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FTC charges CarMax, two auto retailers with failing to disclose recalls

Bags-650x390CarMax and two other major used auto retailers have agreed Friday to settle Federal Trade Commission charges that they advertise how well they inspect their used cars, but failed to disclose that some of the cars had unrepaired safety recalls.

The FTC’s lawsuit against CarMax describes the company’s claims about rigorous used car inspections, including its “125+ Point Inspection” and that its cars undergo, on average, “12 hours of renewing – sandwiched between two meticulous inspections.” The lawsuit also quotes a TV commercial touting a team inspection and reconditioning, which included a message that appears for three seconds in tiny type at the bottom of the screen stating, “Some CarMax vehicles are subject to open safety recalls.”

Despite highlighting their inspections, the FTC alleges that CarMax failed to adequately disclose that some of the cars had open recalls. These recalls included defects that could cause serious injury, including the General Motors key ignition switch defect and the Takata airbag defect.

The FTC’s lawsuit against Asbury Automotive Group alleges that the company made claims such as: “Every Coggin certified used car or truck has undergone a 150 point bumper-to-bumper inspection by certified mechanics. We find and fix problems – from bulbs to brakes – before offering a vehicle for sale.”

However, the FTC alleges that the company advertised some certified used vehicles without disclosing that some of the cars were subject to open recalls, including one that could cause fuel to leak and the engine to misfire or stall, and one that could cause a car to move in an unexpected or unintended direction.

The FTC’s complaint against West-Herr Automotive Group, the largest auto group in New York, cites claims about vehicles backed by the “West-Herr Guarantee” and touting a “rigorous multi-point inspection with our factory trained technicians.” However, the lawsuit alleges that the company failed to disclose that some of the vehicles were subject to recalls for defects that could result in serious injury.

The FTC settled similar allegations against GM and two other dealers earlier this year.

Under the proposed settlements, the companies are required to stop making misleading claims about their recall-repair practices and notify recent customers who may have bought a used car about recalls.

After a public comment period closes, the FTC will decide whether to make the proposed consent orders final.

Used car dealers aren’t required to fix manufacturer recalls on the cars they sell, said Amy Hebert, consumer education specialist for the FTC. But, if they make claims touting their inspections, they need to clearly let people know about the possibility of recalls, so people can get them fixed or decide to buy another car.

Hebert said anytime you shop for a used car, make sure you check up on recalls:

  • Ask questions. Ask the dealer if the car you’re considering has a recall, and whether the dealer can and will fix it before you take the car home.
  • Check for yourself. Take down the VIN number of a car, and enter it at the National Highway Traffic Safety Administration’s recall look-up website, safercar.gov. You also can get information to help you follow up with a manufacturer or dealer about a recall.
  • Check out the vehicle history report. The report will tell you about a car’s title, odometer, theft, or salvage history, and might also provide recall information. Ask the dealer – they’ll often provide a vehicle history report for free. For links to companies that sell the reports, go to vehiclehistory.gov.
Copyright 2016, Rita R. Robison, Consumer Specialist

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