Contrary to the spin from unscrupulous car dealers, and erroneous reports in the news, it is illegal for car dealers to sell dangerous used cars with unrepaired safety recalls. Injured or misled consumers and their surviving family members who sue dealers that engage in such reckless practices usually win confidential settlements. The dealers insist on confidentiality to cover up their illegal activity.The legal settlements also are a telltale sign that the dealers know perfectly well what they are doing is illegal.
So if you discover that a crooked car dealer sold you an unrepaired recalled used car, you should get expert legal advice and fight back.
Here’s the scoop: There is a FEDERAL law against car dealers selling recalled NEW cars. There is a FEDERAL law against car dealers with fleets of 35 or more rental cars from renting, selling, or loaning recalled rental cars. But — while there is no FEDERAL law against car dealers selling recalled USED cars, if they do, they risk being held accountable under various STATE laws.
No less an authority than the U.S. Federal Trade Commission has noted:
“…state product safety, tort, and other consumer protection laws, provide important safeguards to consumers affected by defective cars.”
An attorney who advises auto dealers has also warned them that if they sell used recalled cars, they face serious sanctions under state laws. According to a report in Automotive News:
“There are theories of liability that plaintiff attorneys may attempt to attach to these vehicles, even if dealers are using good-faith efforts to identify potential open recalls,” says Shawn Mercer, a partner at Bass Sox Mercer, a Tallahassee, Fla., law firm that specializes in dealership franchise law. There is no federal law against selling a vehicle with an open recall. But “depending on the jurisdiction,” Mercer says, “potential liability can stem from violations of state laws or common law tort claims.” (Emphasis added)
The article also cautions car dealers:
“Selling a vehicle with an undisclosed safety problem makes for dissatisfied customers and can have legal repercussions, even if the dealership was unaware of the recall.” (Emphasis added)
One legal case that stands out, making the point that state law prohibits dealers and other businesses from failing to exercise due care, or acting with negligence, is Houck vs. Enterprise. Sisters Raechel and Jacqueline Houck were ages 20 and 24 when they visited their parents in Ojai, California. On their way back home to Santa Cruz, they were killed by an unrepaired recalled rental car — a Chrysler PT Cruiser that caught on fire, and also lost steering. They ended up colliding with an 18-wheeler semi-trailer truck.
Their parents sued Chrysler and Enterprise under state laws, for failing to exercise the common law duty of care, and for negligence, resulting in wrongful death. Eventually, on the eve of trial, Enterprise admitted 100% liability — under state laws. A jury awarded the Houcks $15 million in compensatory damages.
Years later, the President of the California New Car Dealers Association made the false claim that it wasn’t illegal for dealers to sell unrepaired recalled used cars. The Houcks’ attorneys wrote a scathing letter pointing out that violating state civil laws is illegal. The attorneys cited the unanimous jury decision in the Houcks’ favor, and also cited state laws against negligence and common law torts.
CARS worked closely with Cally Houck, Raechel and Jacqueline’s mother, to get a new federal law enacted to prohibit rental car companies or car dealers from renting, loaning, or selling unrepaired recalled cars. The battle lasted for years, with auto manufacturers and dealers actively opposing the bill, even after the rental car industry had dropped its opposition. But eventually we won.
That victory means that not only do rental car companies remain liable under state laws, but they also face enforcement by the National Highway Traffic Safety Administration (NHTSA), the nation’s premier auto safety agency.
Thanks to the passage of the Raechel and Jacqueline Houck Safe Rental Car Act, NHTSA now has the authority to issue fines or take other action if a rental car company with a fleet of 35 or more vehicles violates the law — even if no one is injured or killed as a result. Thus, the federal law works to help prevent more tragedies from happening.
CARS supports the ongoing efforts of Senators Blumenthal and Markey, and U.S. Representative Jan Schakowsky, to enact federal legislation to make it a violation of federal law, enforceable by NHTSA, for car dealers to sell unrepaired recalled used cars.
Meanwhile, victims of crooked dealers who play “recalled used car roulette” with their customers’ lives, should get legal advice and fight back, using existing state laws. It’s also important for state attorneys general to enforce the existing state laws against fraud, violations of express and implied warranties, and other provisions of law.
CARS applauds the District Attorney in Sedgwick County Kansas — one of the few law enforcement officials in the nation who is standing up to the powerful car dealer lobby in order to protect car buyers and others who share the roads.
Read More: The Wichita Eagle: Wichita car lot hit with $140,000 fine over business practices