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Lawsuit Claims FTC Allowed Used-Car Dealers to Falsely Advertise Cars as 'Safe'

Most of us are skeptical when buying a used car -- we want the CARFAX report and we don't always believe salesmen's assurances that a car on their lot is safe. But the "Certified Pre-Owned" distinction is meant to allay those fears -- after all, the CARFAX website itself calls them "the low-cost alternative to a new car, or as a low-risk option to a used car." But it turns out CPOs might not be as safe as you'd think.

A federal lawsuit alleges the Federal Trade Commission allowed dealers to market and advertise certified pre-owned vehicles as "safe," even when the same vehicles were subject to safety recalls due to dangerous defects. The suit covers cars, trucks, motorcycles, and motor homes, and claims the FTC did not require dealers to submit the vehicles to the recalls or fix the defects; they only had to disclose the vehicles "may" be subject to recalls, even when the National Highway Traffic Safety Administration had already required a safety recall. You can read the full lawsuit below.

Deceptive Car Dealers

Under the FTC's own rules and regulations, "[i]t is a deceptive act or practice for any used vehicle dealer ... [t]o misrepresent the mechanical condition of a used vehicle" when selling or offering for sale a used vehicle. But the lawsuit, filed by Consumers for Auto Reliability and Safety, Center for Auto Safety, and U.S. Public Interest Group, claims used car dealers have been advertising and marketing CPOs as "safe," "repaired for safety," rigorously inspected, or "certified as safe, despite those vehicles being subject to NHTSA safety recalls.

And while it's illegal to sell a new car that is subject to a pending safety recall, the lawsuit asserts there is no similar prohibition in on selling used vehicles under recall, and the "NHTSA lacks authority to require used car dealers to fix such defects prior to sale." And the recalls are serious -- defects that can lead to safety recalls include "faulty steering, brakes that fail, components that catch fire, air bags that fail to inflate when needed in a crash, accelerators that stick, stalling in traffic, wheels that fall off, or axles that break."

Safety Settlement

Last year, the FTC proposed settlement agreements with three of the large car dealers regarding how they advertised vehicles that were subject to safety recalls. Those settlements would permit the dealers to continue advertising and marketing used cars as safe or repaired as long as the dealers included a written disclosure that the vehicle "may" be subject to recalls for safety issues that have not been repaired. The lawsuit against the FTC is an effort to block those settlements, and enforce the agency's own rules on deceptive advertising.

The full lawsuit is below:

Consumers for Auto Reliability and Safety, et al. v. Federal Trade Commission by FindLaw on Scribd