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Consumer groups criticize deal on auto recalls
By Christian M. Wade Statehouse Reporter
BOSTON — Consumer advocates are blasting an agreement between regulators and used-car dealerships over auto recall disclosures, saying the deal endangers public safety.
Last week the Federal Trade Commission reached agreements with CarMax, the largest U.S. used-car dealer with more than 140 locations, including one in Danvers; Atlanta-based Asbury Automotive Group Inc.; and West-Herr Automotive Group in New York.
Under proposed consent orders, the dealers cannot claim that used vehicles are safe unless recall repairs have been made or open recalls are disclosed to buyers. They also must notify customers that cars bought as far back as 2013 may be subject to recalls.
The settlement did not impose fines or sanctions on the dealers.
The commission also reached agreements in similar cases with General Motors Co. and two other retailers, Jim Koons Management in the mid-Atlantic and Lithia Motors Inc. in Oregon.
In a statement, the Federal Trade Commission said some in the industry “touted how rigorously they inspect their used cars yet failed to adequately disclose that some of the cars were subject to un-repaired safety recalls.”
Consumer advocates say the deal is a giveaway to the used-car industry because it allows companies to disclose that cars “may” be subject to recalls without actually repairing them.
“The bottom-line here is that the result will be more consumers buying unsafe cars, putting the lives of not just themselves but everyone who shares the roadways in danger,” said Deirdre Cummings, legislative director at Massachusetts Public Interest Research Group.
“Consumers rightly have the expectation that when shopping at any car dealership they will be sold a safe car, and at the very least, they certainly would not expect that any car for sale would still be under a safety recall,” she said.
But some in the used-car business say the recall system is flawed, and rules such as last week’s consent order unfairly keep them from selling cars that are safe to drive.
Not all recalls issued by manufacturers and the government are safety-related, said Robert O’Koniewski, executive vice president of the Massachusetts State Automobile Dealers Association.
“It could be a page in the owner’s manual that needs to be changed or something wrong with the cup holders in a vehicle console,” he said.
Federal law prohibits auto dealers from selling new cars that are under recall, he said, but there are no such requirements for used vehicles.
In Massachusetts, the state’s “lemon law” requires dealers to disclose recalls on used cars — as well as any other information that could affect the sale, such as a dent that needs repairing — but it doesn’t require them to fix the problems.
National consumer groups say they plan to sue the government to block last week’s agreement. Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento, California-based advocacy group, called the deal “tragic” and “reckless.”
U.S. Sen. Ed Markey, who with other lawmakers has pushed for stricter limits on the industry, said it “makes it easier for dangerous cars to remain on the road.”
“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 in a statement.
CarMax COO Cliff Wood said his company is an industry leader in transparency over recalls but will alter its sales and advertising language to comply with the agreement and keep consumers informed.
“We share vehicle-specific, open-recall information in store and online to ensure our customers know about open recalls prior to purchase,” Wood said in a statement. “We will continue to make enhancements to our comprehensive recall disclosure program.”
CarMax said all of its used cars “meet or exceed state safety inspection requirements,” but noted that recalls must be “repaired at a manufacturer-authorized facility.”
“The recall system is based on the manufacturer’s relationship with its dealers and registered vehicle owners, and not with independent used auto retailers,” the company said. “Among other things, this means that manufacturers have not authorized CarMax to complete recall repairs.”
Last year, MassPIRG and other groups released a report claiming that more than 17 percent of vehicles sold at CarMax’s North Attleboro dealership were subject to a federal safety recall that had not been repaired. Several vehicles had faulty transmissions that could allow the vehicle to roll away and injure people exiting the car or bystanders, according to MassPIRG.
Advocates are looking to Attorney General Maura Healey to intervene by enforcing a state law that prohibits dealers from selling unsafe used cars and using deceptive sales practices.
Emily Snyder, a spokeswoman for Healey, said the office would be concerned if retailers fail to make repairs or alert customers about known recalls or other safety-related issues.
Sean Kane, president of Safety Research and Strategies Inc. in Rehoboth, said increasing numbers of recalls and deceptive sales practices confuse consumers.
Last week’s ruling, he said, “will only add” to the confusion.
“There’s a staggering number of recalls out there,” he said, noting estimates that suggest 1 in 5 vehicles are subject to a recall.
One major recall, for example, involves Takata-made airbags, some of which have exploded when deployed.
A November 2014 recall of the driver- and passenger-side airbags affects 14 automakers, 22 brands and more than 100 million vehicles worldwide, in what regulators say is the largest, most complex auto safety recall in U.S. history.
O’Koniewski said auto manufacturers are not able to keep up with the demand for parts to make repairs — including the Takata airbags.
“The shortage of parts is a huge problem,” he said. “Dealers are being forced to sit on new vehicles until the parts become available.”
The National Highway Traffic Safety Administration, which oversees vehicle recalls, offers car-buyers and owners a search tool to check for recalls at www.safercar.gov. Most dealerships can also provide a CarFax report on used vehicles that will show if it’s subject to a recall.
Christian M. Wade covers the Massachusetts Statehouse for The Salem News and its sister newspapers and websites. Email him firstname.lastname@example.org.