"New legal settlement means used cars for sale with
safety recalls may become more common"
By Consumer Reports
April 21, 2017
"On Friday, New York Attorney General Eric Schneiderman announced settlements with 104 car dealerships that sold vehicles with unresolved safety recalls without informing the buyers.
New York Attorney General Schneiderman's settlements allow dealers to continue selling unsafe recalled deathtrap cars with "disclosure."
The settlements allow dealers to continue to market and sell used cars with open safety recalls as long as they disclose the issue in their advertising and in showrooms before the sale.
It's the latest wrinkle in a consumer-unfriendly trend that has opened up the sale of more potentially unsafe used cars to the public.
The settlements with the dealerships come weeks after the Federal Trade Commission finalized settlements allowing auto dealer companies to market used cars with unresolved safety recalls, as long as they provide a general statement in advertising that the cars might be subject to a recall.
The FTC settlements from March require used car dealers tell customers how to check for open safety recalls. It's unclear, however, if the FTC will require dealers to disclose open recalls they already know about...
Consumer advocates, who had called for an outright ban on this practice, say that the recent FTC settlements could encourage more dealers to sell cars that are unsafe.
They're allowing car dealerships to mislead buyers about the safety of their cars, says Rosemary Shahan, president of the California-based Consumers for Auto Reliability and Safety, which is suing the agency in federal court. Two other groups are also part of the lawsuit — the Center for Auto Safety and the U.S. Public Interest Research Group."
Contact: Rosemary Shahan, Consumers for Auto Reliability and Safety, 530-759-9440
New York Attorney General’s Settlement with 104 Auto Dealers “Tragic”
New York May Become Dumping Ground for Unsafe Recalled Cars
While lawmakers in other states, including New Jersey, Virginia, California, Oregon, Maryland, and Tennessee, have rejected auto dealers’ attempts to legalize sales of unrepaired recalled used cars with lethal safety defects, if they just provide “disclosure” of the unrepaired recalls, New York’s Attorney General today announced consent orders with 104 car dealerships that will allow those dealers to sell deathtrap cars to New Yorkers who can’t afford a new car, with various written disclosures, which may be only in English, about the existence of a safety recall. No other state has taken such a drastic step.
"As the mother of two beautiful, precious daughters who were killed by an unrepaired recalled car, I am appalled that New York's Attorney General would allow car dealers to sell cars with lethal safety defects, if they merely disclose that the car has an open recall. All that does is make it easier for manufacturers of defective cars and unscrupulous car dealers to shift the legal liability onto innocent victims," said Cally Houck, an attorney and mother of Raechel and Jacqueline Houck, who were just 24 and 20 years old when they were killed by an unrepaired recalled Chrysler PT Cruiser with a defect in a steering hose that leaked and caused an underhood fire and loss of steering.
“Car dealers should not be allowed to play ‘recalled used car roulette’ with people’s lives,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS), a non-profit organization based in Sacramento, CA, that has been spearheading efforts to protect used car buyers from unscrupulous car dealers who sell unsafe recalled used cars without bothering to get them repaired so they are safe to drive.
Cally Houck worked closely with CARS to gain passage of a landmark new federal law, named in honor of Raechel and Jacqueline, that prohibits rental car companies that own fleets of 35 or more rental cars from renting, selling, or loaning cars with pending safety recalls until they have been repaired. President Obama signed the Raechel and Jacqueline Houck Safe Rental Car Act into law, and it took effect last June. The leading author and champion for the law was New York Senator Chuck Schumer, and it was co-sponsored by New York Senator Kirsten Gillibrand. Under pressure from Democratic safety champions, consumer groups, and their own constituents, the Republican-controlled Congress ultimately rejected attempts by auto manufacturers such as Ford and Toyota to weaken the legislation to allow rentals and sales of unsafe recalled vehicles with “disclosure.”
New York City’s Department of Consumer Affairs has taken a much stronger, more pro-consumer stance. According to the City’s DCA:
“Fortunately, City law, which DCA enforces, requires dealers to certify that their vehicles are
“roadworthy,” and prohibits dealers from misleading consumers as to the safety of their
vehicles. Under City Law, a car with recalled parts that are unrepaired is not deemed to
be roadworthy. New York City is in a unique position to investigate these businesses
because of the City’s licensing and consumer protection laws, the presence of a strong
DCA and the fact that it is illegal to sell cars “as is” under state and City law.
“More cars have been recalled in 2014 than any other year on record,” said DCA
Commissioner Julie Menin. “We’re not going to wait for tragic statistics to demand that dealers repair these ticking time bombs.” 1
Commissioner Menin opposed allowing dealers to sell recalled cars with “disclosure,” testifying that: “Under New York State’s Vehicle and Traffic Law, a vehicle must pass an 18-point inspection and be considered roadworthy in order to be sold...We anticipate that the industry will urge the [New York City] Council to simply require disclosure of a vehicle’s recall status prior to sale, an approach which we think is inadequate to protect the lives of consumers who buy cars, as well as those who use the roads.” 2
Even some New York car dealers have publicly acknowledged that it is already illegal under New York law for dealers to sell unrepaired recalled used cars. For example, according to a report in the New York Times, “Potamkin, a General Motors dealer in New York, has a written policy requiring its employees to fix recalled vehicles before selling them to the public, according to John Bruno Jr., a general sales manager at one Potamkin location. ‘If there are any open recalls, we get them taken care of as fast as possible,’ Mr. Bruno said, adding that it was ‘illegal and irresponsible’ to do otherwise.” 3
Polling conducted nationwide and in states such as New Jersey and Florida by Public Policy Polling found that the American public overwhelmingly opposes allowing dealers to sell recalled cars with potentially lethal safety defects with “disclosure.” Instead, over 90% of likely voters believe that dealers should have to repair them, and make them safe, prior to sale.
Attorney General Schneiderman is basically turning buying a used car in New York into a guessing game. If you don’t guess right about how risky the safety defect is, you and your family may die. You may also maim or kill others who share the roads. Dealership sales personnel are not safety experts, and cannot be relied upon to give accurate information about the risks posed by defects that have led to safety recalls. For years, all over the country, undercover TV news investigations have caught car salesmen on camera downplaying the risks, assuring car buyers if the car wasn’t safe, they wouldn’t have it on the lot. They also commonly claim it will be easy to get a quick fix for a recalled
3 “New York City Imposes a Used Car Repair Rule,” New York Times
part, when in fact the manufacturer has not yet developed a fix, or repair parts will not be available for many months.
Tens of millions of recalled vehicles have defective Takata airbags that are prone to exploding with excessive force and spewing shrapnel into drivers and passengers’ faces and necks, causing serous injuries such as blindness, and causing other victims to bleed to death. Severe parts shortages are causing lengthy delays in obtaining repairs. Dealers who fear legal repercussions in other states may now ship them into New York and slap a sticker on them, and sell them to consumers who are unaware how risky they are. According to the National Highway Traffic Safety Administration, some are so risky, they have warned consumers not to drive them, unless it is to take them to a dealership for repairs.
The settlement appears to apply even when dealers have advertised that their vehicles have passed a rigorous inspection and qualified to be sold as “certified” used cars. Manufacturers and dealers typically advertise that “certified” vehicles provide added “peace of mind” and charge thousands of dollars extra for them.
General Motors and other auto manufacturers and dealers may seek to use the settlements to undermine litigation by Consumers for Auto Reliability and Safety, US PIRG, and the Center for Auto Safety against the Federal Trade Commission over how dealers can advertise and market recalled used cars. The FTC waited until after Trump was elected to finalize controversial consent orders with GM and two car dealership chains that allow them to advertise that cars are “safe,” “repaired for safety,” and “passed a rigorous inspection” and qualified to be sold as “certified” cars without repairing the safety recall defects, if they merely disclose that they may have a safety recall. The consent orders were opposed by many major consumer groups across the nation. GM recently filed a motion to intervene in the case, despite its claims it does not allow its dealers to sell unrepaired recalled cars as “GM Certified” vehicles.
Dealers have been seeking to legalize sales of recalled cars with “disclosure,” in order to evade legal liability if someone who purchases a car from them is injured or killed as a result. According to a report in Automotive News, Honda directed its dealers to continue selling cars with unsafe recalled Takata airbags, as long as they obtained a signature from the consumers acknowledging that they were informed about the safety recall. The dealers were quoted as saying, “"If there is a process and we follow the process, I don't feel liable” and “"I believe it takes away the liability...You can never overdisclose." 4
In New Jersey, car dealers pushed aggressively for a bill to allow them to sell unrepaired recalled used cars with “disclosure.” According to one news report, “The bills have the backing of the New Jersey Independent Automobile Dealers Association, which believes it offers protection to the dealer, said Paula Frendel, the association’s executive director.” 5 The bill passed unanimously in the Assembly, but after safety groups found out about it and opposed the measure, it was defeated in the Senate.
The proposed agreements also appear to conflict with existing laws in New York, including case law interpreted by New York Courts. NY’s Vehicle and Traffic Law Section 417 provides for a
5 “Auto-related bills roll through Assembly,” Courier-Post, February 8, 2015.
warranty of serviceability, which cannot be disclaimed, that requires used cars to be “in condition and repair to render under normal use, satisfactory and adequate service upon the public highway at the time of delivery.
New York Courts have used this statue and its legislative history to find that “It is the policy of this state to protect purchasers of used vehicles from being sold defective vehicles. Maure v. Fordham Motor Sales, Inc., 414 N.Y.S.2d 882, 885 (N.Y. Civ. Ct. 1979) citing Pierce v. International Harvester Co., 61 A.D.2d 255, 402 N.Y.S.2d 674 (App.Div. 4th Dept. 1978). In fact, the Fordham case is instructive. In the Fordham case, the court found that the defendant used car dealer had violated VTL 417 by selling a car with a defect in the steering mechanism which caused the steering to lock up and causing a collision. This is exactly the sort of thing that New York’s Attorney General appears to be allowing.
"E-Contract Abuse Alert:
How Car Dealers Can Fake Your Auto Loan"
April 14, 2017
By Diana Hembree
"Last December Tanisha Coley was window-shopping at a Kia car dealership in Stamford, Conn., when she decided to fill out a credit application to see whether she had enough credit to buy a car. As a 39-year-old student and mother of five who was working part-time, Coley was in the market for a reliable used auto. After looking around for a while, she left without buying anything. But a few weeks later, Coley was stunned to find her credit report said she had taken out an auto loan of $28,000.
Assemblymember Matt Dababneh (D-Van Nuys) is pushing legislation that would make it easier for crooked dealers and lenders to cheat consumers.
Devastated, Coley began frantically calling the bank and other places to find out what had happened. Getting no answers, she and her fiancé went to the Kia dealership where she had supposedly bought a 2013 Mazda. 'I said, "Well, where’s the car?" And they looked really nervous and told me it had been sold to someone else.'
How did Coley end up with a loan for a car she never bought? According to a lawsuit filed on her behalf, the Kia car loan was “electronically booked” on December 12 without Coley’s knowledge by Credit Acceptance Corporation, a subprime auto lender with a checkered past. According to the counterfeit installment loan, Coley owed a balance of $17,737, minus insurance payments, an extended warranty and a down payment of $7,000 – none of which she had made.
'I finally got someone at the bank to send me the paperwork,' Coley says, 'and I saw someone had e-signed my name on the loan… It was mind-boggling.'....
E-contracting may be easy and convenient, but it has also generated consumer complaints and lawsuits across the country. Some unethical dealers have used e-contracts to charge more than the agreed-upon sales price, tack on hundreds or thousands of dollars in extra add-ons that consumers didn’t want or agree to buy, or overcharge for government fees and engage in other illegal practices – such as e-signing consumers’ names without showing buyers the contract.
'Unscrupulous car dealers and shady lenders love e-contracting,' says Rosemary Shahan, president and founder of Consumers for Auto Reliability and Safety (CARS), a Sacramento, Calif.-based non-profit. 'The combination of all-electronic transactions and high-pressure sales tactics at the car dealership, which are aimed at consumers who are often tired and feeling rushed after hours of haggling and test-driving cars, make it much easier for dealers and crooked lenders to get away with fraud, forgery and other flim-flam.'
Experts say e-contracting abuses are rampant in Spanish-speaking communities...
'Auto loans are now the most troubled consumer financial product,' said Sen. Elizabeth Warren (D-Mass) in a speech last spring. 'The market is now thick with loose underwriting standards, predatory and discriminatory lending practices, and increasing repossessions.'...
Despite its perils, auto sale e-contracting continues to grow and may even be coming to California. The California New Car Dealers Association is pushing for the passage of Assembly Bill 380, which would allow e-contracting during auto sales in California.
The bill, sponsored by Matt Dababneh (D-Van Nuys), is opposed by Consumers for Auto Reliability and Safety, CALPIRG, Consumer Action, the Center for Responsible Lending, the Consumer Federation of California, and the Public Law Center, among other [consumer and economic justice organizations]."
"Is Your Used Vehicle a Timebomb? Loophole Lets Auto Dealers Sell Millions of Recalled Cars as 'Safe'"
by Diana Hembree
March 27, 2017
"Consumer advocates have been pushing to close the loophole that makes this possible. The fight intensified this February, when six consumer groups sued the [Trump Administration] Federal Trade Commission (FTC) over a consent order involving General Motors and two of the country’s largest auto dealers. The FTC had issued complaints against the three for failing to disclose that their used cars were recalled for safety problems that were never fixed. In its December 2016 consent order, the FTC allowed the companies to continue selling used cars that were recalled and never repaired as “safe” or “certified” – as long as they disclosed that the recall repairs had not been made.
