You’d think that a car dealer couldn’t say that a used car is “safe” if that car is subject to a safety recall (like the Takata airbag recall or the GM ignition switch recall). But, because of a recent action taken by the Federal Trade Commission, used car dealers can do just that. To fix this obvious problem, U.S. PIRG and other leading car safety advocacy groups—Consumers for Auto Reliability and Safety (CARS) and the Center for Auto Safety—have sued the FTC and are asking the court to invalidate the FTC’s action. (The complaint we filed is available here.) Although not parties to this particular lawsuit, MASSPIRG, ConnPIRG, and CALPIRG have also conducted research and exposed the problem of used cars dealers selling unrepaired recalled cars.
This all started when the FTC accused GM, Lithia Motors, and Jim Koons Management of touting how rigorously they inspected their cars but not disclosing that some of them were subject to unrepaired safety recalls. The parties agreed to a settlement that allows the companies to continue to say that their cars are “safe,” “repaired for safety issues,” or “subject to rigorous inspection” even if those used cars are subject to a pending safety defect recall. The only requirement is that the companies must give the buyer a written disclosure stating that the car “may” be subject to a recall.
But this disclosure is highly problematic because it creates confusion by directly contradicting any assertion that the car is “safe,” it doesn’t actually tell the consumer anything because the possibility always exists that a car might be subject to a safety recall, and it can be easily dismissed by dealers who can simply tell buyers that they are required to put it on all their cars.
The FTC’s action here should be nullified because the law requires the FTC to prevent unfair or deceptive acts or practices, not encourage them. Moreover, the FTC’s action is inconsistent with its own used car rule that explicitly prohibits used car dealers from “misrepresent[ing] the mechanical condition of a used vehicle.” For the safety of the millions of used car buyers, we hope that the court agrees.