Consumer Safety Groups Appeal Federal Ruling Enabling Car Dealers to Conceal Recall Information

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As lemon law lawyers, it never ceases to amaze us how big corporations find ways to bend the rules and short-change consumers in the shadows. In a recent development, we’re seeing consumer/safety groups push back against a federal court ruling allowing the FTC to enable car dealerships to lie about the safety of hazardous recalled vehicles.

Fortunately, some of the leading auto safety and consumer advocacy groups have stepped forward. Consumers for Auto Reliability and Safety (CARS), the Center for Auto Safety, and the U.S Public Interest Research Group (USPIRG) have filed a notice of appeal to this ruling. This is part of an ongoing battle to protect consumers from hazardous recalled vehicles.

What is the Problem?

The Federal Trade Commission has consent orders with General Motors and publicly-traded car dealership chains – CarMax, Lithia, Koons, Asbury, and West-Herr. These consent orders allow these sellers to use dangerous & deceptive advertising to sell recalled used vehicles. These vehicles may have deadly defects that compromise the safety of drivers.

The FTC’s consent orders allow brands to advertise defective recalled vehicles as “safe” or “repaired for safety”. They can advertise the vehicle to make it appear it has passed rigorous inspections – and be sold at a marked-up price as a “certified vehicle.”

This is a big problem because the vehicle can be advertised as “inspected” and “safe” – without getting the free safety recall repairs done. All the dealer needs to do is disclose the vehicle “may” have an “open recall”.

In other words, dealers can sell recalled vehicles (with proven defects) without making any repairs. These consent orders let big name auto brands knowingly put people in danger to reduce their own financial losses. Not only is this extremely unethical, it poses a MASSIVE risk to the buyer and other drivers on the road.

“Under state laws, such deceptive advertising has been historically viewed by numerous Courts as being clearly illegal. But the FTC’s consent orders make it more difficult for victims of unscrupulous car dealers to use some of the most important existing state consumer protection laws,” said Bernard Brown, a nationally renowned attorney, in a press release in early November 2021.

What is the Appeal?

The legal appeal – which was filed on November 4th 2021 – seeks to have the Washington D.C. Circuit Court of Appeal overrule the federal court decision. This decision was made on Labor Day 2021 (September 6th).

The appeal would rule in the consumer/safety groups’ case against the FTC before the US District Court.

When the FTC proposed the order, they were initially opposed by a coalition of the United States’ top auto safety, consumer, and injury prevention groups. These organizations filed comments calling on the FTC to modify the proposed consent orders.

The argument was that the “kind of contradictory doublespeak that would be allowed by the proposed agreements is dangerous and inherently false and misleading. Such advertisement has been found repeatedly by the courts to be unfair, deceptive, and/or fraudulent.”

The FTC’s consent orders were opposed by pro-auto safety Senators Schumer, Durbin, Blumenthal, Markey, and Nelson – as well as Representative Schakowsky. As the FTC finalized the orders – despite Congressional opposition – the FTC was accused of being anti-safety and anti-consumer.

What Does It All Mean?

As the consent orders were announced by the FTC, the agency itself admitted the danger recalled vehicles pose to consumers. “Unrepaired auto recalls pose a serious threat to public safety. Defects that have been the subject of recalls have led to serious injuries and even death for many consumers.”

Corporate America and Washington are no strangers to prioritizing the bottom line over public safety. Automakers have a responsibility to keep the people who purchase their products safe. These orders are a blatant disregard to this notion.

Congress needs to enact the Used Car Safety Recall Act, S 1835, sponsored by Senators Blumenthal, Warren, and Markey. The legislation will provide the National Highway Safety Traffic Administration the authority to punish dealers that sell unrepaired recalled used vehicles – without consumers suffering damages.

If the FTC’s consent orders are NOT overturned, or Congress fails to enact safety legislation, these orders will be in effect until 2036! These deceptive advertising tactics have become very normal practice among car dealerships – and need to be stopped.

Have You Been Affected?

If you have been a victim of a car dealer’s deceptive sales tactics – and have purchased an unrepaired recalled used vehicle – you need to speak with an attorney who specializes in consumer protection laws.

In California, used vehicles that exhibit a defect can be processed under the state’s lemon law. If the vehicle is having issues, and it’s covered via dealer warranty or implied warranty of merchantability, you have rights.

California has some of the most consumer-friendly lemon laws in the country. If the dealership knowingly sold you a defective vehicle (and it wasn’t sold “as is”), you may be entitled to compensation.

For questions regarding CA lemon law, the FTC’s orders, or anything with a defective vehicle, don’t hesitate to reach out. Call Cline APC at 888-982-6915, send an email to info@clineapc.com, or fill out a free case evaluation.

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