Nearly a dozen car-safety groups and a U.S. senator are asking the Federal Trade Commission to investigate CarMax, the biggest seller of used cars nationally.
In a petition filed with the FTC Tuesday, the groups allege that CarMax engages in deceptive advertising by claiming every vehicle it sells passes a rigorous 125-point inspection. The groups said the inspection fails to look at whether a car has been recalled and repaired.
“Car dealers shouldn't sell used cars that have a safety recall to consumers, period,” said Sen. Charles E. Schumer (D-N.Y.) “Far too many times we have seen the tragic and often fatal consequences when deficient cars are allowed on the road, and it's time for the FTC to do everything it can to put a stop to it.”
The petition comes at a time when automakers are recalling more cars than ever.
Automakers have recalled more than 53 million vehicles in the U.S. over the last 18 months, or about 20% of all vehicles on the road. They have recalled more than 31 million so far this year, an annual record for the industry.
“CarMax is playing recalled-used-car roulette with its customers' lives,” said Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a Sacramento consumer advocacy nonprofit that spearheaded the petition.
Though federal law prohibits auto dealers from selling new cars that are under a safety recall, no such restriction applies to used cars. Consumers for Auto Safety and Reliability pushed for California legislation that would prohibit dealers from selling used cars that have been recalled but not fixed, but the bill died in an Assembly committee earlier this month.
In a June 2 letter to the Assembly's Business, Professions and Consumer Protection Committee, which was considering the legislation, attorneys for CarMax said it was impractical for the used car seller to manage the repairs, with the company having to devote staff time to taking a recalled car to the nearest dealer of that make for the repairs. The manufacturer, not CarMax, would still pay for all recall repairs.
Such a system could cause long delays in CarMax’s efforts to sell a vehicle, the company said. GM, for example, has recalled about 2.2 million older small cars in the U.S. to fix a defective ignition switch linked to more than 50 crashes and at least 13 deaths, but has said it will take until October to have enough parts to fix all the vehicles.
“Unfortunately, manufacturers do not permit independent auto dealers like CarMax to repair recalls. Further, the manufacturers do not even grant independent auto dealers like CarMax access to their internal databases in order to search a manufacturer's website,” CarMax’s legal team wrote to the Assembly committee. “This system is broken.”
CarMax said that recalls “should be taken seriously” and that it has advised buyers to register a vehicle with its manufacturer upon purchase so that they are contacted for “future recalls.”
The National Highway Traffic Safety Administration has ordered automakers to provide safety recall data on their own websites, updated at least every seven days starting in August. Car owners would punch in the vehicle identification number of their car to access recall information.
In a statement Tuesday, CarMax said the company supports federal legislation that would require used car retailers to fix recalled vehicles if it “also mandates that manufacturers fully enable used car retailers to make the repairs.”
The legislation should require that manufacturers give used car retailers all recall notices, the same diagnostic and repair information, and the tools and parts that manufacturers make available to their franchise dealers, CarMax said.
CarMax, based in Richmond, Va., sells about 500,000 used vehicles annually in the U.S. through its network of 130 stores.
The company regularly sells vehicles that have been recalled but not repaired, Shahan said.
She said the Irvine CarMax store sold a used 2010 Dodge Ram to Clarence and Angela Davidson in May. After the purchase they learned that the truck was recalled last year because an axle nut could loosen causing the rear axle to seize or the driveshaft to separate, cutting off power to the engine, problems that could trigger a crash.
The Davidsons took the truck to a Chrysler dealership to have the safety recall repairs performed. On May 30, the Davidsons were driving in the Mojave Desert when the truck caught on fire.
The family escaped without injury but the truck was destroyed. Shahan said it is not clear whether the fire was related to the recall or the repairs, but alleged that CarMax sold the family an unsafe truck.
The Consumers Union, the Consumer Federation of America, the National Consumer Law Center and the Center for Auto Safety are among the groups that have signed the petition.