FTC would allow dealers to advertise recalled cars with lethal safety defects, including catching on fire, as "safe."
Auto safety advocates lambasted the FTC’s decision.
'The consent order is crazy; it’s insane,' says Rosemary Shahan of Consumers for Auto Reliability and Safety (CARS), one of the consumer groups suing the FTC. 'It lets car dealers put death traps on the road. It’s worse than nothing because it actually gives car dealers a safe harbor if they sell a used and recalled car that hasn’t been fixed.'
....All the major car manufacturers had previously forbidden their dealers to sell used cars with unfixed recalls, says Shahan, but after the consent order Ford reversed gears and began selling them.
And Trump’s presidency makes it even less likely these loopholes will be closed, as the case of AutoNation suggests. AutoNation, the country’s largest car dealership, had pledged not to sell vehicles with open recalls, but, quietly backpedaled after Trump’s victory and resumed sales of vehicles with open recalls. According to Automotive News, CEO Mike Jackson concluded the change in government meant the death knell for legislative action on used vehicles with open recalls."
"Very Safe, Except for One Thing...
Legal Clash with FTC on Marketing of Used Cars"
by Paul Feldman
March 27, 2017
"Can a used car be marketed as 'safe' or 'certified' even if it has defective air bags, a faulty ignition switch or other potentially lethal problems?
FTC would allow dealers to advertise cars are "safe" when they have killer safety defects that have not been repaired.
Yes, so long as the used car dealer discloses that the vehicle may be subject to a pending safety recall.
That stance, taken by the Federal Trade Commission, is at the heart of a recent legal settlement with General Motors and two used car dealers over deceptive advertising practices. But it is now being put to the test in a federal court in Washington, D.C., by auto safety activists....
'The sale of "certified" used cars as "safe," "repaired for safety issues," or "subject to a rigorous inspection," when such vehicles are in fact not safe because they are the subject of pending safety recalls, is extremely detrimental to consumers who buy used cars—particularly poor, unsophisticated, and non-English speaking consumers,' declared the Center for Auto Safety and other safety groups involved in the case....
Under the consent order, the agency said dealers who market a vehicle as safe must have completed repairs on recall issues or disclosed clearly that the vehicle [may remain] subject to an open recall.
That, however, can amount to a 'death sentence' for used car buyers who unwittingly purchase vehicles with unrepaired recalls, while also posing a direct threat to others on the road, said Rosemary Shahan, founder of Consumers for Auto Reliability and Safety, one of the advocacy groups involved in the new legal challenge."
"FTC Sued for Allowing Car Dealers to Sell Recalled Vehicles with Potentially Lethal Defects"
by Herb Weisbaum
Jewel Brangman was just 26 years old when she was killed by a recalled Honda Civic with an unrepaired Takata airbag. More innocent people will die unless we stop the FTC and keep dealers from advertising these cars as "safe."
"Why are dealers still selling cars with unrepaired — and potentially fatal — safety recalls?
Consumer advocates are outraged by the Federal Trade Commission's decisions in several recent cases that allow car dealers to advertise used vehicles with open recalls as safe.
Last year, the FTC reached legal agreements with General Motors and two car dealers who had advertised how rigorously they inspected their cars, but failed to disclose that some of those "certified" or "inspected" vehicles were subject to unrepaired safety recalls.
According to the complaint, some of those open recalls could cause serious injury from issues such as faulty ignition switches and airbags, problems with the power steering and braking, and alternator problems that could result in a fire.
Everyone else in this fender-bender walked away. Jewel Brangman bled to death because she was driving a Honda Civic with an unrepaired Takata airbag. The rental car company, like many dealers, failed to get it repaired before handing her the keys.
As part of the settlement, the commission decided the dealers could claim used vehicles with unfixed recalls are "safe" or have been subject to "a rigorous inspection," as long as they disclosed that those recall repairs were not made. GM and the car dealers did not admit any wrongdoing.
Last week, the Center for Auto Safety, Consumers for Auto Reliability and Safety, and the U.S. Public Interest Research Group sued the FTC, asking a federal court to review and overturn these consent agreements.
It's Not 'Safe' If It Is Potentially Lethal
"It's a dangerous and irresponsible abuse of the commission's authority," said Rosemary Shahan, president of Consumers for Auto reliability and Safety (CARS). "Instead of protecting consumers, the FTC is allowing false and deceptive advertising. A vehicle cannot be safe when it has a potentially lethal safety defect that hasn't been fixed."
"New lawsuit could force used car dealers to repair recalled vehicles"
The Washington Post
by Richard Read
February 8, 2017
"Recalls have been making headlines for the past several years, but on used car lots, recalled vehicles aren't always easy to spot. That could change thanks to a new lawsuit filed against the U.S. Federal Trade Commission...
....massive retailer AutoNation saw the writing on the wall and announced big plans to repair all recalled vehicles before rolling them into showrooms. A year later, though, AutoNation abandoned that program: not only was repairing vehicles costing the company in lost sales, but CEO Mike Jackson also cited Donald Trump's win in the U.S. presidential election as a sign that legislative efforts to mandate repairs of used cars would stall.
CARS sues to stop dealers from advertising cars with defects, like this Honda with a recalled Takata air bag, that blinded Stephanie Erdmann, as "safe."
And stall they have. As a result, consumer groups like Consumers for Auto Reliability and Safety, the Center for Auto Safety, and the U.S. Public Interest Research Group have filed a lawsuit against the FTC....
Generally speaking, automakers forbid dealerships from advertising vehicles as "certified pre-owned" unless they've been through rigorous inspections and repaired for any safety problems. However, Ford recently told dealers that they can advertise vehicles as "certified", as long as (a) they don't include the word "safe" in their advertising, and (b) they have buyers sign waivers to indicate that they're aware the vehicle they're purchasing may be unsafe....
Even in today's contentious political climate, when everything is spun for maximum effect, words still mean things. If a car is listed as "certified pre-owned", it implies certain benefits, certain things that consumers can take for granted. Shifting the definition of the phrase is potentially hazardous to consumers' health. On that argument alone, the plaintiffs would seem to have a strong case.
On the other hand, the courts have a long history of believing in the principle of "caveat emptor": buyer beware. The court could cite such precedents and side with the FTC.
We're not lawyers or judges, so we won't comment on the likelihood of one verdict versus another. But we'll do our best to keep you posted."
Contacts: Rosemary Shahan, CARS, 530-759-9440
Michael Brooks, CAS, 202-328-7700 x 113
Auto Safety / Consumer Organizations Sue Federal Trade Commission,
Over Decision Allowing General Motors and Car Dealerships to Engage in False
Advertising of Unrepaired Recalled "Certified" Used Cars
Today, Consumers for Auto Reliability and Safety (CARS), the Center for Auto Safety, U.S.
Public Interest Research Group (PIRG), MASSPIRG, CONNPIRG, and CALPIRG filed a legal case
seeking to have an appellate court review and overturn the Federal Trade Commission's consent orders
with General Motors, Lithia Motors, and Jim Koons Management Co., which would allow them to
advertise that cars with unrepaired safety recalls are "safe," "repaired for safety," passed a "rigorous
inspection," and qualified to be sold as "certified" cars – without getting safety recall repairs
performed, if the companies merely provide a contradictory, confusing, misleading, disclaimer that the
cars "may" be subject to a safety recall.
The FTC's Consent Orders set a de-facto standard for the auto industry that allows dealers to
deceptively advertise cars with dangerous and potentially lethal safety defects that have killed and
maimed people. Many of those defects jeopardize the lives of not only used car buyers, but also
passengers and everyone else who shares the roads and adjacent areas, including sidewalks, driveways
and parking lots.
"We're optimistic that the Court will rein in the FTC's dangerous and irresponsible abuse of its
authority. Instead of protecting consumers, the FTC is protecting unscrupulous auto dealers who
engage in false and deceptive advertising about the safety of the cars they offer for sale to the public.
This is a serious threat to used car buyers, their families, and all who share the roads," said Rosemary
Shahan, President of Consumers for Auto Reliability and Safety.
"Even if there is a 100% certainty that an unrepaired safety recall defect will immediately kill
anyone who buys a so-called 'certified' car and their family, the FTC would allow car dealers to
advertise that car as 'safe' and 'repaired for safety,'" said Michael Brooks, Acting Director of the
Center for Auto Safety. "Clearly the Court should intervene and force the FTC to reverse itself."
"The Federal Trade Commission is supposed to crack down on false and deceptive advertising.
Instead, they are encouraging it," said Deirdre Cummings, Legislative Director of MASSPIRG. "They
should have protected consumers but chose to protect reckless car dealers."
The FTC's Consent Order is already putting motorists at greater risk of death or injury.
According to a recent report in the New York Times, "Until [the FTC entered into consent orders with
GM, Lithia and Koons] every major car company had said that they forbade their dealers from selling
certified used vehicles with any open recalls, including ones for Takata airbags. [But] "with the F.T.C.
settlement for cover...Ford broke ranks, issuing an update to dealers on its 'enhanced' recall process and
giving them permission to certify used vehicles that had open recalls after all."1
Citing the FTC's Consent Order and the election of an anti-regulation President Trump,
AutoNation (the largest new car dealership chain in the U.S.) reversed its policy of ensuring that all
used cars are repaired prior to sale to consumers, and now also allows its new car dealers to sell
unrepaired recalled cars, including cars with Takata airbags that cannot be made safe, because of severe
shortages of repair parts.
"Certified" cars are supposedly subject to rigorous inspections, and dealers and manufacturers
charge an average of approximately $1200 extra for them. Consumers are led to believe the cars have
not only been inspected, but that any significant problems have been repaired.
The FTC sought public comments regarding its proposed consent agreements with GM, Lithia
and Koons. All the consumer / safety organizations who filed comments strenuously opposed the
Consent Orders, as did nearly all of the individual consumers. The groups followed up with in-person
meetings with the Director of the FTC's Bureau of Consumer Protection and each of the
Commissioners, urging them to reconsider and modify the agreements to prohibit false advertising,
instead of allowing it, or drop the FTC's actions against the companies altogether, since the agency's
proposed "solution" would be worse than nothing.
In a scathing letter to the FTC, Senators Schumer, Durbin, Nelson, Blumenthal, and Markey,
leading champions of auto safety in the U.S. Senate, termed the FTC's consent orders with GM, Lithia
and Koons as "anti-safety" and "anti-consumer." U.S. Representative Jan Schakowsky, the leading
Congressional champion of auto safety in the U.S. House, also sent a strongly worded letter urging the
Chairwoman of the FTC, Edith Ramirez, to reconsider.
To his credit, auto dealer Earl Stewart, who owns a large Toyota dealership in West Palm Beach,
Florida, has refused to sell recalled vehicles that he cannot get fixed, stockpiling them on a remote lot
miles from his main showroom. He even sued a rival, Arrigo Chrysler Dodge Jeep Ram, who he
believes is selling recalled cars without disclosing that they have not been fixed. His lawsuit recently
made it over a major potential hurdle, surviving Arrigo's motion to have it dismissed.
Last December, the FTC proposed a similar consent agreement with CarMax and the Asbury
and West-Herr car dealership chains. CarMax is the largest retailer of used cars in the nation. The
CARS Foundation, MASSPIRG, CONNPIRG, and CALPIRG have released detailed reports
documenting CarMax's deceptive sales of unrepaired recalled cars as "certified" cars that supposedly
passed a "rigorous inspection" and qualified to be sold as a "CarMax Quality Certified" car. The
groups also filed comments opposing those consent orders, which have not yet been finalized.
Among the defects in cars sold by CarMax: catching on fire, faulty brakes, wheels that fall off,
axles that break, hoods that fly up while the car is being driven, transmissions that slip so the cars slide
downhill and crush people, seat belts that fail in a crash, and Takata airbags that propel metal fragments
at drivers and passengers – causing them to bleed to death, or causing severe injuries such as blindness.
Citing the high risk of death or injury, the National Highway Traffic Safety Administration has warned
owners of many of those vehicles not to drive them, except to the dealership for recall repairs. While
CarMax says it tells car buyers to get recalls repaired, for many purchasers of cars with the Takata
exploding airbag recalls, that advice would be misleading, because it may be months, or even years,
before repair parts are available.
State laws prohibit dealers from engaging in such practices. However, some of those laws may
not be enforced until after someone has already been injured or killed. Victims of dealers who sold
unrepaired recalled cars, or their surviving family members, have sued dealers for wrongs such as
negligence or wrongful death, and have received confidential settlements. One similar case, where two
sisters, Raechel and Jacqueline Houck, were killed by an unrepaired recalled PT Cruiser, resulted in a
unanimous jury verdict awarding $15 million in compensatory damages.
Despite progress made in improving vehicle design, motor vehicle crashes remain a leading
cause of death and injury in America, particularly among children, teenagers, and young adults in the
U.S. According to NHTSA, "The Nation lost 35,092 people in crashes on U.S. roadways during 2015,"
and another 2.44 million people were injured.2
"Motor vehicle crashes impose a staggering human and economic toll in the United States. The
price tag for crashes comes at a heavy burden for Americans at $871 billion in economic loss and
societal harm. This includes $277 billion in economic costs – nearly $900 for each person living in the
United States based on calendar year 2010 data – and $594 billion in harm from the loss of life and the
pain and decreased quality of life due to injuries."3
The organizations are represented by the public interest law firm of Meyer Glitzenstein &
Eubanks LLP in Washington, D.C.
