FTC Proposes Settlement with Used-Car Dealers over Disclosure of Open Recalls
The Federal Trade Commission said the idea has settled complaints which alleged some of the largest used-car dealers inside the United States were selling vehicles with open safety recalls, even while advertising which all of the cars as well as also also trucks had gone through rigorous inspections.
Under the agreement, CarMax, West-Herr Automotive Group of fresh York, as well as also also Asbury Automotive Group of Georgia are “prohibited coming from claiming which their used vehicles are safe, have been repaired for safety issues, or have been subject to an inspection for safety-related issues, unless they are free of open recalls,” the FTC said Friday.
The dealers are also required to “conspicuously disclose” if vehicles are subject to safety recalls which have not been addressed as well as also also to tell consumers how to know whether a car or truck is usually subject to such a recall. The settlement follows three separate FTC complaints, one against each dealer group, alleging which the companies were violating the Federal Trade Commission Act by advertising which vehicles had undergone thorough inspections without revealing the cars still had open safety recalls.
As an example, an FTC complaint points to a CarMax television spot which feigned sympathy for a used vehicle which had just been subjected to the dealership’s 125-point inspection.
“To the automobile which just survived hours of reconditioning, sorry, we know which was a bit invasive. although if we didn’t hoist you up inside the air as well as also also poke around a little, we wouldn’t be CarMax. We expect a lot coming from our cars, as well as also also we need to make sure which you’ll make the grade,” the FTC complaint quotes coming from the company’s 30-second commercial. “Oh, just relax. the idea’s going to be a long time before anybody peeks at your undercarriage again.”
The trouble was, for just three seconds of which commercial, “a tiny, blurry white font at the bottom of the screen” stated which “some CarMax vehicles are subject to open safety recalls,” the FTC complaint says.
The FTC complaints against West-Herr Automotive Group as well as also also Asbury Automotive Group, also known as Crown Automotive Group as well as also also Coggin Automotive Group, are similar: dealers marketing cars as well as also also trucks for sale which are certified as having been rigorously inspected while failing to adequately disclose open safety recalls.
A spokeswoman for CarMax said which if a car or truck is usually subject to a recall, the dealer has customers sign a form acknowledging which fact before they are presented with sales documents.
“This specific has been our policy for quite some time,” CarMax spokeswoman Catherine Gryp said. In an emailed statement, CarMax chief operating officer Cliff Wood said the company “has led the industry in recall transparency. As soon as centralized recall information was made available by NHTSA, we believe we were the first to incorporate the idea into our advertising as well as also also sales process.”
Nevertheless, the company said which, as part of its settlement with the FTC, which does not include any fines unless the settlement is usually breached later, the idea “will be modifying some language about recalls in its advertising.” The consent agreement is usually subject to a period of public comment through January 17, 2017, after which the FTC will decide whether to finalize the agreement. Earlier, a similar settlement with General Motors as well as also also two various other used-car sales channels was criticized by consumer advocates, who backed an alternative NHTSA recommendation which all used cars subject to recalls should be repaired before dealers could sell them again. NHTSA oversees the safety recalls although has no direct regulatory authority regarding the sales of used cars with open recalls.
The FTC complaint against CarMax cited a period of violation lasting “until at least November 2014.” Complaints against West-Herr were until at least June 2015, as well as also also the one against Asbury cited periods ending both in November 2014 as well as also also June 2015.
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Asbury Automotive Group’s chief compliance officer, Kelly J. Baker, told Car as well as also also Driver which the dealership group has had a program in place for “several years” under which they “expressly disclose open recalls to each consumer prior to completing the vehicle purchase.” Baker also pointed out which every advertisement for an Asbury used vehicle “prominently” displays a link to a free current CarFax report, which shows the repair as well as also also recall history of the vehicle listed for sale.
West-Herr’s chief operating officer, Jed Hunter, said the FTC complaint stems coming from a dispute over “use of the word ‘rigorous’ on a webpage of the auto group’s website during a 15-month period in 2014–2015, as well as also also the requested modifications were adopted almost two years ago. During its review of the advertising, the FTC did not identify any used vehicles sold with serious defects. The FTC has required similar advertising modifications coming from a sampling of large auto groups across the country.”