CarMax will pay $1.1 million to settle a consumer protection lawsuit in California after prosecutors said the nation’s largest used-car retailer repeatedly failed to deliver vehicle titles to buyers on time. The settlement was announced by the Santa Clara County District Attorney's Office.
The case, brought by district attorney’s offices of Santa Clara, Riverside, San Francisco, Ventura, and Los Angeles counties, alleged that CarMax violated state law by failing to submit required ownership and registration paperwork within the mandated timeframe. Under California law, dealers must file title and registration transfers with the California Department of Motor Vehicles within 30 days of a vehicle sale.
Prosecutors said the delays left thousands of buyers without legal ownership of their vehicles, preventing them from selling, refinancing or otherwise fully using their cars.
“Buying a car is a huge investment for many people, and that comes with the right to receive ownership on time,” Santa Clara County District Attorney Jeff Rosen said in a statement. “Dealerships, whether large or small, need to meet their legal deadlines.”
The settlement, approved by a Santa Clara County Superior Court judge, requires CarMax to pay $900,000 in civil penalties, $150,000 in investigative costs and $50,000 toward statewide consumer protection efforts.
As part of the agreement, CarMax must also change its business practices to ensure compliance going forward. Those measures include placing a hold on vehicles that do not have a clear title available within the required timeframe, completing smog checks or VIN verifications before sale, maintaining adequate staffing to process paperwork and assigning a senior manager to oversee compliance.
The lawsuit covered conduct dating back several years and accused the company of a pattern of failing to meet legal deadlines for transferring ownership documents.
CarMax cooperated with the investigation and resolved the case without admitting wrongdoing, according to prosecutors.
In a emailed statement to CarPro for this story, CarMax writes:
"CarMax is dedicated to delivering the most customer-centric car buying experience in the industry, and that commitment includes timely vehicle title and registration processing.
CarMax has resolved a civil matter with California District Attorneys related to allegations regarding vehicle title processing timelines in California. The resolution does not include any admission of wrongdoing.
The timeframe covered by this matter includes periods during the COVID-19 pandemic, when vehicle title processing was impacted industrywide by disruptions, including DMV closures and process changes, third party processing backlogs, and reduced staffing, which were outside of CarMax’s control. During and since that time, we have strengthened our systems, processes, and oversight to better support timely title delivery, and we remain focused on continuously improving the systems and processes that support our customers."
The Richmond, Virginia-based retailer operates more than 250 stores nationwide and is the largest used-vehicle retailer in the United States.
The settlement underscores a basic but critical part of the car-buying process: getting the title. Without it, buyers can find themselves stuck in limbo — unable to prove ownership, transfer the vehicle or secure financing.
California prosecutors said the case sends a clear message that dealerships must follow the law when it comes to paperwork, not just the sale itself. For consumers, it is a reminder that even in a “no-haggle” environment, the fine print — and the back-office process — still matter.
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