CarMax Plays “Used Car Recall Roulette” By Selling Potentially Dangerous Vehicles

carmaxcertDuring the height of recallopalooza 2014, a coalition of consumer advocacy groups raised concerns about CarMax, alleging that the nation’s largest used vehicle seller was misleading customers with claims of “Quality Certified” cars and “125+ point” inspections while not revealing that some cars had been recalled for safety issues that had not yet been repaired.  More than a year later, a new report shows that CarMax is continuing this practice, which one legislator has dubbed “used car recall roulette.”

The report [PDF] from Connecticut Public Interest Research Group examined CarMax’s inventory and sales records at two dealerships in the state, and found that many of the vehicles listed for sale have unaddressed recalls.

In all, the report found that 74 of the 566 vehicles for sale at the two dealerships during the month of July were currently under recall campaigns.

The recalls ranged from seat belt defects, non-deployment of airbags, fire risks related to leaking fuel or faulty catalytic converters, loss of power steering while driving, faulty rear breaks, and axles prone to breaking.

Sen. Richard Blumenthal, of Connecticut, who has sponsored several bills that would ensure used vehicle recalls are addressed before being sold, tells NBC Connecticut that the ConnPIRG report is “chilling.”

“Bottom line: CarMax is playing a deadly game of ‘used car recall roulette’ with consumer lives,” he said.

During the investigation at an East Haven, CT, dealership, ConnPIRG found that of the 42 vehicles subject to recall, four were part of two or more recall campaigns.

“One vehicle, a 2007 Toyota Yaris, had four unrepaired safety recalls, including air bags that may fail to inflate when needed, seat rails that can break and allow the seats to slide forward in a crash, and two defects that can cause it to catch on fire,” the report states.

At the Hartford CarMax location, investigators found 32 vehicles with unaddressed recalls, five of which were subject to two or more recall each.

“One vehicle, a 2007 Toyota Prius Hybrid 4D Hatchback, had three unrepaired recalls, including faulty steering components that can cause a loss of steering, corroded coil wire that can cause stalling while the vehicle is being driven, and an accelerator pedal that can get stuck in wide open position, causing a crash, serious injury, or death,” the report found.

Although the group’s findings are certainly eye-opening, and CarMax may be violating federal laws against unfair and deceptive advertising, or certain state laws, there is no specific federal law that gives the National Highway Traffic Safety Administration the authority to force dealers to fix recalled used cars before they are sold or rented.

That’s because, while it’s illegal for consumers to sell recalled microwaves, blenders, or other products, the folks at the National Highway Traffic Safety Administration lack the authority to actually force people to fix recalled vehicles before they are sold or rented.

Legislators and consumer groups have called for stricter regulations against such used car sales, but so far no federal law or requirement has been enacted, thanks in part to opposition from CarMax and other dealers.

While CarMax says it takes steps to ensure the safety of car buyers, it doesn’t seem to be considering actually fixing those cars before sending them back on the road, despite the fact that any repairs would be covered by the vehicle manufacturer, not the dealer.

Instead, the company will stick with its current process: going over such safety information with the car buyer prior to closing a sale. At that point, if the consumer buys the vehicle, it’s up them to get it fixed.

A spokesperson for CarMax tells NBC Connecticut that the company leads the industry in transparency, noting that ConnPIRG received its information from the company directly.

“Before any customer purchases a used vehicle in our stores, a CarMax associate and the customer review the vehicle’s NHTSA VIN-specific recall report and the customer signs a form acknowledging receipt of the recall report with their sales documents,” the spokesperson said.

ConnPIRG took issue with that process, noting the method of disclosure is designed as a way to protect the company from liability, rather than keep consumers out of harm’s way.

“It’s a bit late in the game to ‘disclose’ that a specific car is being recalled, after a car buyer has been lulled onto the lot with a promise of a car that is ‘the very best’ and ‘perfect,’ checked out multiple cars and taken them for test drives, negotiated over the price, and several house after arriving at CarMax’s store – made a decision to buy,” the report states.

Also at issue is CarMax’s continued marketing of vehicles that are “Quality Certified” and undergo a 125+ point inspection, saying the statements are misleading to potential customers.

ConnPIRG contends that because CarMax functions much like a franchised car dealership selling used cars, these statements can easily mislead consumers about the dangers of some recalled vehicles.

“CarMax’s advertising that all their vehicles are ‘certified’ may also mislead car buyers, particularly shoppers who have seen ads touting the ‘certified’ used car sales offered by competing franchised new car dealerships,” the report states. “Those ‘certified’ programs are designed to meet criteria established by auto manufacturers, who typically require their dealerships to ensure that any vehicle they offer for sale as a “certified” car has had any outstanding safety recall repairs performed.”

Last year, consumer groups claimed the statements by CarMax “tend to lull car buyers into a false sense of security.” The groups called on the Federal Trade Commission to investigate CarMax’s practice of marketing quality-control while still selling vehicles that require repairs.

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