Trump's anti-consumer, anti-safety executive order on regulations
will add to carnage on America's roads,
and harm the auto industry and the economy
Statement of Rosemary Shahan, President, Consumers for Auto Reliability and Safety
For immediate release Jan. 30, 2017
Contact: Rosemary Shahan, 530-759-9440
Note: Today, President Donald Trump signed an executive order with the goal of repealing two public protections for every new one issued. The order also establishes a process for setting an annual cap on federal regulations, which the Trump administration intends to set at $0, according to reports.
Trump's new executive order (EO) threatens to roll back lifesaving auto safety regulations that prevent fatalities and injuries in car crashes, and that prevent crashes from happening. It also threatens to undermine public confidence in the safety of new vehicles, particularly those equipped with new "autonomous" technologies, at a time when the auto industry is rapidly moving forward in developing cars where the drivers have far less control, and depend increasingly on how the cars are designed in order to be safe.
Under the new EO, if NHTSA seeks to promulgate a regulation to improve cyber-security for autonomous vehicles, in response to their being hacked by terrorists and driven off bridges, into oncoming traffic, or into crowds, NHTSA would have to eliminate two other regulations, such as those that require seat belts to work, or that prevent vehicles from exploding into flames when they are rear-ended, or from rolling over and killing the occupants, or reducing head and torso injuries in a side impact. So if motorists are made safer in one way, they would be made less safe in two other ways.
Polling shows that safety ranks extremely high among almost all new car buyers, particularly women, who influence the vast majority of auto purchases. According to NHTSA, "A fundamental change in the public's view of safety has occurred over the last decade. Many customers are not only willing to pay extra for safety features, they are now selecting vehicles based on their content of key safety items. This trend is expected to continue and to intensify in the years ahead." Source: NHTSA 2020 report: https://one.nhtsa.gov/nhtsa/whatis/planning/2020Report/2020report.html
According to NHTSA, vehicle crashes cost our nation over $800 billion each year.
The auto industry should be careful what it wishes for. While President Obama is credited with saving the auto industry, Trump may well be blamed for destroying it.
# # #
FTC causes disaster for used car buyers
Ford now allows its dealers to sell
cars with killer safety defects as "certified"
and charge extra for them
Reporter Ron Lieber of the New York Times reports that:
"...last month the Federal Trade Commission made it easier for cars to be billed as "certified," even if they were under recall and hadn't been fixed yet...Ford - with the F.T.C. settlement for cover - told its dealers this week that they could sell recalled vehicles and certify them too...
Ford allows its dealers to sell cars with killer Takata airbags as "certified" and charge extra for them
Until early this week, every major car company had said that they forbade their dealers from selling certified used vehicles with any open recalls, including ones for Takata airbags.
On Monday, however, Ford broke ranks, issuing an update to dealers on its "enhanced" recall process and giving them permission to certify used vehicles that had open recalls after all...
AutoNation took a different approach, at least at first. In 2015, its chief executive, Mike Jackson, told Automotive News that the recall situation was 'a dysfunctional nightmare that the industry should be ashamed of.' The company pledged to sell no cars with open recalls, period.
By last year, it was costing the company dearly, to the tune of 6 cents per share of its earnings in the third quarter. In November, it gave up and began selling some cars with open recalls (and full disclosures). The lack of Takata airbag replacements, the F.T.C.'s decision and other anticipated regulatory rollbacks proved to be too much.
'We are proud of the efforts we made, but sometimes the system beats you down,' Marc Cannon, the company's chief marketing officer, said."
This is precisely the horrific, dangerous result that CARS and our consumer / safety organization allies have been warning against. CARS has led the fight against the FTC's weakening of auto safety protections every step of the way. We drafted and submitted detailed comments. We organized meetings with the Director of the FTC's Consumer Protection Bureau, Jessica Rich, and key staffers. We also met with each of the FTC Commissioners and their staff, along with Alexander Brangman, whose daughter Jewel Brangman was only 26 years old when she was killed by a recalled Takata airbag in a relatively minor fender-bender crash that everyone else walked away from. We appealed to auto safety champions on Capitol Hill, who responded by sending letters to FTC Chairwoman Edith Ramirez urging the agency to reconsider the action it had proposed, which Senators Schumer, Durbin, Nelson, Blumenthal and Markey characterized as "anti-consumer" and "anti-safety."
However, the FTC chose to ignore all the input from safety advocates. Instead of improving protections for used car buyers, the FTC gutted them. Now, when the inevitable happens and innocent people are harmed, those who made this disastrous decision will have the victims' blood on their hands.
CARS remains committed to doing all we can to restore desperately needed protections for used car buyers, their families, and all who share the roads. Stay tuned. Meanwhile, CARS warns used car buyers: NEVER trust an auto dealer about the safety of a car. ALWAYS check the safety recall status yourself, before you buy. NEVER buy a "certified" car. Get your OWN, independent inspection done instead. Why pay extra for a "certified" car when dealers like CarMax and Ford think they can get away with selling them without bothering to get the safety defects that have killed and maimed people repaired first?
January 26, 2017: As friends, colleagues, and family members gather together in Washington, D.C. to commemorate Clarence M. Ditlow III, CARS shares in the grief, and in remembering and honoring Clarence, widely hailed as the nation's leading auto safety advocate, who was an esteemed colleague. Clarence was the epitome of a stellar consumer advocate -- passionate, smart, knowledgeable, persistent, courageous, and totally dedicated to improving auto safety for all. He had an encyclopedic knowledge of motor vehicle policy, history, and defects, and was enormously effective in overcoming the auto industry's cynical tactics and political ploys.
Clarence M. Ditlow III, Champion for Auto Safety
Just a few of the many tributes that have poured in, since Clarence's passing:
From Ralph Nader:
"America's motorists are less safe today with the passing of their Guardian Angel - engineer/lawyer Clarence Ditlow, the director of the Center for Auto Safety. The generating force behind the recalls of millions of defective motor vehicles, Mr. Ditlow pressured the federal auto safety agency and the auto companies with meticulous advocacy that was technically deep and morally powerful...
While culpable auto executives were on the golf links, he was at his office on weekends assembling evidence about the causes of crashes and their human casualties, and preparing formal petitions and lawsuits demanding action...
Over the years he was the "go-to" person for hundreds of reporters, columnists, editorial writers, researchers and legislative staff. Patiently, he would walk them through the details of motor vehicle failures and engineering deficiencies, the derelictions of management and the inaction of government regulators not doing their job. He took his work beyond auto safety to include fuel efficiencies, emitted pollutants, and sloppy vehicle construction and design...
Self-effacing and ethical, he did not ask anything for himself, receiving a very modest salary, living a simple and courageous life, as his wife, Marilyn Herman, recounted in his final days."
From Jeff Plungis, lead investigative journalist, Consumer Reports:
"Clarence M. Ditlow, III, one of the most influential and effective consumer activists of the past five decades,…leaves behind an astonishing legacy of work on safety defects that led to the eventual recall of tens of millions of vehicles. He was at the center of every major automotive safety controversy dating back to the exploding gas tanks of the Ford Pinto during the disco era, and as recently as this summer remained a strong voice for how to regulate autonomous technology in vehicles."
From Mark Rosekind, Administrator, the National Highway Traffic Safety Administration:
"Clarence dedicated his life's work to improving the safety of all those who drive or ride in motor vehiles. Clarene was relentless in his pursuits, and whether he was taking the fight to the auto industry, or prodding NHTSA when he felt we weren't moving fast enough, no one could ever doubt his heartfelt motivation. Americans are driving in cars that are safer thanks to Clarence, and his voice as an advocate for safety won't easily be replaced.''
Michael Brooks, who has been working side-by-side with Clarence for years, is currently serving as the Acting Director of the Center. Preserving Clarence's legacy and moving forward in these challenging times is truly daunting. We wish Michael and the Board of Directors of the Center all the best as they face the challenges ahead.
We extend our sincere condolences to Clarence's wife, Marilyn, his sister and other family members, and to all who had the privilege of knowing or working with Clarence. May his legacy live on.
Christina and John Snell and their son, with their new 2017 RAV4
After a two-year ordeal that started when Toyota sold them an unsafe lemon RAV4, Army Tank Commander John Snell and his wife Christina are celebrating a very sweet victory.
Their ordeal started after a Toyota car dealership in Georgia sold the Snells a new Toyota RAV 4. About a year later, it began breaking down at unpredictable moments, leaving Christina stranded on winding country roads in the middle of winter in Germany, where John was stationed. At first, Toyota refused to repair their vehicle unless they paid for the parts and labor out of pocket in advance. Even after they persisted, Toyota failed to provide the necessary parts, leaving them without a vehicle for months. Eventually, a panel of arbitrators ruled that their RAV 4 was unsafe and declared it a lemon. Toyota was ordered to take back their lemon vehicle and replace it, but they refused. Instead, they sued the Snells.
Why? Toyota wanted to get a ruling in court that would allow them to get away with selling defective new cars to military families in our country, without having to honor the warranties if the families are later stationed outside the U.S. and take their cars with them.
This is shameful. As Christina Snell wrote in a petition she filed on Change.org:
Christina and John Snell at a military ball, before their son was born
"I could not be more proud of my husband, who is a highly decorated Army Tank Commander. We're both honored to be a military family. When we learned we were going to be transferred to a duty station in Germany, we talked it over and decided to buy a brand new car, so we wouldn't have to worry about having reliable transportation while coping with all the challenges that come with being stationed overseas. When we went to a local Toyota dealer in Savannah, Georgia, we asked whether Toyota would honor the warranty, even if we were serving abroad. We were repeatedly assured that Toyota is a global company with dealerships and repair facilities around the world, and there was no problem. It even said in the warranty book that 'If you are using your vehicle outside the United States, US territories and Canada and need warranty service, contact a local Toyota dealership….The warranty repairs should be completed in a reasonable amount of time, not to exceed 30 days.' So we bought the new RAV 4.
Unfortunately, Toyota does not want to honor that commitment or their warranty. They claim that because we are in the military, and took the car with us to Germany, they do not have to comply with Georgia's auto lemon law. We are determined to fight back. Toyota boasts they made over $18 billion in profits last year. They should not make those profits at the expense of military families who are serving our nation and putting their lives on the line to help protect all of us from our enemies."
CARS heard about their ordeal, and helped them and their attorney, Michael Flinn, raise awareness about Toyota's outrageous and disgraceful conduct toward the Snells. Over 155,000 people signed the Snell's petition on Change.org, urging Toyota to buy back their lemon car. Many wrote comments such as "Toyota should be banned from selling cars on any military base."
For months, Toyota stonewalled. They even tried to keep evidence about John Snell's tours of duty and his military medals and awards from becoming part of the record before the Court. To his credit, Flinn did not back down, and never wavered in his defense of the Snells and their rights. Finally, Toyota agreed to drop their lawsuit against the Snells, buy back their lemon car, and replace it with a new 2017 RAV4. Plus they paid some fees.
Under Georgia's lemon law, Toyota has to brand the title of the lemon RAV4 as a "manufacturer buyback," to help alert consumers about the car's history. They also have to repair the defects and provide at least a 12-month warranty.
An added bit of good news: Toyota also had to give up on winning an appellate court decision that could have allowed them to deny lemon law protections to ALL military families who ship their cars to duty stations overseas.
Many thanks to all who signed Christina's petition on Change.org. We are proud to salute Christina and John Snell for their principled perseverance, and for their courageous and exemplary service to our nation. They have played an important role in preserving important lemon law protections for ALL of our military heroes and their families.
CARS and other leading consumer / safety organizations oppose
allowing CarMax and other car dealers to engage in
false advertising regarding the safety of "certified" used cars with
lethal safety defects as "safe," and "repaired for safety"
On behalf of a coalition of leading consumer and safety organizations, CARS filed comments, opposing the U.S. Federal Trade Commission's dangerous proposed consent orders with CarMax, Asbury Automotive Group, and West-Herr Automotive Group.
FTC would allow CarMax to advertise so-called "certified" cars with this defect, that caused Stephanie Erdmann to lose her eye, as "safe" and "repaired for safety" and passing a "rigorous inspection."
The groups warn that:
"As the FTC states, 'Unrepaired auto recalls pose a serious threat to public safety ... defects that have been the subject of recalls have led to severe injuries and even death for many consumers.' [footnote #1] We agree with the tragic truth of this statement.
Yet, despite the FTC's acknowledgment of the imminent hazards that can be posed by unrepaired recalled vehicles, the proposed agreements would allow [CarMax and the other car dealers] to advertise unsafe, unrepaired, defective recalled used cars with serious safety defects that have killed and injured people as "safe," "repaired for safety issues," or "subject to a rigorous inspection," without repairing the safety defects. They could do so if the advertising merely includes a contradictory, confusing, inadequate, and misleading disclaimer that the dealer sells cars that "MAY be subject to recalls for safety issues that have not been repaired" and the dealer subsequently provides other information that is also inadequate and much too late in the sales process to compensate for the initial false impression."
*1 Fed. Trade Comm'n, Analysis of Proposed Consent Order to Aid Public Comment, 81 Fed. Reg. 93931, 93933 (Dec. 22, 2016).
NEWS: For immediate release: December 16, 2016
Contact: Rosemary Shahan, President, CARS, 530-759-9440
Federal Trade Commission to America's used car buyers: Drop Dead.
Agency ignores pleas by safety groups, parents of children killed by recalled cars, and safety champions in Congress, and approves anti-consumer, anti-safety consent orders with GM and car dealership chains
Consumer and safety organizations blasted the FTC Commissioners' decision, announced today, to finalize consent orders with GM and the Lithia and Koons auto dealership chains that will allow them to advertise that unrepaired recalled used cars with lethal safety defects are "safe," have been "repaired for safety," passed a "rigorous inspection" and qualified to be sold as "certified" cars without repairing the safety defects, if they merely disclose that the cars "may" have an open recall.
