Proposed Legislation Targets Sales of Cars with Open Recalls

CarMax, the largest U.S. used car retailer, is continuing to find itself in hot water for selling vehicles with open recalls. Most recently,  the Consumers for Auto Reliability and Safety (CARS) Foundation led a study that found one in four cars sold by CarMax had open safety recalls, including significant safety issues like defective airbags. Despite these open recalls, CarMax sold the vehicles as “certified.”  The Federal Trade Commission (FTC) took action against the retailer.  That action led to a consent order that allows CarMax to continue selling used cars that were recalled and never repaired as “safe” or “certified” – as long as CarMax discloses that the recall repairs were not made.

Most likely as a result of CarMax’s actions (and similar issues with other used car dealers), members of Congress are now attempting to revive a bill that would require used car dealers to repair any outstanding recalls before selling a vehicle. This bill, called “The Used Car Safety Recall Repair Act,” was reintroduced in the Senate on July 26, 2017 and in the House the following day. If passed, the bill would make it illegal for an automobile dealer to sell or lease a used vehicle before fixing any open recall, defect, or noncompliance declared by the Department of Transportation (DOT). The proposed bill treats all recalls the same, regardless of safety impact, and would prevent the sale of a used vehicle with any open recall. The bill is more stringent than the current law that prohibits new car dealers from selling new vehicles with an open safety recall.

Although this bill is not likely to pass in its current stringent form, this issue remains a regulatory priority and used car dealers should pay attention to its progress. Ongoing information on this bill’s status can be found here.

* Adam Steele contributed to this post.