U.S. PIRG joined more than 20 consumer organizations in calling on the Federal Trade Commission (FTC) to prohibit the practice of selling “certified” used cars with unrepaired safety recalls. The formal comments were in response to the FTC's proposed settlements with General Motors, Jim Koons Management, and Lithia Motors.
The FTC proposed settlements to address the deceptive practice of selling cars with parts subject to safety recalls that have not been repaired as “certified,” or another similar term, suggesting they have been thoroughly inspected and are safe.
The FTC's intention to enforce laws against false advertising and unfair and deceptive acts and practices involving auto dealers' sales of unsafe, unrepaired recalled used cars, particularly vehicles advertised and sold as “certified,” is laudable. The action is an important public safety and consumer protection issue. But while we applaud the Commission's decision to engage in this area, the proposed consent agreements would fail to protect consumers from false and misleading statements, unfair and deceptive trade practices, and – most importantly – unsafe cars.
The consumer groups argue the consent orders should be amended to prohibit dealers from selling any “certified” vehicle to a consumer if it has unperformed repairs mandated by a safety recall. The consent orders should not rely on mere disclosure of a safety defect at all, but it would be particularly harmful to rely on disclosures of open safety recalls when a vehicle is advertised as having passed an inspection, or being “certified,” or safe. It is inherently deceptive.
Some car dealers, most notably AutoNation, the nation's largest new car dealership chain, have announced that they do not sell any recalled new or used vehicles, at wholesale or retail, unless the recall repairs have been performed. However, other dealers, most notably CarMax, the nation's largest retailer of used cars, sell unrepaired recalled used cars to consumers, including vehicles they advertise as having passed a rigorous inspection, qualifying to be sold as “CarMax Quality Certified,” and covered by express warranties. These sales pose a serious threat to public safety.
In a recently released report by U.S. PIRG Education Fund and the Consumers for Auto Reliability and Safety Foundation, research found that over 17 percent of cars offered for sale at a given day at the CarMax North Attleboro dealership – 42 out of 243 – were subject to a federal safety recall and had not been repaired, despite the fact that repairs for many of these safety defects were readily available at no cost to CarMax.
The vehicles were recalled due to defects including stalling in traffic; catching on fire; having seat belts that may fail in a crash; having Takata air bag inflators that rupture and propel metal fragments, blinding drivers or passengers or causing them to bleed to death; sticking accelerator pedals, and faulty steering that can cause a crash.
We would not tolerate the resale of recalled prescription drugs, food or other consumer products like car seats, we must not tolerate it in the used car industry.