The consent orders may lower the standard for the industry regarding how unrepaired recalled used cars are advertised, and will be in effect for 20 years, unless they are overturned in court or preempted by federal law. The dangerous behavior allowed by the FTC is worse than GM and other manufacturers say that they allow among their franchised dealers. It would also be worse than the current practices among many dealerships, which are constrained by state laws and also are concerned about their reputations.
The consent orders are also worse than existing law in all 50 states. Under state laws, dealers who engage in such practices face charges of negligence, wrongful death, punitive damages for fraud, violations of common law, and other serious sanctions. In each state where auto dealer trade associations have attempted to change the laws to make it legal for them to sell unrepaired recalled used cars with "disclosure," their efforts have been rejected by lawmakers, including in California, New Jersey, Maryland, Virginia, and Tennessee.
Quotes from consumer advocates and parents of children killed by unrepaired recalled cars:
"This is tragic. The FTC's reckless action will result in more people being killed and injured because of unsafe, defective used cars," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety, which has been leading efforts to oppose the agreements. Shahan vowed to sue the FTC to get the consent agreements overturned.
"The FTC is supposed to protect consumers. Instead, they are protecting unscrupulous car dealers," said Cally Houck, mother of Raechel and Jacqueline Houck, ages 24 and 20, who were killed by an unrepaired recalled Chrysler PT Cruiser that caught fire and caused them to crash head-on into an 18-wheeler. Subsequently, Houck won a unanimous jury verdict, rendered under state law, awarding over $15 million in compensatory damages, based on claims of negligence and wrongful death.
"This would be catastrophic to consumers. When I met with each of the Commissioners, and urged them not to do this, what struck me was how clueless they were about how dangerous recalled cars really are," said Alexander Brangman. He is the father of Jewel Brangman, who was only 26 when she was killed by an unrepaired recalled Honda Civic with a faulty Takata air bag that exploded with excessive force, spewing metal fragments that severed an artery in her neck, causing her to bleed to death.
"The FTC is literally giving car dealers license to kill," said Taras Rudnitsky, a Florida attorney who has represented the surviving families of victims who were killed by the defects in unrepaired recalled used cars.
"This isn't just 'weak' consumer protection from the FTC. It is the FTC actively harming consumers, giving dangerous new protection to car dealers who fraudulently sell unsafe cars. We have won cases for consumers cheated by sleazy car dealers that did things very similar to what the FTC is now permitting, with courts and juries finding their conduct to be 'fraud' and deserving of heavy penalties," said Bernard Brown, a Missouri attorney who has represented victims of unscrupulous car dealers who sold them unsafe vehicles.
Don't let car dealers trick you into buying
an unsafe, defective recalled car
1) Do NOT pay extra for a car that is "certified." That just means you are paying too much, particularly since the Federal Trade Commission allows dealers to advertised that cars are "safe," "repaired for safety" and qualified to be sold as "certified" cars -- without getting the killer safety defects repaired.
2) NEVER trust what a car dealer or salesperson says about whether a car is safe. Do not trust any car dealer advertising or any claims they make, whether they are in writing, or verbally, about the safety of the cars they offer for sale. It's unfortunate, but this is the new reality.
3) Check the safety recall status of any car yourself BEFORE you agree to buy. Here's how to check:
Get the Vehicle Identification Number (VIN), which should be on a plate on the dashboard and also on a sticker on the driver door jamb.
If you do not have access to the internet, or wish to talk with a person, call the toll-free number for the manufacturer of the car. Here's a list of toll-free numbers for each manufacturer: http://autopedia.com/html/Mfg800.html
4) If a car has an unrepaired safety recall, WALK AWAY. Your life is precious. So is the safety of your family and friends, and others who share the roads.
5) If a dealer tells you the defect is not serious, do NOT believe them. Many dealers lie about the risks posed by recalled cars. Some people have been killed by a defective car within hours of when they were handed the keys. One horrific example of what can happen: In San Diego, a Highway Patrol officer, his wife, their 13-year-old daughter, and her uncle were all killed within hours, after they were loaned a defective Lexus. The defect? The car had a problem with the floor mat that caused it to accelerate out of control, reaching speeds of over 120 mph.
6) If a dealer tells you that you can get a safety recall repaired right away, for free, do NOT believe them. For millions of recalled cars, it is impossible to get repairs because of a severe shortage of repair parts. It may take years before the car can be made safe to drive. If it was so easy to get the car repaired, the dealer should have gotten the repairs done, before offering the car for sale.
7) You can often find a safe car and a better deal by buying directly from another consumer, but you still have to be careful how you buy. Here are CARS' tips for how to get a good deal on a safe, reliable used car without having to go to a car dealership:
U.S. Senate Auto Safety Champions Blast FTC over "Anti-consumer" Action
U.S. Senator Richard Blumenthal (D-Connecticut):
"FTC's reckless decision to finalize this deeply flawed consent order is unconscionable and anti-consumer. It finalizes a dangerous consent order that permits car dealers to sell cars with unrepaired recalls as safe or certified. Under no circumstances should potentially deadly vehicles be advertised as safe. The disclosure requirements do more to deceive than fully inform, and merely protect unscrupulous dealers. Consumers must stay vigilant and always check any used car in safercar.gov for unrepaired defects."
U.S. Senator Edward Markey (D-Massachusetts):
"Instead of ensuring safe cars for consumers, the FTC is ensuring safe harbor for used car dealers who provide false and deceptive assurances. The FTC is supposed to protect consumers, but this settlement only makes it easier for dangerous cars to remain on the road, endangering American families. I urge all consumers to continue to check www.safercar.gov to ensure they aren't buying a car with unrepaired defects."
CarMax, others settle US Actions over Used Car Safety
The Associated Press
Published in the New York Times
December 16, 2016
"A consumer group criticized those agreements as failing to protect car buyers and actually harming consumers. By permitting the companies to disclose that cars may be subject to recalls, the FTC is allowing them to advertise that recalled and unrepaired used cars are safe and have been 'repaired for safety,' Consumers for Auto Reliability and Safety said in a statement. The consent orders may lower the standard for the industry in this type of advertising and are weaker than state laws, the group said."
FTC settles charges with used-car dealerships over recall disclosures
Previous settlement agreements with GM, other dealers also approved
December 16, 2016
By John Irwin
"The final approval of those three consent orders came under fire today from the group Advocates for Highway and Auto Safety, which claims the FTC is in effect continuing to allow dealerships to advertise unrepaired vehicles under recall as safe.
'Today's decision by the [FTC] was a repudiation of their statutory duty to protect consumers,' said Cathy Chase, the group's vice president of government affairs, in a statement. 'By finalizing consent orders with [GM] and the Lithia and Koons dealership chains … consumers are duped and safety is jeopardized. The FTC also issued similar proposed consent orders to CarMax, Asbury Automotive Group and West-Herr Automotive Group.'"
"Trump Appointments: Is a Step Back for Auto Safety Looming?"
December 13, 2016
by Cheryl and Christopher Jensen
"As President-elect Trump pieces together his administration, consumer advocates are wondering who will head up the National Highway Traffic Safety Administration – a crucial position when it comes to automotive safety. That position is now held by Mark Rosekind, who got the job in December 2014.
Dr. Mark Rosekind, Administrator, National Highway Traffic Safety Administration
One can make a good argument that Rosekind has been the most aggressive, pro-consumer administrator in years. It's been a startling and happy change for an agency that has had a relationship with the auto industry routinely criticized by consumer advocates as cozy and accommodating.
'He deserves enormous credit for pressuring manufacturers to perform record numbers of safety recalls and to take a more pro-active approach to addressing safety defects,' says Rosemary Shahan, the president of Consumers for Auto Reliability and Safety...
Under [former NHTSA Administrator David Strickland], safety advocates said N.H.T.S.A. continued as a captive of the auto industry and Strickland showed little interest in breaking free...
The decision on whether to replace Rosekind is expected to be made by Elaine Chao, who has been selected to head up the Department of Transportation. The N.H.T.S.A. is part of that department."
Note: Elaine Chao is married to Republican Senate Majority Leader Mitch McConnell. Since 2011, she has been serving on the Board of Directors of Wells Fargo, which has been caught engaging in numerous illegal practices, including creating bogus accounts through fraud and identity theft, overcharging over $203 million in overdraft fees, and illegally repossessing cars from military Servicemembers serving our nation on active duty.
CARS tells Toyota: Stop selling unsafe lemons to military families
Toyota sold John and Christina Snell a new unsafe lemon RAV 4
CARS has joined Christina and John Snell in calling on Toyota to buy back their unsafe lemon car, and stop suing them -- because they are in the military and took their new car with them to their duty station in Germany. John Snell is a highly decorated military hero serving in the U.S. Army. As Christina wrote in a petition on Change.org:
"In 2013, a Toyota car dealership in Georgia sold my Army husband and me a new Toyota RAV 4. About a year later, it began breaking down at unpredictable moments, leaving me stranded on winding country roads in the middle of winter in Germany, where we were stationed. At first, Toyota refused to repair our vehicle unless we paid for the parts and labor out of pocket in advance. Even after we persisted, Toyota failed to provide the necessary parts, leaving us without a vehicle for months. Eventually, a panel of arbitrators ruled that our RAV 4 was unsafe and declared it a lemon. Toyota was ordered to take back our vehicle and replace it, but they refused. Instead, now they are suing us."
Federal Court Rules Against CarMax
over Failures to Provide Completed Inspection Reports
In a major blow to CarMax, a Federal Ninth Circuit Court ruled that CarMax fails to comply with California's Car Buyers Bill of Rights, by failing to provide completed inspection reports describing the condition of components the company inspects. CarMax sells all of its vehicles as "certified" cars that have supposedly passed a "rigorous 125+ point inspection." But the auto retailing giant neglects to name which parts passed or failed their tests.
The three-judge panel's decision was unanimous. The consumer who won the case, Travis Gonzales, bought a 2007 Infiniti G35 from CarMax in Costa Mesa, California. The car had badly worn brake pads, malfunctioning windows, a defective transmission and warning lights that lit up intermittently on the dashboard. CarMax claimed the car had passed its inspection program. The dealership argued that putting a generic list of components that were supposedly checked, in the glove box, was enough "disclosure."
The buyer's lawyer, Hallen Rosner of the law firm Rosner, Barry & Babbitt, successfully argued that CarMax's business practices are "a farce" that cheats customers.
CARS spearheaded efforts to enact and improve the Car Buyers Bill of Rights, including capping dealer interest rate markups on auto loans, mandatory disclosures of common add-on items, prohibitions against selling "certified" cars "AS IS" (without an express warranty), mandatory disclosures of credit scores to borrowers, and other protections.
DO NOT drive these Honda cars. Get them fixed. NOW.
November 7, 2016
A 50-year-old Riverside, California woman was recently killed by a faulty, recalled airbag in her 2001 Honda Civic. Cutting corners on safety, airbag supplier Takata produced the airbag with cheap but volatile sodium nitrate.
In even a low-speed collision, the chemical explodes with excessive force, sending shards of metal into the passenger compartment. It's been described as having a hand grenade go off in the car.
The woman, Delia Robles, was driving to get her flu shot when her Civic collided with a pickup truck. Officials at the National Highway Traffic Safety Administration (NHTSA) have been warning owners of the cars not to drive them, and to get them repaired immediately. NHTSA found that in a collision where the airbags inflate, the odds of being killed are 50-50. In other words, those cars are ticking time bombs.
Here are the cars that NHTSA has identified as posing the highest risk:
Honda is offering to tow these cars to dealerships for repairs. They should also offer to send roving mechanics to the owner's home or workplace, since a leading barrier to getting repairs is the fact most people have only one car, and they depend on it to keep their job and get their kids to school. For many owners of recalled cars, the closest dealership may be a long distance away, and they may not be able to drop off their car on a weekday, and then get back home and back to work.
Owners of recalled cars may also have difficulty getting time off from work to drive a long distance for repairs. Many at-risk owners may not be proficient in English or Spanish, and may not understand the risks they face.
Some owners have also had bad experiences at car dealerships, and may be fearful of going to a dealership again. Unfortunately, some dealers may take advantage of the safety recalls to pressure them to buy another car, while holding their recalled car for repairs.
Where to check the safety recall status of your car, at a government website:
Leading Auto Safety Champions in Congress
Slam Federal Trade Commission
over proposal to allow dealers to advertise unsafe, unrepaired
recalled cars as "safe" and "repaired for safety"
Rep. Jan Schakowsky (D-IL) stands up for protecting used car buyers, their families, and others who share the roads.
U.S. Rep. Schakowsky (D-IL) a leading champion for auto safety in the U.S. House of Representatives, joined CARS, other consumer groups, and leading Senate safety champions in urging the Federal Trade Commission to reverse course over the agency's controversial proposal to allow dealers to advertise unsafe recalled cars as "safe" and "repaired for safety" and having passed a " rigorous inspection" -- without repairing the safety defects that led to a federal safety recall.
In her letter, Rep. Schakowsky writes:
"I am writing to express my deep concern with regard to the consent orders with General Motors Company (GM), Jim Koons Management, and Lithia Motors, Inc. proposed by the Federal Trade Commission (FTC)... While the FTC does not have the authority to prohibit the sale of used cars with unrepaired defects, it can and should prevent the misleading advertising of those cars.
