Buyers Beware! Used Cars with Open Safety Recalls to be Advertised as “Safe”

The FTC recently finalized consent orders allowing General Motors, CarMax, and the Lithia, Koons, West-Herr, and Asbury dealership chains to advertised used cars as “safe” even if they have open safety recalls, so long as they disclose the mere possibility of an open safety recall. As to General Motors, these consent orders directly conflict with its settlement agreements with the Attorneys General of 49 states and the District of Columbia—all of which prohibit General Motors and its dealerships from advertising vehicles with unrepaired safety recalls as “certified” pre-owned cars.

In response, three consumer protection organizations—Consumers for Auto Reliability and Safety (CARS), the Center for Auto Safety, and the U.S. Public Interest Research Group (USPIRG)—filed suit against the FTC. These consumer groups contend the consent orders are illegal and place the lives of used car buyers, their passengers, and others on the roadway in danger.

The FTC has moved to dismiss the lawsuit on procedural grounds, and has advocated the adoption of these rules nationwide. This would pass the burden on to used car buyers to ignore representations that a particular vehicle is “safe” and to conduct their own investigation into whether the vehicle is subject to an open safety recall. Unsurprisingly, car dealerships are attempting to enact such legislation in several states, having already failed to do so in California, Maryland, Virginia, and New Jersey.

On August 16, 2018, a federal district court in Washington, D.C., will hear oral arguments by all parties to the lawsuit to determine whether it will dismiss the action or instead address the legality of the consent orders.