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Federal Trade Commission to America’s used car buyers: Drop Dead.

For Immediate Release

Federal Trade Commission to America’s used car buyers: Drop Dead.

 

Agency ignores pleas by safety groups, parents of children killed by recalled cars, and safety champions in Congress, with an anti-consumer, anti-safety settlement with GM and car dealership chains, other chains like CarMax to follow

 

           

Consumer and safety organizations blasted the FTC Commissioners’ decision, announced today, to finalize consent orders with GM and the Lithia and Koons auto dealership chains that will allow them to advertise that unrepaired recalled used cars with lethal safety defects are “safe,” have been “repaired for safety,” passed a “rigorous inspection” and qualified to be sold as “certified” cars without repairing the safety defects, if they merely include a meaningless disclosure that the cars “may” be under an  open recall.  In addition, FTC has proposed the same settlement with CarMax and  other dealers. 

            The consent orders may set a new lower standard for the industry regarding how unrepaired recalled used cars are advertised, and will be in effect for 20 years, unless they are overturned in court or preempted by federal law. The dangerous behavior allowed by the FTC is even worse than what GM and most other manufacturers say they allow to be advertised as “certified”. Most manufacturers say they prohibit their franchise dealers from selling any used car as “certified” if it has an unrepaired safety recalled part.  

            The consent orders also undermine existing law in all 50 states.  Under state laws, dealers who engage in such deceptive practices face charges of negligence, wrongful death, punitive damages for fraud, violations of common law, and other serious sanctions. In each state where auto dealer trade associations have attempted to change the laws to make it legal for them to sell unrepaired recalled used cars with meaningless “disclosure,” their efforts have been rejected by lawmakers, including in California, New Jersey, Maryland, Virginia, and Tennessee.

“This is outrageous. The bottom line here is that the result will be more consumers buying unsafe cars putting the lives of not just themselves but everyone who shares the roadways in danger,” said Deirdre Cummings, Legislative Director with MASSPIRG. “Consumers rightly have the expectation that when shopping at any car dealership they will be sold a safe car, and at the very least, they certainly would not expect that any car for sale would still be under a safety recall.”

“Instead of ensuring safe cars for consumers, the FTC is ensuring safe harbor for used car dealers who provide false and deceptive assurances, said U.S. Senator Edward Markey (MA). “The FTC is supposed to protect consumers, but this settlement only makes it easier for dangerous cars to remain on the road, endangering American families. I urge all consumers to continue to check www.safercar.gov to ensure they aren’t buying a car with unrepaired defects.”

            Last year MASSPIRG Education Fund and Consumers for Auto Reliability and Safety Foundation,  released a report that found that over 17 percent of cars offered for sale at the CarMax North Attleboro dealership were subject to a federal safety recall that had not been repaired.  As concerning was that CarMax advertises that all the vehicles it offers for sale must pass a rigorous “125 point inspection” in order to qualify to be sold as “CarMax Quality Certified” vehicles.          

 “This is tragic. The FTC’s reckless action will result in more people being killed and injured because of unsafe, defective used cars,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety, which has been leading efforts to oppose the agreements. Shahan vowed to sue the FTC to get the consent agreements overturned.

            “The FTC is supposed to protect consumers. Instead, they are protecting unscrupulous car dealers,” said Cally Houck, mother of Raechel and Jacqueline Houck, ages 24 and 20, who were killed by an unrepaired recalled Chrysler PT Cruiser that caught fire and caused them to crash head-on into an 18-wheeler.  Subsequently, Houck won a unanimous jury verdict, rendered under state law, awarding over $15 million in compensatory damages, based on claims of negligence and wrongful death.

            “This would be catastrophic to consumers. When I met with each of the Commissioners, and urged them not to do this, what struck me was how clueless they were about how dangerous recalled cars really are,” said Alexander Brangman. He is the father of Jewel Brangman, who was only 26 when she was killed by an unrepaired recalled Honda Civic with a faulty Takata air bag that exploded with excessive force, spewing metal fragments that severed an artery in her neck, causing her to bleed to death.

            “Given the FTC decision, it is more important than ever that Attorney General Maura Healey protect Massachusetts consumers by enforcing MA law that prohibits dealers from selling dangerous cars in Massachusetts and prevents deceptive advertising”[i], concluded Cummings.

            For Consumer Guide on how to avoid buying dangerous recalled cars, click here.

                   

Relevant documents:

Comments filed by MASSPIRG and other consumer groups and the International Association of Machinists and Aerospace Workers, opposing the consent agreements: https://www.ftc.gov/system/files/documents/public_comments/2016/02/00081-100828.pdf

Results of nationwide polling, which found that the American public overwhelmingly agrees that allowing dealers to advertise that unrepaired recalled cars are “safe” or “certified” is deceptive:

https://www.ftc.gov/system/files/documents/public_comments/2016/02/00081-100829.pdf

FTC’s proposed consent agreement with GM – see especially page 4, A (2):

https://www.ftc.gov/system/files/documents/cases/160128generalmotorsorder.pdf

Letter to FTC Chairwoman Edith Ramirez from U.S. Senators Schumer, Nelson, Blumenthal, Markey, and Durbin, blasting the FTC’s proposed agreements as “anti-consumer” and “anti-safety”:

http://www.blumenthal.senate.gov/imo/media/doc/2016%2007%2014%20Letter%20to%20NHTSA%20FTC%20re%20Deceptive%20Used%20Car%20Advertisements.pdf

Letter from U.S. Representative Jan Schakowsky to FTC Chairwoman Ramirez, calling on the FTC to revise or reject the proposed consent orders:

http://carconsumers.org/pdf/FTC_Rep_Schakowsky_letter_9-2016.pdf

 

 

[i] Massachusetts' Used Vehicle Warranty Law, G.L. c. 90, § 7N ¼ (General Laws chapter 90, section 7 N ¼) specifically requires car dealers to warrant the safety of used vehicles they sell to consumers for $700 or more. 940 CMR 3.02 prohibits false advertising and 940 CMR 3.05 prohibits general misrepresentations. And the implied warranty of merchantability states that products must do what it was designed to do with 'reasonable' safety.

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