When auto dealers imply cars are safe even though the cars have unrepaired safety defects subject to a recall, those are precisely the unfair and deceptive practices the FTC has the power to stop. However, the proposed consent orders stop short of banning deceptive language...the weak remedies in these proposed consent orders would likely affect other attempts to curb the sale or advertising of vehicles under recall...the FTC should stop auto dealers from deceiving their customers.
I call on the FTC to revise or reject these proposed orders to truly look out for consumer safety."
"Congressman offers unusual defense in ethics probe"
Williams, a car dealer, says he wasn't helping himself,
he was helping a lobbyist for car dealers
Center for Public Integrity
September 13, 2016
By John Dunbar
"U.S. Rep. Roger Williams, a Texas Republican under investigation by the House Ethics Committee, asserts that he did nothing wrong when he offered an amendment that would benefit car dealers — despite the fact that he himself is a car dealer.
Members of Congress, say the rules, may not use their positions for personal financial benefit. But Williams asserted in a statement that he did not profit from his actions.
GOP Rep. Roger Williams, a Texas car dealer, faces House ethics investigation
Instead, Williams revealed, he offered the amendment at the behest of a lobbyist. And the lobbyist — whose employer, the National Automobile Dealers Association, one of the congressman's top donors — was even kind enough to send along 'proposed language' for the text of the amendment.
The case is being considered by the House Ethics Committee. There is no timetable for when the committee will rule. But regardless of what happens, the Austin area congressman's defense offers a rare glimpse at how business is often done in the Capitol.
In this case, at least, it reveals a place where lobbyists have enormous influence; where a legislator was arguably more concerned with his own interests and those of his donors than his constituents; and where actions that appear at first glance to be clear conflicts of interest, are in fact, routine...
Rep. Williams offered an amendment on the floor of the House just before midnight on Nov. 4 that alleviated the dealers' concerns. It would, as understood by Williams and NADA, carve out an exemption for auto dealers. It would, in effect, allow them to rent or loan out vehicles even if they were subject to safety recalls...
'It seems to me that if it isn't illegal, if it isn't an ethics violation it ought to be,' said Shahan, president of Consumers for Auto Reliability and Safety, a [non-profit] consumer group. 'His amendment benefits nobody but car dealers. And he's a car dealer.'
In his statement, Williams says that his business does indeed offer rental cars for use by customers who are getting their vehicles fixed as well as loaner cars...Williams, in his defense, said he sometimes loses money under the arrangement and that the passage of the amendment would have "zero bearing" on his business interests.
Shahan said dealers still benefit indirectly.
'They benefit, of course, by profiting from having the repair business,' she said. 'And you can be sure that it's built into the price they charge for the repair.'
Shahan said it was clear that the congressman was not interested in consumers.
'It doesn't get any clearer that he was not acting in the public interest, he was acting in the interest of the NADA members. He doesn't even claim to be acting in the public interest,' she said."
"Both organizations strongly support the CFPB's proposal to prohibit forced arbitration clauses that bar wronged consumers from being able to join together to address widespread illegal activity through class actions. We also support the proposal to improve transparency involving individual cases in forced arbitration, and urge the Bureau to also ban forced individual arbitration.
Consumers deserve at least the same freedom, protection, and access to justice as car dealers, who were granted a special exemption from the Federal Arbitration Act by Congress. We agree with the points and arguments that Senator Orrin Hatch (R-UT) and Senator Charles Grassley (R-IA) made in favor of restoring Seventh Amendment rights to car dealers, which clearly should apply equally to consumers.
As Senator Hatch stated when he introduced S. 1140, "The Motor Vehicle Franchise Contract Arbitration Fairness Act of 2001," the new law was needed to protect auto dealers from having mandatory arbitration clauses imposed upon them by auto manufacturers, due to their "unequal bargaining power." As Senator Grassley, speaking in support of S. 1140, stated:
"While arbitration serves an important function as an efficient alternative to court, some trade-offs must be considered by both parties, such as limited judicial review and less formal procedures regarding discovery and rules of evidence. When mandatory binding arbitration is forced upon a party, for example when it is placed in a boiler-plate agreement, it deprives the weaker party the opportunity to elect another forum. As a proponent of arbitration I believe it is critical to ensure that the selection of arbitration is voluntary and fair… Unequal bargaining power exists in contracts between automobile and truck dealers and their manufacturers. The manufacturer drafts the contract and presents it to dealers with no opportunity to negotiate… The purpose of arbitration is to reduce costly, time-consuming litigation, not to force a party to an adhesion contract to waive access to judicial or administrative forums for the pursuit of rights under State law."
Senator Grassley also stated that:
"This legislation will go a long way toward ensuring that parties will not be forced into binding arbitration and thereby lose important statutory rights. I am confident that given its many advantages arbitration will often be elected. But it is essential for public policy reasons and basic fairness that both parties to this type of contract have the freedom to make their own decisions based on the circumstances of the case."
Statements on Introduced Bills and Joint Resolutions, United States Senate, June 29, 2001. Statement by Senator Grassley of Iowa.
The organizations also cited specific cases where class members -- low-income consumers whose cars had been repossessed -- received over $383 million in forgiveness of loans. However, in those cases, Aho vs. Americredit Financial Services and Smith Vs. Americredit Financial Services, the additional benefits received by class members varied solely based on the basis of whether class members had signed retail installment contracts that included arbitration clauses. Car buyers without arbitration clauses received refunds of 89% of their payments. In direct contrast, car buyers with arbitration clauses received smaller refunds of only 57% of their payments. Class counsel were awarded fees in addition to the class recovery, so the attorneys' fees did not reduce the recovery for consumers one iota.
In the class action case Hamm vs. Consumer Portfolio Services, Inc., the class representative did not have an arbitration clause in his contract. In an exemplary result, the class members, 2,189 car buyers, whose vehicles had been illegally repossessed, received $18,158,243 in debt forgiveness. The fees for the class members' attorneys were awarded in addition to the amounts received by the class members.
However, in a "twin" class action case, Trabert vs. Consumer Portfolio Services, Inc., he class representative did have an arbitration clause in his contract. The claims were identical to the claims asserted in Hamm, against the same defendant, regarding the same practices, over the same period of time. The same attorneys brought the case, representing members of the class. But solely because of the arbitration clause, Mr. Trabert and members of the class in that case received no relief whatsoever. The debt remains on their credit reports, and they are still subject to having to pay the entire debt, plus penalties, and are also subject to receiving calls from debt collectors. They have also received no notification that they have been wronged and have legitimate claims that could be brought, if they were free from the arbitrary limits imposed by the arbitration clause.
NEWS: For immediate release August 10, 2016
Contact: Rosemary Shahan – 530-759-9440
Consumer Group Warns: Avoid Buying Used Cars from CarMax
Today Consumers for Auto Reliability and Safety warned used car buyers to steer clear of
CarMax, which continues to sell unsafe, defective recalled cars, including vehicles with dangerous
Takata air bags that have been linked to 10 deaths and over 100 injuries, including loss of eyesight and
strokes. According to the National Highway Traffic Safety Administration, the Takata air bags in some
models pose a 50% chance of exploding with excessive force and spewing metal fragments at drivers
and / or passengers in a crash, and should be driven only to a dealership for repairs.
“CarMax sells cars that are ticking timebombs on wheels,” said Rosemary Shahan, President of
Consumers for Auto Reliability and Safety (CARS), a non-profit auto safety and consumer advocacy
organization. “Car buyers should avoid shopping at CarMax unless they stop selling recalled cars with
lethal safety defects that they fail to get repaired.”
Many of the recalled vehicles CarMax offers for sale cannot be repaired, because the
manufacturer has not yet developed a fix, or because of parts shortages – leaving car buyers and their
passengers at risk. Most, if not all, auto manufacturers require their franchised car dealers to refrain
from selling defective recalled cars, pending repairs. It may take years before enough repair parts are
available to repair recalled cars such as the more than 100 million vehicles worldwide with Takata
airbag inflators that need to be replaced before 2019.
Under broad, general state laws in all 50 states, it is illegal for car dealers to sell recalled used
cars to consumers. Dealers who sold recalled used cars have faced lawsuits for violating implied
warranties, engaging in unfair and deceptive acts or practices, or violating more specific laws such as
New York's requirement for dealers to certify that all used vehicles they offer for sale are “roadworthy.”
When people have been injured or killed by the defective cars, the dealers also faced legal
action alleging negligence or wrongful death, or violation of the common law duty of care. Some
dealers have entered into confidential settlements with families of victims killed by their negligence.
CarMax is the largest retailer of used cars in the nation. CarMax advertises that all the cars it
offers for sale must pass a “125+ point Certified Quality Inspection.” However, CarMax often fails to
ensure that safety recall repairs are performed prior to sale. More details about CarMax's sales of
recalled cars are posted at: http://www.carsfoundation.org/
# # #
CARS Praises Consumer Financial Protection Bureau for
Helping Improve the Economy and Protect Consumers,
Especially Military Servicemembers and their Families
Richard Cordray, Director of the Consumer Financial Protection Bureau, and CARS President Rosemary Shahan, a fellow Buckeye
At a roundtable and Field Hearing in Sacramento hosted by the Consumer Financial Protection Bureau, CARS President praised CFPB Director Richard Cordray and his team for helping improve America's economy and protect consumers, especially military Servicemembers and their families. At the roundtable, Shahan also provided information about predatory lending practices perpetrated by "Buy Here Pay Here" car dealers, who commonly overcharge vulnerable car buyers who are desperate for wheels to get to work for junky cars that break down soon after purchase. Some don't even make it home from the car lot.
The dealers typically also charge exorbitant interest rates on loans that vastly exceed the value of the cars. When the cars break down, the car buyers lose their only means of transportation to get to work, costing them their jobs. When they default on their loans, the dealers repossess the cars, and then resell them again and again. Each time, they make a high profit.
As reported in an award-winning series by Los Angeles Times reporter Ken Bensinger, some dealers make this predatory practice, known as "churning," a regular business practice. Too often, California's Department of Motor Vehicles fails to protect car buyers from such practices. Even if dealers are closed by the DMV, or declare bankruptcy, they often re-open again, sometimes in the exact same location, under a relative's name, and continue to engage in the same illegal conduct.
Governor Brown turns deaf ear to
consumer, civil rights groups
Signs bill backed by toll authorities and auto dealers
SACRAMENTO: California Governor Jerry Brown ignored pleas from consumer and civil rights groups and signed AB 516 into law, despite the fact the author had rejected amendments offered by law enforcement and consumer groups to address the serious problem of innocent people being pulled repeatedly over and ticketed, and having their cars impounded, when their vehicles have not been properly registered, through no fault of their own.
Such incidents are destined to increase under the bill, as law enforcement will be able to readily scan the temp tags and target people whose tags have expired, and who have not received their permanent plates.
"The Democratic governor’s decision Monday comes over the objection of social justice activists who say it will lead to more fines and create economic hardships for poor people." -- KPIX-TV News report
Hess bought a 2011 Acura TSX for about $18,000 in September [over 8 months ago]. 'I paid for it in full,' she said. And yet, the car is still unregistered. What’s the hold up? The dealer. Hess says AutoNation Acura of Stevens Creek agreed to title and register the TSX for her. Her paperwork even lists a $29 service fee. But the dealer hasn’t titled or registered the car. The expired plate is proof....Hess's Acura is screaming for a ticket.
'The DMV investigator told me I could be pulled over, and the car could be towed,' Hess said. Hess said the dealer didn’t offer an explanation; it was stalling....
Rosemary Shahan, the consumer advocate who leads Consumers for Auto Reliability and Safety, is lobbying the Legislature to give drivers a break when dealers are careless with paperwork. 'You get penalized if they don’t do their job,' she said."
Unless Governor Brown vetoes a bill (AB 516) that is being backed by toll authorities and the California New Car Dealers Association, more innocent car buyers like Dori will be unfairly penalized when dealers sell them cars they cannot get properly registered, through no fault of their own.
BLUMENTHAL, SCHUMER, MARKEY, NELSON, DURBIN: FTC SETTLEMENTS ALLOWING USED CAR DEALERS TO ADVERTISE CARS WITH UNREPAIRED RECALLS AS ‘SAFE’ ARE ANTI-CONSUMER & ANTI-SAFETY
Recent proposed settlements between the FTC and used car dealers allow dealers to continue advertising used cars as certified and “safe” even if those vehicles have unrepaired safety recalls
Senators today called on FTC and NHTSA to redraft the proposed settlements to ensure consumers have the information they need to stay safe
[WASHINGTON, DC] – U.S. Senators Richard Blumenthal (D-CT), Chuck Schumer (D-NY), Edward J. Markey (D-MA), Bill Nelson (D-FL), and Dick Durbin (D-IL) today called on the Federal Trade Commission (FTC) and National Highway Traffic Safety Administration (NHTSA) to ensure used car dealers cannot advertise a car as ‘safe’ if it has an unrepaired safety recall. Recent proposed settlements between the FTC and used car dealers allow dealers to continue advertising used cars as certified and “safe” even if those vehicles have unrepaired safety recalls. The Senators today called on the FTC and NHTSA to redraft the proposed settlements to ensure consumers have the critical safety information they need when buying a car.
“Congress has long debated whether dealers should be allowed to sell used cars subject to open safety recalls,” the Senators wrote. “We firmly believe that the law should prohibit such sales, as it currently does for new cars with open safety recalls. These proposed settlements wade into this contentious public policy debate, and we believe they would establish an anti-consumer, anti-safety precedent with far-reaching policy implications. Accordingly, we urge you to work together, and in good faith, to leverage your respective agency’s expertise and redraft the proposed settlements so they ensure that consumers receive meaningful information regarding the safety of their potential used vehicle purchases and that public safety is not compromised.
