In the Matter of General Motors LLC, File Number 152-3101 #00079

Submission Number:
Steven Taterka
Initiative Name:
In the Matter of General Motors LLC, File Number 152-3101
I am writing to express my concerns about the proposed consent decree with General Motors. As proposed, the decree would legitimize the retail sale of automobiles under recall without the safety defects first being fixed. As an attorney practicing mostly in the area of consumer law, I have handled many cases involving auto dealer sales practices. The proposed decree focuses on the practice of selling Certified Pre Owned cars without "clear and conspicuous" notice that the defect for which the vehicle is under recall has not been repaired. The fundamental flaw with this approach is that it assumes some level of notice is sufficient to allow the retail sale of potentially dangerous vehicles. The proposed decree would thus legitimize the sale of vehicles under safety recall notwithstanding that the safety defect giving rise to the recall has not been repaired. The proposed decree thus shifts responsibility for getting the repair performed from the selling dealer to the consumer. Last year two states, New Jersey and California, considered legislation that would have authorized such sales with "disclosure" but both rejected it. Also last year, Congress rejected proposed legislation that would have permitted the rental of unrepaired recall vehicles with disclosure; instead, Congress enacted a statute prohibiting rental companies from selling, leasing or renting unrepaired vehicles under recall. To date, no state has enacted this "disclosure" legislation which would immunize dealers for selling unsafe recalled cars. If the FTC was to condone this practice, it would be a first from an agency whose mission is to protect consumers, not put them at risk. There are a number of practical consequences if this proposed consent decree is approved: 1. Customers purchasing these unrepaired vehicles may not know that, even if they rush to the nearest franchise dealer to have the repairs performed, parts may not be available for months or longer. Current examples are the malfunctioning GM ignition switches and exploding Takata airbags. 2. Customers purchasing these unrepaired vehicles may not always be aware that their vehicle is under recall. The purchase of a vehicle involves signing a multitude of documents including a buyers order, credit application, retail installment sales contract, application for title & registration, odometer disclosure statement, power of attorney and perhaps other documents depending on whether the customer also purchased an extended warranty, credit life and/or credit disability insurance, GAP insurance/waiver, etc. To expect customers to focus on the completeness of an earlier advertisement when they are faced with a stack of documents to sign after the customer has spent hours test driving a car and negotiating price, financing and add-on items is unrealistic, to say the least. 3. If a customer purchasing an unrepaired recall vehicle does not bring it to a franchise dealer for repair, drivers and passengers in OTHER vehicles are at risk. Such other vehicles may be involved in an accident with the recalled vehicle, an accident which might not have happened if the recalled vehicle had been repaired. Here in Tennessee the Tennessee Consumer Protection Act, a mini-FTC Act, proscribes unfair or deceptive acts or practices. Thus, if a dealer now sells a recalled vehicle where the repairs have not been made, an injured consumer, or a consumer's estate, may have a claim against the dealer. The proposed consent decree arguably creates a safe harbor for dealers rendering them immune from any such claims notwithstanding they sold a vehicle which they knew to be unsafe. Moreover, claims for breach of implied warranties of merchantability and fitness for particular purpose could be negated as well as common law claims for fraud, all of which are viable under current Tennessee law. Safety recalls are issued because of lethal defects. The FTC should not condone the sale of these dangerous vehicles.