Dealers representing 117 new-car franchises are suing TrueCar Inc. for more than $250 million, claiming they are victims of false advertising and unfair competition.

The lawsuit was filed today in U.S. District Court in New York by dealer lawyer Leonard Bellavia of Mineola, N.Y. TrueCar disputed the claims and vowed to fight the suit.

In the complaint, the dealers argue that TrueCar’s advertisements falsely claim that consumers who use the vehicle-shopping site’s services can buy a car without haggling or negotiations. The filing dealers are not current users of TrueCar, though some have used the service in the past.

The dealers who filed the lawsuit “have lost sales and have suffered injury to their goodwill and business reputation as a result of TrueCar’s false advertising claims,” the suit says.

Said Bellavia: “They’re seeing their customers jump ship.”

False-advertising charge

Vehicle buyers are drawn to TrueCar and its subscribing dealerships by advertisements that promise a no-haggle experience but fail to deliver as promised, Bellavia said. Such advertising violates the Lanham Act, the federal false-advertising statute, Bellavia said.

In addition to the $250 million-plus sought by the suit, the plaintiffs are asking the federal court to enjoin TrueCar’s advertising.

\"We are aware that a complaint has been filed on behalf of a group of dealers who are not on the TrueCar program. We believe the complaint is without merit,\" TrueCar spokesman Alan Ohnsman said. \"We will vigorously defend ourselves and our business practices and expect to be fully vindicated.”

The lawsuit says, “Despite its advertising claims to the contrary, TrueCar does not ‘remove surprises’ at the dealership.”

Consumers, the lawsuit says, “will be surprised to learn” that “the promised vehicle may not be in stock, and may not be available at the advertised price or financing terms.

“TrueCar’s false or misleading advertising,” the suit continues, includes “false ‘no-haggle’ claims,” “bait-and-switch” advertising, “false factory invoice claims,” “false financing claims,” “false transparency claims” and “false rebate claims.”