The text of today’s letter is available here and below:
Dear Administrator Rosekind and Chairwoman Ramirez:
We write with serious safety concerns regarding the Federal Trade Commission’s (FTC) recent proposed settlements with General Motors Company, Jim Koons Management, and Lithia Motors Inc, regarding their failure to adequately disclose unrepaired safety recalls when advertising their used car inspection programs. The proposed settlements would allow dealers to continue to advertise used cars as “safe,” “repaired for safety issues,” and having been rigorously and extensively inspected, including that they are certified—a term that connotes safety—even if those vehicles have unrepaired safety recalls. As such, in their current form, these proposed settlements would fail to address the wrongdoing at hand.
We understand that, at our behest, your two agencies have discussed these proposed settlements. Nevertheless, we remain concerned that this important public safety and public policy matter has not received the heightened scrutiny it deserves. Congress has long debated whether dealers should be allowed to sell used cars subject to open safety recalls. We firmly believe that the law should prohibit such sales, as it currently does for new cars with open safety recalls. These proposed settlements wade into this contentious public policy debate, and we believe they would establish an anti-consumer, anti-safety precedent with far-reaching policy implications. Accordingly, we urge you to work together, and in good faith, to leverage your respective agency’s expertise and redraft the proposed settlements so they ensure that consumers receive meaningful information regarding the safety of their potential used vehicle purchases and that public safety is not compromised.
The National Highway Traffic Safety Administration (NHTSA) has publicly stated time and time again that all recalls are safety recalls that need to be fixed. In 2011, a spokeswoman for NHTSA said, “All safety recalls resulting from defects present an unreasonable risk to safety and we believe it is inappropriate to suggest that some defects are not risky enough to require repair.” In a 2013 hearing, former Administrator David Strickland testified, “All NHTSA safety recalls address an unreasonable risk to safety and should not be ignored.” In addition, NHTSA’s current FAQ on vehicle recalls explicitly states, “A recall is issued when a manufacturer or NHTSA determines that a vehicle, equipment, car seat, or tire creates an unreasonable safety risk or fails to meet minimum safety standards.” There is no question that any vehicle with an outstanding recall is an unsafe vehicle.
In contrast to NHTSA’s longstanding position, the FTC’s proposed settlements would allow dealers to continue committing the same wrongdoing that was the impetus for the Commission’s actions. Car dealers would still be able to represent that a pre-owned vehicle is “safe,” has been “repaired for safety issues,” and has passed a “rigorous safety inspection” or to label a pre-owned car as being certified even when it is being sold with an unrepaired safety recall. A certified used vehicle with an unrepaired safety recall is inherently misleading. Perhaps more alarming, the proposed settlements would only require dealers to make a blanket statement that their rigorously inspected and certified used vehicles “may be subject to unrepaired recalls.” Consequently, this “disclosure” arguably amounts to nothing more than a legal disclaimer that could absolve dealers from their responsibilities and would likely do little, if anything, to meaningfully convey to consumers the existence of an open recall and dissuade them from purchasing such vehicles due to their safety risks.
The sale of any car with an unrepaired safety recall is a threat to public safety. We support the concerns raised in the comments recently filed by a number of consumer groups that no dealer should be able to advertise that a car is certified or any similar terminology connoting safety, if the car is subject to an outstanding recall. Please report back by August 10, 2016 on how you intend to cooperate and work together to amend the proposed settlements and ensure that car dealers cannot mislead and deceive consumers about the safety of their prospective purchases.
NEWS: For Immediate Release: Wednesday, June 1, 2016
Contact: Rosemary Shahan, President, Consumers for Auto Reliability and Safety, 530-759-9440
New Federal Safety Recall Law Takes Effect
As the nation's travel season heats up, motorists and their families now have a new level of
protection from unsafe, recalled cars. Today, the Raechel and Jacqueline Houck Safe Rental Car Act
takes effect. The Act, named for two sisters, ages 24 and 20, who were killed by a recalled rental car,
makes it a violation of federal law for rental car companies with fleets of 35 or more rental or loaner
cars (including some car dealers), to rent, loan, or sell defective, unsafe recalled cars until the safety
defects have been repaired.
The new law is the first major expansion of the National Highway Traffic Safety
Administration's authority over safety recalls since the agency was created in the 1960's. For the first
time, NHTSA will be able to crack down on covered rental car companies and car dealers, and issue
fines or invoke other sanctions, to help prevent tragedies like the crash that claimed Raechel and
“I'm thrilled that the Safe Rental Car Act named for my beautiful, treasured daughters, Raechel
and Jacqueline, is now the law of the land. But I'm worried about the loaner car loophole for car dealers
and remain committed to closing that dangerous safety gap,” said Cally Houck, Mother of Raechel and
Jacqueline. The Houcks filed a lawsuit against the rental car company under state laws against
negligence and wrongful death, and won a unanimous jury verdict.
“If this law was in existence when my cherished, beautiful daughter Jewel rented a car, she
would still be alive today,” said Alexander Brangman. In 2014, his 26-year- old daughter Jewel died
while driving a rented 2001 Honda Civic. Tragically, the recalled car had an unrepaired and defective
Takata airbag, which exploded in her face during a low speed chain reaction fender bender. Passengers
in the other vehicles were able to walk away from the crash site without injuries. However in Jewel’s
case, the shrapnel from the defective airbag sliced an artery in her neck, causing her to bleed to
death. The small rental car company in San Diego, CA that rented the Honda to Jewel had
approximately 55 vehicles for rent, and would be covered under the new Act.
U.S. Senator Chuck Schumer (D-NY), the principal author of the Act, said, “This law is going
to save lives, period. Families heading out for vacation or businesspeople on travel should never have
to wonder if their rental car is under recall when they drive it off the lot. Thanks to this bill, the
millions of people who rent cars every year will have peace of mind that rental car companies can't rent
or sell cars that they know are unsafe.”
“I am so proud that the Raechel and Jacqueline Houck Safe Rental Car Act takes effect today
so that the public can be assured when they rent a car, it cannot be under recall,” said U.S. Senator
Barbara Boxer (D-CA), a leading champion for the Act. “It is outrageous that some loaner vehicles
were exempted from the law and we must act to close this dangerous loophole.”
“When consumers and families drive a rental car off the lot, they should be able to do so with
the confidence that car is safe to drive, and our legislation will help achieve that peace of mind,” said
Senator Claire McCaskill, former Chairman of the Senate Subcommittee on Consumer Protection.
“Companies like Honda and GM, as well as the rental car industry and consumer and safety advocates
rallied support for our commonsense plan that will help ensure any rental cars subject to recall are
grounded, and that companies violating that law are held accountable.”
“Implementation of the Raechel and Jacqueline Houck Safe Rental Car Act is an important
consumer safety measure that is long overdue,” Rep. Lois Capps said. “If a car is deemed too
dangerous to sell, it is too dangerous to rent — it’s that simple. Thanks to the tireless efforts of
advocates like Cally Houck, we have now made our roads safer. This commonsense, bipartisan law
will undoubtedly protect public safety and prevent more unspeakable tragedies from occurring.”
“The Safe Rental Car Act will save lives and assure Americans that the vehicles they rent are free of known defects,” said Rep. Jan Schakowsky. “Rental car companies should never rent out cars that are unsafe. Sadly, for far too many families these vital protections come too late. But thanks to the hard work of family members who channeled their grief and anger into advocacy, we now have a law to prevent future deaths. We must continue to work to ensure that every vehicle bought or rented is safe.”
Rental car companies are the largest purchasers of new cars in North America. They are also
among the largest sellers of used cars. So under the new federal law, millions of used cars will also be
required to be repaired, in addition to existing state laws that prohibit dealers from selling unsafe
products to the public.
However, thanks to a last-minute loophole added by the Republican House of Representatives at
the behest of auto dealers, and carried by Rep. Roger Williams (R), a Texas car dealer, the Act applies
only to companies with a fleet of 35 or more rental or loaner vehicles, on average – exempting many
auto dealers. If a dealer who is not covered by the new law rents, loans, or sells an unsafe recalled car,
it would still be a violation of various state laws, such as laws against false advertising, unfair and
deceptive acts and practices, or violations of express or implied warranties, or – if someone is injured
or killed as a result -- negligence or wrongful death, but NHTSA is not able to enforce those laws.
The leading Congressional champions for passage of the Act were U.S. Senators Schumer,
Boxer, McCaskill, Nelson, and Blumenthal, and Representatives Capps, Schakowsky, Butterfield, and
Jones. The Senate measure was also co-sponsored by Senators Casey, Feinstein, and Gillibrand. U.S
Secretary of Transportation Anthony Foxx and NHTSA Administrator Mark Rosekind, M.D. also
advocated strongly for its passage. The DOT's request to Congress, for enactment of the FAST Act,
included provisions calling for NHTSA to have authority to curb rental car companies and car dealers'
illegal sales of ALL recalled rentals / loaners or used cars.
In a commendable move, the rental car industry, including Enterprise, Hertz, Avis, Dollar-
thrifty, Alamo, National, and the American Car Rental Association, as well as many smaller rental car
companies, helped persuade lawmakers to vote for the Act, and worked alongside Cally Houck,
Consumers for Auto Reliability and Safety, and other supporters for passage of the new law. General
Motors and Honda broke ranks with other auto manufacturers and also supported the bill.
The Senate and House both rejected attempts by some auto manufacturers and by the National
Automobile Dealers Association to kill the bill, or to legalize rentals and loaners of recalled vehicles
with “disclosure” -- shifting liability onto the victims of unsafe vehicles.
In contrast to the position of the Department of Transportation and National Highway Traffic
Safety Administration that recalled cars should not be rented or sold to consumers, unless the safety
defects have been repaired, the Federal Trade Commission is on the brink of approving settlements
with General Motors and the Lithia and Koons auto dealership chains that would allow them to
advertise that defective recalled cars are “safe,” have “been repaired for safety,” or have passed a
“rigorous inspection” and qualified to sold as “certified” cars without repairing the safety recalls, if
they merely disclose that the “certified” used vehicles may be subject to a safety recall.
Consumers for Auto Reliability and Safety, many other consumer groups, and Cally Houck are
actively opposing the FTC's proposed consent agreements, which would undermine existing state
consumer protection laws. If they are finalized, the consent agreements would be in effect for 20 years.
Meanwhile, they could be used by unscrupulous auto dealers in litigation, against victims injured or
killed by recalled cars, and as grounds to oppose any further improvements in federal law.
Parents of daughters killed by unrepaired recalled cars to
National Automobile Dealers Association Chairman:
His claim only 6% of auto safety recalls are "hazardous"
Is "Dangerous, irresponsible, and dead wrong"
National Automobile Dealers Association Chairman Carlson: killer defect NOT "hazardous"
Parents of children killed by unrepaired recalled cars are calling on the new Chairman of the National Automobile Dealers Association (NADA), car dealer Jeff Carlson, to retract his dangerous claim that "only 6% of recalls are 'hazardous.'"
The parents include:
Cally Houck, mother of Raechel and Jacqueline Houck, who were only 20 and 24 when they were killed by a recalled PT Cruiser that caught on fire and lost steering. Read Cally's letter.
Alexander Brangman, father of Jewel Brangman, who was only 26 when she was killed by a recalled Honda Civic with an exploding Takata air bag. Read Alexander's letter.
Laura Gipe Christian, birth mother of Amber Marie Rose, who was only 16 when she was killed by the GM ignition switch defect that has killed over 124 people, and injured more than 274 others. Read Laura's letter.
In a letter to the NADA Chairman, Cally Houck and Alexander Brangman wrote:
Jewel Brangman, in this photo with her father, Alexander, was killed by a recalled Takata air bag, in a low-speed collision
"As parents of precious, beautiful talented daughters killed by recalled cars with lethal safety defects, we are appalled that you would claim that 'only 6% of recalls are "hazardous."' Our daughters were driving or riding in cars with the very defects that you claim are not hazardous, and therefore acceptable for your car dealer members to sell to the public without repairing the defects first. Not only is your assessment of the risks posed by auto safety recalls totally false, but it is dangerous, irresponsible, and dead wrong."
Alexander's daughter Jewel Brangman was only 26 when she was killed by a recalled Takata air bag that severed an artery in her neck, after a low-impact collision, causing her to bleed to death. According to Carlson, a Colorado auto dealer, because Honda chose not to issue a voluntary, discretionary “stop drive” warning at the time, that defect was not “hazardous.”
In a report provided by the Alliance of Automobile Manufacturers to the National Highway Traffic Safety Administration, the AAMA found that auto manufacturers chose to issue a "do not drive" warning in only 6% of safety recalls. According to the National Highway Traffic Safety Administration, the agency lacks the authority to mandate that auto manufacturers issue such a warning.
Recalled PT Cruiser that killed Raechel and Jacqueline Houck, ages 20 and 24. NADA Chairman claims this defect was NOT "hazardous"
Cally's daughters Raechel and Jacqueline were only 24 and 20 when they were killed by a recalled Chrysler PT Cruiser with a steering hose defect. According to NADA's Carlson, because Chrysler chose not to issue a voluntary “stop drive” warning at the time, their deaths do not count either, when it comes to how he and the National Automobile Dealers Association decide which safety defects are “hazardous.”
The parents also wrote that Carlson shows "a stunning disregard for the individuals and families across the nation who have suffered profound losses due to defects such as exploding Takata air bags, which remain in millions of vehicles across the nation. Those ticking time-bombs have already killed at least eleven people, most recently a 17-year-old teenager in Texas. They have also blinded a military officer and a young boy, and caused many other serious injuries."
