly. Dealers have a responsibility to do so, and their conduct is regulated by state authorities. As Carvana’s recent experience in North Carolina shows, consequences can be painful when they don’t follow through.

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