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From Products Liability Law Daily, June 25, 2014

Safety groups urge FTC to crack down on used car dealers selling recalled vehicles

By Joe Bichl

Consumer safety groups have called on the Federal Trade Commission to investigate and take enforcement action against CarMax, the nation's largest retailer of used cars, over its sales and advertising practice concerning the sale of recalled used cars. According to the consumer groups, while CarMax indicates in its advertising that each of the used vehicles it offers for sale are “CarMax Quality Certified” and has undergone a rigorous “125+ point inspection,” the retailer has “failed to ensure that safety recalls are performed prior to selling used cars to consumers.”

Federal law. Currently, the Motor Vehicle Safety Act prohibits new car dealers from selling recalled vehicles without first fixing the safety defects but does not hold dealers selling used-cars to the same standard.

In a petition filed this week, the consumer groups are requesting that the FTC curb CarMax’s advertising and sales practices, which they describe as “deceptive.” According to the petition: “It is inherently deceptive for an auto dealer to represent that its vehicles have passed a rigorous inspection, while failing to take even the most basic step of checking the vehicle's safety recall status in order to identify known safety defects that have triggered a federal safety recall, and ensuring that the safety recall repairs have been performed, prior to selling the vehicle to a consumer.”

“CarMax is playing recalled used car roulette with its customers' lives,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS), in a news release.

NHTSA powerless. The consumer groups’ petition argues that it is important for the FTC to exercise its authority under the Federal Trade Commission Act to address false or deceptive advertising, since the National Highway Traffic Safety Administration (NHTSA) lacks authority over new and used car dealers concerning sales of used cars that are subject to auto safety recalls.

CARS cautions that used car buyers should always check the Vehicle Identification Number of any used car they are considering purchasing. In addition, consumers can find up-to-date safety recall information on most auto manufacturers' websites, or by calling the manufacturer's toll-free number or a local dealer, and providing the VIN.

Congressional response. In a letter to the FTC, Sen. Charles E. Schumer (D-N.Y.) requested that the agency immediately direct car dealers that sell used-cars to change any policy which may potentially allow the sale of recalled vehicles without first fixing safety defects. The letter comes in response to reports that used-car dealers are selling cars subject to recall for safety-related defects while at the same time advertising the used vehicles as having passed rigorous safety inspections. Schumer added that if the FTC does not act to prevent used car dealers from selling defective vehicles, he will take legislative action to address this issue.

“Used cars that have a safety recall shouldn’t be sold to anyone until the recall is fixed, period,” said Schumer. “Far too many times we have seen the tragic and often fatal consequences when deficient cars are allowed on the road, and it’s time for the FTC to do everything it can to put a stop to it.”

Companies: CarMax; Consumers for Auto Reliability and Safety

MainStory: TopStory ProductRecallsNews IndustryNewsStory NHTSANewsStory MotorVehiclesNews

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