Laura's daughter Amber's crash was attributed to a faulty ignition switch in her GM Chevrolet Cobalt, which apparently shut off the engine while the car was in motion – affecting the steering and braking, and cutting power to the air bags, which didn't inflate when the car hit a tree in Dentsville, Md.
Amber Marie Rose. age 16, was killed by a faulty GM ignition switch
Laura Gipe Christian wrote to NADA's Carlson: "I am absolutely appalled by your callous comments concerning auto recalls. To say that only 6% of all safety recalls is hazardous is a gross misrepresentation of the truth. As a parent of a child who died because her daughter’s vehicle wasn’t recalled, this type of rhetoric is a slap in the face. There are hundreds of other parents in this country who have been impacted by our broken recall system. Numerous lives have been forever changed because auto manufacturers and auto suppliers like Takata were focused on cover-ups instead of safety.
Given your position, policymakers as well as consumers view you as an industry “expert” and they take your word seriously. But, your remarks down play the seriousness of a very scary situation here in our country. Frankly, you should be ashamed."
U.S. Rep. Jan Schakowsky (D-IL) queries Dr. Rosekind,
Administrator of the National Highway Traffic Safety Administration,
about NADA President Jeff Carlson's appalling statement:
Other lethal safety defects affecting millions of vehicles, where manufacturers chose not to issue a "do not drive" warning:
Raechel and Jackie's Mother asks: "Don't Raechel and Jackie's deaths count?"
GM ignition switches that turn to "off," causing a loss of braking and steering, and the air bags to fail to inflate when needed, in a crash
sticking accelerator pedals
catching on fire
axles that break
wheels that fall off
safety belts that fail in a crash
carbon monoxide poisoning
hoods that fly up while you're driving, obscuring vision
Consumer - Auto Safety Groups Call on
Federal Trade Commission
To Halt Dealer Sales of Unsafe Recalled Used Cars
Will Federal Trade Commission protect used car buyers, or unscrupulous dealers?
Just because you can't afford a new car, doesn't mean a car dealer should be able to get away with selling you a ticking automotive time bomb with a lethal safety defect, under the guise of "disclosing" that it had an unrepaired safety recall.
That's the core message consumer and auto safety groups are sending to the U.S. Federal Trade Commission, urging the agency to step up its game in protecting the American public from unsafe recalled used cars. The groups are responding to the FTC's proposal to settle cases brought against GM, Jim Koons Management, and Lithia Motors, Inc. over sales of "certified" used cars. Their advertising claimed all the cars had passed a rigorous inspection, before they could qualify to be sold as "certified". However, the dealers had failed to get the safety recall defects repaired.
According to the FTC's announcement of the settlements, “Under the proposed consent orders, which would remain in effect for 20 years, the companies are prohibited from claiming that their used vehicles are safe or have been subject to a rigorous inspection unless they are free of unrepaired safety recalls, or unless the companies clearly disclose the existence of the recalls in close proximity to the inspection claims. The proposed orders also would prohibit the companies from misrepresenting material facts about the safety of used cars they advertise.” [Emphasis added.]
The groups pointed out that "The proposed settlements would allow car dealers to sell 'certified' vehicles, advertised as having passed rigorous inspections, if the dealers merely “disclose” to prospective car buyers the existence (or potential existence) of unrepaired safety recalls. Such settlements could unfortunately do more harm than good. They could perversely encourage even more unethical and unscrupulous car dealers to engage in reckless practices and play “used car roulette” with the public's safety."
Instead, the groups urged the agency to "prohibit dealers from selling any 'certified' vehicle to a consumer if it has unperformed safety recalls. The consent orders should not rely on mere disclosure of a safety defect at all, but it would be particularly harmful to rely on disclosures of open safety recalls when a vehicle is advertised as having passed an inspection, or being “certified,” or safe.
The American public agrees: "Certified" cars must mean they are safe.
A nationwide poll of likely voters conducted by Public Policy Polling on February 16-17 of this year
found that a whopping 92% of voters who responded agreed that they would expect a car advertised
as passing a rigorous inspection to be safe; 87% would expect the car to be without any serious
safety defects; 77% would expect it to be free from any unrepaired safety recalls.
An overwhelming 89% believe that when a dealer advertises that a car was thoroughly
inspected and qualified to be sold as a “certified” car, but fails to repair a safety recall defect, that is
deceptive. Only 21% agreed that car dealers should be allowed to advertise that a car was thoroughly
inspected and qualified to be sold as “certified,” if they disclose in writing that there is a safety recall,
while 75% agreed that disclosure of the recall is not enough, and that the safety recall should actually
have been fixed.
Nationwide Polling results (Commissioned by the CARS Foundation)
Raechel and Jacqueline Houck, ages 24 and 20,
were killed by an unrepaired recalled car
Cally Houck of Ojai, CA, sent a similar message. Her daughters, Raechel and Jacqueline, were ages 24 and 20 when they were killed by an unrepaired recalled car. She told the FTC: "I oppose the FTC's proposed settlements with GM, Lithia and Koons. Allowing dealers to sell “certified” used cars with “disclosure” would make it “open season” on car buyers and their families, by legalizing the deceptive sales of deathtrap cars. Make no mistake. Allowing the sales of recalled used cars with 'disclosure' would protect car dealers, not consumers. Not only are such practices illegal, but they are totally irresponsible and reckless, and show an utter disregard for human life."
Cally Houck's message continued:
"If the FTC's proposed settlements had been in effect when my daughters were buying a car, they would not have saved my daughters. Had they even noticed and read a “disclosure” about the recall, my girls, in their early 20's, with no engineering or mechanical experience, and no awareness of other fatalities associated with that defect, would not have been equipped to accurately assess the risk involved. If they had been told verbally that the defect did not pose a serious hazard, in all likelihood they would have believed it. And after their deaths, there would have been no way to prove what they were told."
Car dealer bill to legalize sales of unsafe
recalled used cars fails in Virginia
Richmond VA. Update: In another major win for consumers and public safety, Virginia legislators rejected car dealers' attempt to legalize selling unsafe, defective recalled used cars to consumers, without getting them repaired first.
The lawmakers faced mounting pressure from consumer advocates and safety organizations, and the potential for increased public exposure in the media. Car dealers sought changes to the law in Virginia, which prohibits them from selling unsafe recalled used cars, and protects car buyers and their families.
The biggest loser was CarMax, which has made it a practice to deliberately sell consumers vehicles that the company knows are unsafe. This victory was all the more remarkable because CarMax has its headquarters in Richmond, and has a lot of political sway. CarMax is the largest retailer of used cars in the country. CarMax advertises that all its vehicles must pass a "rigorous 125+ point inspection," in order to qualify to be sold as "CarMax Quality Certified" cars. But the company doesn't bother getting the safety recall repairs performed prior to sale.
Virginia Car Dealers to Used Car Buyers: DROP DEAD!!
Brazen Attempt to Legalize Sales of Unrepaired, Unsafe Recalled Cars with Lethal Safety Defects
Virginia auto dealers are mounting a sneak attack aimed at making it legal, for the first time, for car dealers in VA to get away with selling unsafe recalled used cars without fixing the potentially lethal safety defects first. The car dealers are backing two bills, SB 709 (authored by Republican Senator Ryan McDougle) and HB 1232 (carried by Republican Delegate Greg Habeeb).
The bills were introduced without fanfare, at a time when car dealers nationwide are facing increased scrutiny by federal regulators over their deceptive sales of unsafe recalled used cars and mounting pressure by the U.S. National Highway Safety Administration. In addition, CarMax, the nation's largest used car dealership chain, with headquarters in Richmond, VA, is also under fire over its deceptive and misleading sales practices, which have been the target of numerous media investigations and reports issued by the CARS Foundation and PIRG Education Funds in California, Massachusetts and Connecticut. Over 97,000 people have signed a petition calling on CarMax to stop selling unsafe recalled cars. https://www.change.org/p/carmax-stop-selling-unsafe-recalled-cars-to-consumers-2
It is already illegal, in all 50 states, for dealers to sell unsafe new or used vehicles to consumers. Dealers who sell unsafe recalled used cars face severe penalties and sanctions, including loss of their license to conduct business, punitive damages that may cost them millions of dollars, major fines, and other penalties for violations of state laws. For example, a jury unanimously awarded the Houck family $15 million after Raechel and Jacqueline Houck were killed by an unrepaired recalled car. Their parents sued under state laws that prohibit negligence or wrongful death. Dealers also face legal sanctions for violating laws against engaging in unfair or deceptive acts and practices, violating express or implied warranties, or engaging in fraud. Any dealer who fails to disclose a "material" fact -- concealing information that is important -- may be guilty of criminal fraud. Findings of fraud have sometimes led to hefty jury verdicts against dealers, helping deter other dealers from engaging in such practices.
Depending on how dealers advertise their cars, their sales of unrepaired recalled used cars may also be a violation of federal law. Recently, the Federal Trade Commission announced a crackdown against GM and its dealers, Lithia Motors, and Jim Koons Management Company, which is based in Virginia, over their advertising and sales of unrepaired recalled used vehicles as so-called "certified" cars. Typically, manufacturers and dealers advertise "certified" vehicles as being superior to other vehicles, using terms like "nearly new" and telling consumers to "expect perfection." They also charge extra for "certified" cars and claim they must pass a "rigorous" inspection of many specific components, claiming they inspect 125+ or 170 or more different points / components.
According to the Daily Press in Richmond, the car dealers deny that their bills are anti-consumer. Don Hall, president and CEO of the Virginia Automobile Dealers Association, downplayed alarms raised about the bills, and even claimed that "the vast majority of recalls are for minor things."
However, that is false. In fact, that is exactly the type of misleading, irresponsible statement that could trick car buyers into the mistaken notion that a recall may not be serious, when it may actually pose a serious risk of death or devastating injuries. It may also lead car buyers into believing there is no urgency need to getting their car's safety recall repaired.
GM similarly downplayed the threat posed by faulty ignition switch defects for over a decade, while hundreds of its customers were injured or killed. One of GM's victims was Lara Gass, a beautiful, talented, young woman and beloved daughter. Ms. Gass, an honors student and law review editor at the Washington and Lee University School of Law in Lexington, Va., was driving on Interstate 81 in Virginia one Tuesday morning. According to a report in the New York Times, "On March 15, three days before the accident, Ms. Gass’s parents received the recall notice from G.M. with its warning not to drive with any objects on the key chain. Mr. Gass scanned it into his computer and forwarded it in an email to Lara, who was in Washington with friends running a half-marathon...Ms. Gass, 27, was killed after crashing into a tractor-trailer on her way to work as an intern for a federal judge."
Typical types of safety defects that lead to safety recalls:
Seat belts that fail in a crash
Air bags that explode with excessive force and spew shrapnel into faces and necks, causing blindness and bleeding to death
Axles that break
Wheels that fall off
Child safety seat anchors that fail to latch
Components that burst into flames
Fuel leaks that cause carbon monoxide poisoning
Ignition switches that cause a loss of steering and braking, and also disengage the air bags
Sticking accelerator pedals
Stalling in traffic
Richmond, VA. CARS President Rosemary Shahan participates in news conference with US Secretary of Transportation Anthony Foxx,
National Highway Traffic Safety Administration Administrator Dr. Mark Rosekind, Richmond, VA Mayor Dwight Jones, and allies from the rental car industry.
Secretary Foxx and Administrator Rosekind called upon auto dealers to stop foisting unsafe recalled rental, loaner, or used cars onto the public.
Daily News Report: Sudden Disagreement: Is car bill good for consumers, or bad?
The car dealers' legislation in VA is even worse than similar legislation that was defeated by consumer and labor organizations in California and New Jersey. That's because it also would impose a new, unprecedented burden on consumers to get the safety recalls on their vehicles repaired. For most people, that means having to time from work, losing income due to lost hours of work, and hassling over getting an appointment to have the repairs performed. Most dealers only perform repairs during regular business hours and on weekdays, making the logistics difficult for many working families. Plus if there are no repair parts available, there could be lengthy delays -- months, or even years -- before it is possible to get the defects repaired. Meanwhile, the consumer would have little choice other than to keep driving an unsafe vehicle.
Here are links to letters of opposition to the bill in CA. The same arguments also apply to the bills in VA:
Other opponents include: Trauma Foundation, Center for Auto Safety, and Advocates for Highway and Auto Safety.
Sweet Victory for Consumers
President Obama Signs Raechel and Jacqueline Houck Safe Rental Car Act
Work still needed to close car dealers' "Loaner car loophole"
Raechel and Jacqueline Houck were killed by a recalled rental car
After over 5 years of battles, the U.S. Congress passed the Raechel and Jacqueline Houck Rental Car Safety Act in the federal Highway Bill, known as the "DRIVE Act," and President Obama signed it into law. The Act is scheduled to take effect next June. It will prohibit nearly all rental car companies, including many car dealers, from renting, loaning, or selling recalled vehicles until the safety defects have been repaired. Existing federal law prohibits dealers from selling recalled new vehicles, but there was no similar federal law regarding rentals and loaner cars.
The new law is a major new expansion of the National Highway Traffic Safety Administration's authority over safety recalls. For the first time, the agency will be able to police used vehicles provided by rental car companies, including car dealers, as rentals or loaners. Nearly all vehicles rented or sold by rental car companies will be required to be safe. Rental car companies are the largest purchasers of new cars in North America. They are also among the largest sellers of used cars. So this means that millions of used cars will also be safer, when they re-enter the used car market. However, thanks to a last-minute loophole added at the behest of auto dealers, the Act would apply only if the company rents or loans a fleet of 35 or more vehicles, on average – exempting many auto dealers. If a dealer rents, loans, or sells an unsafe recalled car, it would still be a violation of various state laws, but NHTSA is not able to enforce those laws.
