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FTC Approves Settlements With CarMax, Asbury, West-Herr

April 6, 2017

WASHINGTON, D.C. — The Federal Trade Commission last week approved settlements with CarMax, Asbury Automotive, and West-Herr Automotive Group, which the regulator charged with failing to disclose that some pre-owned vehicles offered for sale had unrepaired safety recalls despite the companies' claims of rigorous vehicle inspections.

The final orders prohibit CarMax, Asbury, and West-Herr from claiming that their used vehicles are safe, have been repaired for safety issues, or have been subject to rigorous inspection, unless they are free of open recalls or the companies clearly and conspicuously disclose their vehicles may be subject to unrepaired recalls for safety issues. They must also explain to consumers how they can determine a vehicle’s recall status. The orders also prohibit the organizations from misrepresenting material facts about the safety or recall status of used cars they advertise.

Additionally, the orders require the three companies inform recent customers, by mail, that vehicles they bought as far back as July 1, 2013, may be subject to open recalls.

“Federal law requires that all new cars sold in the United States be free from recalls, but it does not prohibit auto dealers from selling used cars w3iht open recalls. As a result, neither the [National Highway Transportations Safety Administration (NHTA)] nor any other agency has the authority to ban the sale of used cars that have open recalls across the industry,” the FTC said in December when the settlements were first announced. “Section 5 of the [FTC Act], however, enable the commission to stop car sellers from engaging in false or misleading practices that maske the existence of open recalls, and we are committed to doing just that.”

The FTC’s complaint against Virginia-based CarMax revolves around the retailer’s advertising claims of a “125+ Point Inspection,” and that its cars undergo, on average, “12 hours of renewing — sandwiched between to meticulous inspections.” The complaint also notes a TV commercial touting a team of inspection and reconditioning, which includes a message that appears for three seconds in tiny type at the bottom of the screen that reads, “Some CarMax vehicles are subject to open safety recalls.”

Those recalls, however, included the GM’s key ignition switch defect, as well as the Takata airbag defect, the agency alleged.

As for Georgia-based Asbury Automotive Group, which also does business as Coggin Automotive Group and Crown Automotive Group, the FTC alleged in its complaint 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.”

Like it did in its complaint against CarMax, the FTC charged the group with failing to adequately disclose in its advertising that some vehicles were subject to open recalls, including one that could cause fuel to leak and the engine to misfire or stall, as well as one that could cause a car to move in an unexpected or unintended direction.

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

The commission vote approving the final orders against CarMax, Asbury and West-Herr GM was 2-0.

 

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