Carvana to continue operations in Illinois, but not without new restrictions

Illinois and Carvana have reached an agreement that will allow it to continue its business in the state with new restrictions, after an investigation resulted in the suspension of its dealer license last year.

The 2022 investigation arose from consumer complaints in relation to the company’s handling of vehicle registrations and titles, which alleged the process took longer than was allowed under state law. Its license was suspended last July, although Carvana was allowed to continue sales in the state provided it followed new restrictions which required the business to outsource the title process to third-party vendors. Similar allegations in Michigan and Pennsylvania also resulted in the loss of business privileges.

The settlement was announced Tuesday by the new Illinois Secretary of State Alexi Giannoulias, who assumed the role earlier this month. According to the agreement, Giannoulias has the right to entirely remove the online retailer’s license if it fails to follow new restrictions, including but not limited to regulatory inspections.

To say the least, Carvana is in the middle of an extremely challenging period, marked by debt issues and questions over its logenvity in the car business. While the used car seller rose to impressive heights during the COVID pandemic as new vehicle production ground to halt, it failed to scale back its operations in time when supply chain improvements began to relieve vehicle shortages. The Illinois case was not its first encounter with the law, and is unlikely to be its last. Although it has managed to circumvent an outright ban in any state, it remains to be seen what structural changes the company will take to prevent further litigation or more restrictions.

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