TrueCar operates a consumer-facing website that promises to help car buyers find the best price. Their TV ads feature a glasses-wearing, bearded, regular-guy pitchman oozing authenticity. He tells us that by seeing TrueCar data on what other buyers paid, we can see how the no-haggle price we get from a certified TrueCar dealer saves us a lot of money.
How much do car buyers save with TrueCar?
An article in the New York Times says a recent lawsuit “asserts that TrueCar’s ‘no-haggle’ promise falsely implies savings that TrueCar does not deliver.” TrueCar, also sued three years earlier for intentionally deceiving the public with false claims and bait-and-switch advertising, argued their promise is not meant to be taken literally.
A comparison study.
Consumer’s Checkbook calls themselves an “unbiased non-profit service ratings authority.” They shopped for cars using TrueCar, then shopped the same cars at dealerships across the country and compared quotes. They found that TrueCar’s guaranteed no-haggle price averaged $1,550 MORE than what buyers paid at dealers. The study was sponsored by CarBargains, a service that claims to help consumers save money while “bypassing all the hassles and high-pressure sales tactics of traditional car shopping.” CarBargains says on their website that they are a nonprofit that takes no money from dealers and has no conflicts of interest. Their revenue comes from customers who pay a $250 fee to have skilled negotiators contact five different dealers and haggle with them for their best prices.
TrueCar doesn’t charge buyers, though, so how do they make money?
The only dealers they recommend are those who pay TrueCar to be “certified” and who pay TrueCar a transaction fee of several hundred dollars for each car sold. What those dealers are paying for is no more than a sales lead, according to the Motley Fool. TrueCar’s real customers are car dealers. They don’t mention this to car shoppers, who continue to think that TrueCar is giving them a buying advantage when they are in fact being steered into paying higher prices to TrueCar’s business partners. Forbes said TrueCar is like Angies’ List, where recommendations that purport to be objective and independent are anything but.
TrueCar has other revenue sources, too.
Their service is endorsed by AAA, AARP, Consumer Reports, USAA and others. These affinity groups recommend TrueCar and – guess what – get a fee from TrueCar for delivering sales prospects.
Adam Lisagor, the TrueCar spokesman, also oozes sincerity for his other clients, Warby Parker, Groupon, Lyft, and Airbnb. In a celebrity interview with Mashable, he said “I think I come off as reasonably authentic and enthusiastic about the product.”
I wonder if that isn’t meant to be taken literally, either.
Please send today’s article to someone you know who is thinking about buying a car.