Blumenthal & Markey Slam Anti-Consumer & Anti-Safety FTC Settlements Allowing Used Car Dealers to Advertise Cars with Unrepaired Recalls as 'Safe'

[WASHINGTON, DC] – A final consent order issued by the Federal Trade Commission is anti-consumer and anti-safety, U.S. Senators Richard Blumenthal (D-CT) and Edward J. Markey (D-MA) said today after the FTC announced a settlement allowing auto dealerships to continue to advertise used cars as “safe,” “repaired for safety issues,” and having been rigorously and extensively inspected, including that they are certified—a term that connotes safety—even if those vehicles have unrepaired safety recalls.

“FTC’s unsound decision to finalize this deeply flawed consent order is disappointing and anti-consumer. It finalizes a dangerous decision that permits car dealers to promote cars with unrepaired recalls as safe or certified. Under no circumstances should potentially deadly vehicles be advertised as safe,” Blumenthal said. “The disclosure requirements do more to deceive than fully inform, and worse, could protect unscrupulous dealers. Consumers must stay vigilant and always check any used car in www.safercar.gov for unrepaired defects.”

“Instead of ensuring safe cars for consumers, the FTC is ensuring safe harbor for used car dealers who provide false and deceptive assurances,” Markey said. “The FTC is supposed to protect consumers, but this settlement only makes it easier for dangerous cars to remain on the road, endangering American families. I urge all consumers to continue to check www.safercar.gov to ensure they aren’t buying a car with unrepaired defects.”

In November, Blumenthal led a letter with Markey, and U.S. Senators Chuck Schumer (D-NY), Bill Nelson (D-FL) and Dick Durbin (D-IL) calling on the FTC and the National Highway Traffic Safety Administration (NHTSA) to ensure used car dealers cannot advertise a car as ‘safe’ if it has an unrepaired safety recall. Recent proposed settlements between the FTC and used car dealers allow dealers to continue advertising used cars as certified and “safe” even if those vehicles have unrepaired safety recalls. The Senators also called on the FTC and NHTSA to redraft the proposed settlements to ensure consumers have the critical safety information they need when buying a car.

The text of the Senators’ letter is available here and copied below:

Dear Administrator Rosekind and Chairwoman Ramirez:

We write with serious safety concerns regarding the Federal Trade Commission’s (FTC) recent proposed settlements with General Motors Company, Jim Koons Management, and Lithia Motors Inc, regarding their failure to adequately disclose unrepaired safety recalls when advertising their used car inspection programs. The proposed settlements would allow dealers to continue to advertise used cars as “safe,” “repaired for safety issues,” and having been rigorously and extensively inspected, including that they are certified—a term that connotes safety—even if those vehicles have unrepaired safety recalls. As such, in their current form, these proposed settlements would fail to address the wrongdoing at hand.

We understand that, at our behest, your two agencies have discussed these proposed settlements. Nevertheless, we remain concerned that this important public safety and public policy matter has not received the heightened scrutiny it deserves. Congress has long debated whether dealers should be allowed to sell used cars subject to open safety recalls. We firmly believe that the law should prohibit such sales, as it currently does for new cars with open safety recalls. These proposed settlements wade into this contentious public policy debate, and we believe they would establish an anti-consumer, anti-safety precedent with far-reaching policy implications. Accordingly, we urge you to work together, and in good faith, to leverage your respective agency’s expertise and redraft the proposed settlements so they ensure that consumers receive meaningful information regarding the safety of their potential used vehicle purchases and that public safety is not compromised.

The National Highway Traffic Safety Administration (NHTSA) has publicly stated time and time again that all recalls are safety recalls that need to be fixed. In 2011, a spokeswoman for NHTSA said, “All safety recalls resulting from defects present an unreasonable risk to safety and we believe it is inappropriate to suggest that some defects are not risky enough to require repair.”[1] In a 2013 hearing, former Administrator David Strickland testified, “All NHTSA safety recalls address an unreasonable risk to safety and should not be ignored.”[2] In addition, NHTSA’s current FAQ on vehicle recalls explicitly states, “A recall is issued when a manufacturer or NHTSA determines that a vehicle, equipment, car seat, or tire creates an unreasonable safety risk or fails to meet minimum safety standards.”[3] There is no question that any vehicle with an outstanding recall is an unsafe vehicle.

In contrast to NHTSA’s longstanding position, the FTC’s proposed settlements would allow dealers to continue committing the same wrongdoing that was the impetus for the Commission’s actions. Car dealers would still be able to represent that a pre-owned vehicle is “safe,” has been “repaired for safety issues,” and has passed a “rigorous safety inspection” or to label a pre-owned car as being certified even when it is being sold with an unrepaired safety recall. A certified used vehicle with an unrepaired safety recall is inherently misleading. Perhaps more alarming, the proposed settlements would only require dealers to make a blanket statement that their rigorously inspected and certified used vehicles “may be subject to unrepaired recalls.” Consequently, this “disclosure” arguably amounts to nothing more than a legal disclaimer that could absolve dealers from their responsibilities and would likely do little, if anything, to meaningfully convey to consumers the existence of an open recall and dissuade them from purchasing such vehicles due to their safety risks.

The sale of any car with an unrepaired safety recall is a threat to public safety. We support the concerns raised in the comments recently filed by a number of consumer groups that no dealer should be able to advertise that a car is certified or any similar terminology connoting safety, if the car is subject to an outstanding recall.[4] Please report back by August 10, 2016 on how you intend to cooperate and work together to amend the proposed settlements and ensure that car dealers cannot mislead and deceive consumers about the safety of their prospective purchases.