FTC to car dealers: When making inspection claims, recall recalls

Share This Page

When thinking about buying a used car, some people hit a speed bump when they get to the “used” part. It’s one thing to spot a dinged fender or smudged floor mat, but it’s tougher to evaluate a used car’s essential systems. In separate complaints, the FTC charged that CarMax and two large dealership groups touted how rigorously they inspect their used cars and yet failed to clearly disclose to prospective buyers that some were subject to unrepaired safety recalls.

CarMax’s ads highlighted that its cars undergo a 125+ point “Certified Quality Inspection” that “must check out before it meets our high standards.” What did CarMax say it inspected in the “over 12 hours, on average” it spent on each car? Everything from the engine and steering system to the brakes and axles.

Georgia-based Asbury Auto Group – which also does business under the names Coggin and Crown – made similar claims for its used fleet of certified cars. For example, on its website, the company promised “Crown Automotive sends every Crown Certified used vehicle through a rigorous 150 point inspection to ensure that every vehicle is in top shape before you take it home. It is important to Crown that every feature of your vehicle work as it should so that you have peace of mind before you leave the dealership.”

Similarly, West-Herr Automotive Group – the largest auto group in New York – told car buyers that “Each vehicle goes through a rigorous multi-point inspection with our factory trained technicians. The service department grades each vehicle, and only the highest quality vehicles make it to our lots.”

But according to the FTC, despite the companies’ broad claims about rigorous used car inspections, there was something they failed to tell consumers: that some of the cars were subject to safety recalls that hadn’t been fixed.

Let’s be clear. We’re not talking about wonky cup holders. According to the complaints, some of the unrepaired recalls covered defects that could cause serious injury – for example, in the case of CarMax, a defect that could result in the airbag rupturing and striking occupants with metal fragments. The complaint against Asbury alleges that some cars advertised as passing its “150 point bumper-to-bumper inspection” were subject to an open recall for a defect that could increase the risk of a crash by causing the car to move in an unexpected or unintended direction.

Under the proposed settlements, CarMax, Asbury and West-Herr can’t claim their used vehicles have been subject to an inspection for safety-related issues unless they’re free of open safety recalls, or the companies clearly and conspicuously disclose that the vehicles may be subject to unrepaired safety recalls. If they make that clear and conspicuous disclosure, they also have to tell consumers how to determine if a car they’re considering is subject to an unrepaired safety recall. (The inspection claim and disclosure can’t be misleading in any other way, of course.) Among other things, the companies also have to send letters to customers that vehicles they bought as far back as July 1, 2013, may be subject to open recalls.

While we’re on the subject of “clear and conspicuous,” the FTC’s complaint against CarMax alleges that one TV ad touted its inspection procedures and then flashed in fine print for just three seconds at the bottom of the screen “Some CarMax vehicles are subject to open safety recalls.” It’s FTC 101 that fleeting fine-print superscripts flunk the “clear and conspicuous” standard. That’s the case for the disclosure of any information necessary to prevent deception.  Dealerships eager to steer clear of law enforcement need to know that conveying key information in tiny type, burying it in dense blocks of text, or hiding it in a place consumers aren’t likely to look is a non-starter under the law.

The FTC is accepting online comments about the proposed settlements until January 17, 2017.

In a related development, the FTC also finalized settlements with GM, Jim Koons Management and Lithia Motors, which alleged similar Section 5 violations for touting the thoroughness of used car inspections while not disclosing that some cars were subject to unrepaired safety recalls.

 

Comments

These "used car dealers" should be held responsible for notifying consumers in a clear &n cognizant manner, about any recalls & have a signed affidavit that they were made aware of the problems prior to the sale.

I am not happy with the car I brought from Drive Time in October 2016 also need to file a report on other auto dealer and finance company that is working with the dealers who would I talk to thanks

I think "mouse print" on all TV ads, and fast talk at the end of all Radio ads, should be outlawed.
Nobody can read that stuff on even the best high def TV, or make out most of what is said on a radio ad.
The "mouse print" and "fast talk" just blows away the great deal they just advertised in the ad. Also I'm getting sick and tired of hearing that stupid fast talk (sometimes up to 15 seconds or more) after all the radio ads.

I am one of those buyer who was lied to about a used 2007 Honda Accord I purchased. It had been in an accident, but was not disclosed. The dealership gave us Auto Care report, which was a very Cheap Trick. I still have vehicle and my lawn was sold after 4 months from Miami Financial Services to Innovate Auto Loan Servicing in Fort Worth, Texas. They do not know it had been wreck. I found out with another dealership who ran a Carfax on my vehicle. That was when I found out it had been wrecked. From this point on: If they do not give car fax, then I am walking off lot and leave their vehicle right there for them to continue. Follow what FTC tells us and we will be protected. There are more than one dealership and many of them are HONEST and will give CARFAX when asked or they will offer.

Used car dealers should be required to provide a standardized inspection report of EVERYTHING that was checked and repaired as well as a standardized list of items not checked or repaid....and a disclaimer of items known to need repairs but not repaired. A similar requirement is required when selling a home, the seller must disclosed known damage and repairs including if anyone has died in the home. Also the realtor needs to disclose anything they have notice. If something comes up after the sale that could be traced back to the seller....that should have been disclosed but wasn't....then both the seller and the real-estate agent are responsible for that repair. IF we implemented something similar to this in the used car market....yes it would drive prices up a bit....but it would provided buyers with a better and safer car as well as force the seller to be more responsible for the disclosing major repairs to a potential buyer.

I just took my van to a Ford dealer in Reedsburg, WI because my sensor light kept coming for low air in tires. This was happening every few weeks. I suspected it might have been the rims. When the service department manager put the van up on the lift and was going to inspect the rims and tires, he came to me in the waiting room and said to forget the tires. I had some very very serious problems with the van! I was in a panic. I was told that my rear axle was ready to break in two and the subframe front lower control were all rusted and needed to be replaced. The only saving grace to thousands of dollars in repairs is that these were items that had a recall on them in the past. According to the service tech, neither had been ever taken in on the recall to be fixed. The service manager wouldn't even let me drive home. If that rear axle would break while I was driving, I would be killed. What a thought. I purchased the vehicle from a reputable used car dealer in Greenbay, WI and had no idea these recall issues had never been addressed. By the grace of God, I had taken my van in for a checkup for an entirely different matter. Thanks to a lot of wonderful people, I am home safely while my van is being repaired under the recalls. It is still a "buyer beware" world. It could have ended up in a death - mine. We need responsibility on the part of a used car dealer to check out any recalls on that particular vehicle BEFORE it is sold. I feel it is the used car dealers responsibility to notify a potential customer before a sale is struck. Accidents always happen. They don't have to be because of negligence! Thank you for taking the time to listen.

Add new comment

Comment Policy

Privacy Act Statement

It is your choice whether to submit a comment. If you do, you must create a user name, or we will not post your comment. The Federal Trade Commission Act authorizes this information collection for purposes of managing online comments. Comments and user names are part of the Federal Trade Commission’s (FTC) public records system (PDF), and user names also are part of the FTC’s computer user records system (PDF). We may routinely use these records as described in the FTC’s Privacy Act system notices. For more information on how the FTC handles information that we collect, please read our privacy policy.