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NHTSA Fines Ariz. Dealership $40,000 for Selling New Cars With Open Recalls

June 1, 2016

By Eric Gandarilla

WASHINGTON, D.C — The National Highway Traffic Safety Administration (NHTSA) has ordered Arizona-based Sands Chevrolet and its subsidiaries to pay a civil penalty of $40,000 for violating the Safety Act, according to a settlement agreement between the two parties.

The dealership will be required to transfer the $40,000 in one lump sum payment to the U.S. Treasury. Along with the civil penalty, Sands Chevrolet was ordered to show that it has taken, or will take, steps to ensure it does not violate the Safety Act again, the settlement agreement states.

The NHTSA first began investigating the dealership more than two years ago when it received information alleging that the dealership was selling and delivering new vehicles to customers without first fixing safety-related defects or non-compliances that General Motors had notified its dealers about. On May 2, 2014, the administration opened an audit query to determine if the dealership had actually been violating the Safety Act — a law that prohibits the sale and delivery of vehicles that contain a safety-related defect or do not adhere to certain safety standards.

The NHTSA found that in multiple instances the dealership violated the Safety Act by selling and delivering vehicles that were noncompliant with safety standards.

After the dealership received notice of NHTSA’s audit query, it began to improve its sales process and service department to make sure that it checked all vehicles for recalls before delivery to customers. The dealership also began to check open recalls for every vehicle brought in for service and trade-in. If it found any problems with any of its trade-ins, it would ensure they were fixed before reselling it to a new customer.

The number of instances the dealership was found to have been in violation of the Safety Act was not disclosed. However, before March 17 of this year, the maximum penalty for each Safety Act violation was $7,000. After March 17, that maximum was raised to $21,000 for each violation. NHTSA also has in its authority the power to compromise the amount of civil penalties.

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