Cally Houck has been a tireless advocate for improving rental and loaner car safety
“I'm thrilled that we've finally passed the Rental Car Safety Act named for my beautiful, treasured daughters, Raechel and Jacqueline. But I'm worried about the loaner car loophole for car dealers and remain committed to closing that dangerous safety gap,” said Cally Houck, Mother of Raechel and Jacqueline Houck, who were ages 24 and 20 when they were killed by a recalled rental car.
The leading champions for passage of the Act were U.S. Senators Schumer, Boxer, McCaskill, Nelson, and Blumenthal, and Representatives Capps, Schakowsky, Butterfield, and Jones. The Senate measure was also co-sponsored by Senators Casey, Feinstein, Gillibrand, and Markey. The Obama Administration was also strongly supportive of passage.
Sweet Victory! Greg Houck, Cally Houck, and U.S. Senator Charles Schumer commemorate passage of Raechel and Jackie's law. Sen. Schumer was a leading champion of the law.
Thanks to the new law, the National Highway Traffic Safety Administration will be able to police rental car companies and dealers who have fleets of 35 or more rentals or loaner vehicles, and fine them if they violate the law – preventing tragedies like the crash that killed Raechel and Jackie.
The Senate and House both rejected attempts by the auto manufacturers and car dealers to kill the bill, or to allow rentals and loaners of recalled vehicles with “disclosure,” which would merely shift liability onto the victims of unsafe vehicles. The rental car industry, including Enterprise, Hertz, Avis, Dollar-thrifty, Alamo, National, and the American Car Rental Association, as well as many smaller rental car companies, helped persuade lawmakers to vote for the Act, and worked alongside Cally Houck and CARS for passage of the new law. The lone exception was the owner of Rent-a-Wreck, Jack Fitzgerald, a car dealer, who actively opposed the bill and lobbied against its passage.
US Rep. Roger Williams (R-Texas), a car dealer, introduced a special-interest amendment to exempt car dealers from the bill, and to allow them to rent or loan unrepaired recalled vehicles regardless how unsafe they are, or how many people they have maimed or killed, without having to worry about NHTSA enforcement. U.S. Rep. Lois Capps (D-CA), and Rep. Jan Schakowsky (D-IL) argued against the dealer loophole on the House Floor, pointing out that the amendment would mean that consumers who take a recalled car to a dealer for repairs could be loaned another recalled car with the exact same defect. Despite polling showing that the public overwhelmingly opposes this loophole, the Williams amendment passed near midnight, with few Representatives left on the House floor to cast votes, by a voice vote, with some voting “No.”
Greg Houck, Cally Houck, Senator Barbara Boxer, and Pamela Gilbert (who represents CARS in Washington, DC), celebrate passage of the Raechel and Jacqueline Houck Safe Rental Car Act. Sen. Boxer was a leading champion of the law.
While Rep. Williams claimed that the loaner loophole would apply only to minor problems that do not affect safety, it would actually apply to ALL safety recalls, including defects such as catching on fire, brake failures, loss of steering, stalling in traffic, wheels that fall off, axles that break, child safety seat anchors that fail, seat belts that break apart in a crash, and air bags that spew shrapnel that blinds people and slices into their necks, causing them to bleed to death.
Rep. Williams also claimed that no dealer would loan or sell an unsafe vehicle. However, many news reports have exposed cases where dealers have handed customers the keys to vehicles with potentially lethal safety defects, causing crashes and even catching a home on fire. In one tragic crash, four family members were killed by an unsafe Lexus loaner car. In Texas, Carlos Solis was killed by a recalled used car with an exploding Takata air bag when a dealer failed to get the car repaired prior to sale. CarMax, the largest retailer of used cars in the nation, openly admits that it sells large numbers of unsafe recalled vehicles without bothering to get the free safety recall repairs done first.
According to the National Highway Traffic Safety Administration, “All safety recalls resulting from defects present an unreasonable risk to safety and we believe it is inappropriate to suggest that some defects are not risky enough to require repair. For the safety of the motoring public, all recalled vehicles should be fixed promptly.”1
SCally Houck, Rep. Lois Capps, Greg Houck, and Pamela Gilbert (who represents CARS in Washington, DC), commemorate passage of Raechel and Jackie's Law. Rep. Capps was a leading champion of the law.
Recently, the Campaign Legal Center urged the House Ethics Committee and the Office of Congressional Ethics (OCE) to review Texas Republican Rep. Roger Williams' conduct in authoring a special-interest amendment that would benefit his own business, as a car dealer.
The Act will improve both rental car and used car safety, by reducing the numbers of recalled rental and used cars that re-enter the used car market. However, Congress failed to close the used car safety gap, due to heavy opposition from the National Automobile Dealers Association.
To its credit, AutoNation has publicly announced that they guarantee a recall-free vehicle, including used cars. They have also announced that they will not penalize consumers who trade in a vehicle with an open recall by dinging them over the price.
NEWS for immediate release: December 1, 2015
Contact: Rosemary Shahan, President, CARS, 530-759-9440
Congress Nears Passage of Rental Car Safety Act in Highway Bill
Safety advocates seek to close dangerous loaner car loophole
After over 5 years of battles, the U.S. Congress is nearing passage of the Raechel and
Jacqueline Houck Rental Car Safety Act in the federal Highway Bill that is expected to be voted upon
this week. The Act would prohibit nearly all rental car companies, including many car dealers, from
renting, loaning, or selling recalled vehicles until the safety defects have been repaired. Existing federal
law prohibits dealers from selling recalled new vehicles, but there is no similar law regarding rentals.
Raechel and Jacqueline Houck were killed by a recalled rental car
Passage would be a major new expansion of NHTSA's authority over safety recalls. For the
first time, the agency would be able to police used vehicles provided by rental car companies, including
car dealers, as rentals or loaners – but thanks to a last-minute loophole added at the behest of auto
dealers, the Act would apply only if the company rents or loans a fleet of 35 or more vehicles, on
average – excluding many auto dealers.
“I'm thrilled that we're finally close to passage of the Rental Car Safety Act named for my
beautiful, treasured daughters, Raechel and Jacqueline. But I'm worried about the loaner car loophole
for car dealers and remain committed to closing that dangerous safety gap,” said Cally Houck, Mother
of Raechel and Jacqueline Houck, who were ages 24 and 20 when they were killed by a recalled rental
The leading champions for passage of the Act are Senators Schumer, Boxer, McCaskill, Nelson,
and Blumenthal, and Representatives Capps, Schakowsky, Butterfield, and Jones. The Senate measure
was also co-sponsored by Senators Casey, Feinstein, Gillibrand, and Markey. The Obama
Administration has also been strongly supportive of passage.
Thanks to this provision, the National Highway Traffic Safety Administration will be able to
police rental car companies and dealers who have fleets of 35 or more rentals or loaner vehicles, and
fine them if they violate the law – preventing tragedies like the crash that killed Raechel and Jackie.
Currently, it is a violation of state laws for rental car companies or dealers to engage in such practices,
but generally those laws are not enforceable by individual consumers or their survivors unless they
have suffered damages, such as property damage, personal injury, or death. NHTSA will be able to act
without having to wait for a crash to occur.
The Senate and House both rejected attempts by the auto manufacturers and car dealers to kill
the bill, or to allow rentals and loaners of recalled vehicles with “disclosure,” which would merely shift
liability onto the victims of unsafe vehicles. The rental car industry, including Enterprise, Hertz, Avis,
Dollar-thrifty, Alamo, National, and the American Car Rental Association, as well as many smaller
rental car companies, helped persuade lawmakers to vote for the bill. The lone exception was the owner
of Rent-a-Wreck, Jack Fitzgerald, a car dealer, who actively opposed the bill and lobbied against its
US Rep. Roger Williams (R-Texas), a car dealer, introduced a special-interest amendment to
exempt car dealers from the bill, and to allow them to rent or loan unrepaired recalled vehicles
regardless how unsafe they are, or how many people they have maimed or killed, without having to
worry about NHTSA enforcement. U.S. Rep. Lois Capps (D-CA), and Rep. Jan Schakowsky (D-IL)
argued against the dealer loophole on the House Floor, pointing out that the amendment would mean
that consumers who take a recalled car to a dealer for repairs could be loaned another recalled car with
the exact same defect. Despite polling showing that the public overwhelmingly opposes this loophole,
the Williams amendment passed near midnight, with few Representatives left on the House floor to cast
votes, by a voice vote, with some voting “No.”
Cally Houck has been a tireless advocate for improving rental and loaner car safety
While Rep. Williams claimed that the loaner loophole would apply only to minor problems that
do not affect safety, it would actually apply to ALL safety recalls, including defects such as catching on
fire, brake failures, loss of steering, stalling in traffic, wheels that fall off, axles that break, child safety
seat anchors that fail, seat belts that break apart in a crash, and air bags that spew shrapnel that blinds
people and slices into their necks, causing them to bleed to death.
Rep. Williams also claimed that no dealer would loan or sell an unsafe vehicle. However, many
news reports have exposed cases where dealers have handed customers the keys to vehicles with
potentially lethal safety defects, causing crashes and even catching a home on fire. In one tragic crash,
four family members were killed by an unsafe Lexus loaner car. In Texas, Carlos Solis was killed by a
recalled used car with an exploding Takata air bag when a dealer failed to get the car repaired prior to
sale. CarMax, the largest retailer of used cars in the nation, openly admits that it sells large numbers of
unsafe recalled vehicles without bothering to get the free safety recall repairs done first.
According to the National Highway Traffic Safety Administration, “All safety recalls resulting
from defects present an unreasonable risk to safety and we believe it is inappropriate to suggest that
some defects are not risky enough to require repair. For the safety of the motoring public, all recalled
vehicles should be fixed promptly.”1
Recently, the Campaign Legal Center urged the House Ethics Committee and the Office of
Congressional Ethics (OCE) to review Texas Republican Rep. Roger Williams' conduct in authoring a
special-interest amendment that would benefit his own business, as a car dealer.
The Act will improve both rental car and used car safety, by reducing the numbers of recalled
rental and used cars that re-enter the used car market. However, Congress failed to close the used car
safety gap, due to heavy opposition from the National Automobile Dealers Association.
To its credit, AutoNation has publicly announced that they guarantee a recall-free vehicle,
including used cars. They have also announced that they will not penalize consumers who trade in a
vehicle with an open recall by dinging them over the price.
1 Official statement issued by the National Highway Traffic Safety Administration, April 4, 2011
Car dealer Congressman's loophole for dangerous
recalled rental and loaner cars
Leads to call for ethics investigations
Defective Lexus loaner car kills 4 family members within hours of when Bob Baker car dealership hands CHP Officer Mark Saylor the keys
A nationally recognized government-ethics watchdog organization based in Washington, D.C., the Campaign Legal Center, is urging the House Ethics Committee and the Office of Congressional Ethics (OCE) to review Texas Republican Rep. Roger Williams' conduct in authoring a special-interest amendment that would benefit his own business, as a car dealer. He pushed the amendment through near midnight during debate on the House Floor over the Raechel and Jacqueline Houck Safe Rental Car Act. The amendment would grant car dealers a special exemption from the Act, allowing them to rent or loan unsafe recalled vehicles to the public, without having to wait to get the safety defects -- such as exploding Takata air bags, catching on fire, faulty brakes, or steering loss -- repaired first.
The Center stated in a news release: “Members creating carve-outs that directly benefit their own business interests severely undermines the public’s belief that Members of Congress are acting in the public interest,” said Meredith McGehee, Campaign Legal Center Policy Director. “The specific actions of Rep. Williams must be reviewed for compliance with current rules, but even if he did clear his amendment with the Ethics Committee, his actions are a prime example of why the current rules are both too weak and in need of further clarification.”
The Center issued a letter to Ethics Committee Chair Charles Dent (R-PA) and Ranking Member Linda Sanchez (D-CA) and OCE Co-Chairs David Skaggs and Judy Biggert, urging a review of Rep. Williams’ conduct. The Center also asked the Committee to recommend changes to clarify House rules concerning recusal [removing oneself from participating in the debate and / or vote] and conflicts of interest by Members.
NEVER trust that a dealer will have the safety recall repairs performed before selling you a car that is being recalled. Dealers are so eager to make a buck, fast, they are unwilling to delay sales long enough to get the safety recall repairs done -- for FREE.
Plus -- dealers are actively opposing legislation in Washington, DC and in California that would prohibit them from renting, selling, leasing, or loaning unsafe, recalled vehicles to consumers, unless the safety recall repairs have been performed first.
CARS' tips on how to buy a safe, reliable used car — without having to risk going to a dealer:
Did a dealer sell you an unsafe, recalled car? We want to hear your story. Contact CARS
Buyer Beware! Auto dealers' one-
sided contracts can ruin your life
Even if the car dealer breaks the law, you might not be able to get justice. Forced arbitration clauses hidden in the fine print can keep you tied up for years. The dealer often gets to pick the arbitrator who hears your case. CARS exposed how a dealer abused arbitration, after selling Jon Perz an unsafe car. CARS' video has received over 1.3 million views on YouTube. Jon and his attorney eventually won, but because of forced arbitration, Jon had to wait 8 years for justice:
Think this is outrageous? Call your member of Congress at 202-224-3121, and urge them
to vote for the Arbitration Fairness Act. More about the AFA, now pending before Congress: http://www.fairarbitrationnow.org
Here's what we're doing to bring
more attention to Jon's plight: