Federal Trade Commission Reaches Settlement with GM and Other Car Dealerships

Posted January 13, 2017

On December 16th, the Federal Trade Commission (FTC) finalized consent orders with GM and other auto dealership chains—Lithia and Koons—allowing them to advertise unrepaired, recalled used cars that still have dangerous safety defects as “repaired for safety” and having passed “rigorous inspections.” This is done through what are called “disclosure requirements”; requirements that many consumer advocacy organizations are now claiming “do more to deceive than fully inform.” Specifically, the FTC claims that it has prohibited retailers like CarMax from declaring that their vehicles are safe and have been repaired unless the dealers “disclose” that the cars may be subject to unrepaired recalls for safety issues.

Previous lawsuits that the FTC was charged with settling alleged that these auto dealerships were concealing crucial information from consumers. Unfortunately, not only could this provide for false advertising of cars that have serious safety defects, but it may also set a new, low industry standard when it comes to unrepaired, recalled used cars up to for sale to the public. In order to prevent this, the consent orders may need to be overturned in court.

The Law

While there have always been concerns with the “certified pre-owned” label, many are saying that this is much worse, as some manufacturers have at least prohibited used cars from being sold as “certified” if they have any unrepaired safety recalled part.

The consent orders also conflict with well-founded state law that allows any auto dealers who engage in deceptive practices to be sued for fraud, negligence, and/or wrongful death. In Oklahoma, for example, there is the Consumer Protection Act, which mirrors the Uniform Deceptive Trade Practices Act. The law identifies certain practices as unfair or deceptive, such as:

• Making false representations of the product;
• Making misleading statements about a product;
• Selling something as new or undamaged when, in fact, it is used or damaged; and
• False advertising; amongst others.

An “unfair trade practice” is defined as any practice which offends established public policy or is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers.

Consumers have always enjoyed protection from auto dealers attempting to sell unrepaired, recalled used cars with meaningless disclosures. This could not only put more consumers out there, purchasing more unsafe cars, and placing their lives in danger, but it will likely be a headache for the courts, as there will undoubtedly be more and more litigation from individuals harmed by what comes from these consent orders because the consumer is led to believe that they are purchasing a safe car when the car could actually still be under a safety recall.

Reach Out to Our Oklahoma City Car Dealer Fraud Attorneys

If you or a loved one is a victim of car dealer fraud, you have rights. Our experienced bad faith insurance and Oklahoma City car dealer fraud attorneys focus solely on representing victims of dealership fraud and obtaining justice for them and their families. Contact us today to schedule a free consultation with the attorneys at The Bennett Law Firm, (405) 272-0303.