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Schumer Urges FTC to Crack Down On Used-Car Dealers Who Can Sell Cars Under Safety Recall to Unwitting Customers

Schumer Letter Comes as Consumer Group Submits Petition to FTC Alleging CarMax is Engaged in Deceptive Advertising and Sales Practices

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Washington, DC - June 24, 2014 - In a letter to the Federal Trade Commission, Senator Charles E. Schumer today called on the agency to immediately direct car dealers that sell used-cars to change any policy which may potentially allow the sale of recalled vehicles without first fixing safety defects, putting used-car buyers in harm’s way. The letter comes in response to reports that used-car dealers are selling cars subject to recall for safety-related defects while at the same time, advertising the used vehicles as having passed rigorous safety inspections. Currently, the Motor Vehicle Safety Act prohibits new car dealers from selling recalled vehicles without first fixing the safety defects but does not hold dealers selling used-cars to the same standard. Schumer added that if the FTC does not act to prevent used car dealers from selling defective vehicles, he will take legislative action to address this issue.
 
“Used cars that have a safety recall shouldn’t be sold to anyone until the recall is fixed, period,” said Schumer. “Far too many times we have seen the tragic and often fatal consequences when deficient cars are allowed on the road, and it’s time for the FTC to do everything it can to put a stop to it.”
 
Schumer’s letter comes as Consumers for Auto Reliability and Safety and other consumer groups have petitioned the FTC to investigate and take appropriate legal action regarding the advertising and sales practices of CarMax, the largest retailer of used vehicles, in selling vehicles that have been recalled for repair of safety defects without having fixed those safety defects.
 
A copy of Senator Schumer’s letter to the FTC is attached and pasted below, and the consumer groups’ petition to the FTC can be found here.
 
June 24, 2014
The Honorable Edith Ramirez
Chairwoman, Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Dear Chairwoman Ramirez:
 
I write today to express my grave concern over reports that used-car dealers are selling cars subject to recall for safety-related defects, while at the same time representing to consumers that those used vehicles have passed rigorous safety inspection. It is bad enough that used-car dealers are not required by law to fix a safety recall problem prior to selling the recalled vehicle to a consumer. Compounding the safety risks with misleading and deceptive advertising and sales practices only further endangers the safety of used-car customers and everyone who shares the roads. I ask that the Federal Trade Commission immediately investigate whether car dealers that sell used cars are implementing policies that mislead consumers about safety-related recalls. If the investigation reveals that used-car dealers have implemented these policies, the Commission should suggest steps that regulators or Congress should take to end these policies.
 
I understand that Consumers for Auto Reliability and Safety and other consumer groups have petitioned the Federal Trade Commission to investigate and take appropriate legal action regarding the advertising and sales practices of the largest retailer of used vehicles CarMax, because they allege this operation is selling vehicles that have been recalled for repair of safety defects without having fixed those safety defects. I respectfully request that the Commission address the allegations in the petition, launch a full-fledged investigation to determine whether other used-car dealers engage in similar practices, and move to prevent these practices from occurring in the future. 
 
As you know, in accordance with the Motor Vehicle Safety Act, car dealers selling new cars are not permitted to sell recalled vehicles without first fixing the safety defects. Dealers selling used cars should be held to the same standard. I believe the Federal Trade Commission has the regulatory power to take appropriate action to protect the safety of used-car buyers. However, I am also actively exploring with my colleagues ways to enhance the agency’s power to take action on this matter via legislation.
 
The Commission has a long and distinguished history of cracking down on deceptive sales practices and protecting consumers. If the allegations by Consumers for Auto Reliability and Safety prove to be true, I believe the Commission should take swift and decisive action to rectify the inherently deceptive and dangerous practice of selling safety-compromised used cars that are under recall to unsuspecting consumers.
 
Thank you for your prompt attention to this important matter. I look forward to hearing from you on this issue.