The New York City Department of Consumer and Worker Protection on Thursday (Oct. 15) disclosed that it filed a lawsuit in the Supreme Court of New York against CarGurus, claiming the platform misled consumers with its pricing information.
Driving the news: The NYC agency claimed CarGurus violated its New York Consumer Protection Law more than 2,000 times.
In the lawsuit filed Oct. 5, the DCWP noted it has investigated more than 106 used car dealerships, securing $1.97 million in consumer restitution and assessing $6.5 million in civil penalties.
The agency’s suit stated CarGurus’ “Deal Ratings” were deceiving customers by not including all the added fees in the asking price or with the “good deal” or “great deal” descriptions.
CarGurus response: CarGurus, which was founded in 2006 and has nearly 40 million monthly visitors, issued a statement in response to the lawsuit.
“We are deeply disappointed that the New York City Department of Consumer and Worker Protection (DCWP) is bringing claims against CarGurus,” the statement said. “We’re also surprised they’re taking this step given our history of leading the market in information transparency, our open collaboration with them, and our repeated efforts to engage productively with them.
In the lawsuit filed Oct. 5, the DCWP noted it has investigated more than 106 used car dealerships, securing $1.97 million in consumer restitution and assessing $6.5 million in civil penalties.
The agency’s suit stated CarGurus’ “Deal Ratings” were deceiving customers by not including all the added fees in the asking price or with the “good deal” or “great deal” descriptions.
Recent efforts mentioned: After the Federal Trade Commission sent 97 warning letters to auto dealers on pricing transparency, CarGurus issued a notice to dealers in June about “all-in pricing.”
CarGurus gave dealers a July 14 deadline to add fees to their listings or risk receiving a “no rating” and being moved down the search results.
Additionally, dealers were required to use the platform’s fees setup tool to toggle “fees included in my inventory feed” if they sent all-in prices.
The lawsuit mentioned these changes, but the DCWP claimed the changes do not address what “CarGurus deceptively calls ‘Great Deal’ or ‘Good Deal’” given that it fails to disclose fees or only discloses fees in the asking price.
It claims that for NYC dealers, CarGurus misrepresented asking prices more than 1,200 times between September 2023 and June 2026, along with another 149 instances of deals being misrepresented or not including all dealer fees.
“New Yorkers should be able to trust that a ‘Great Deal’ is actually a great deal,” said DCWP Commissioner Samuel A.A. Levine in a press release. “Our lawsuit seeks to stop bait-and-switch pricing, eliminate hidden fees, and ensure customers aren’t getting fleeced when making one of the biggest purchases of their lives.”
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Bottom line: The lawsuit from NYC follows other actions by the Federal Trade Commission and state attorneys general on price transparency. The NYC agency has been especially aggressive in its enforcement of price transparency and advertising.
Notably, the case follows the FTC publishing its recent Automobile Industry Pricing Transparency FAQs, which included a directive on third-party listings.
“Everyone who has control over the advertising is responsible for making sure the ads state the actual price as the most prominent amount,” the FAQs read. “...Third-party advertisers should make sure this accurate price appears the most prominently when any amount is stated.
