C.A.R.S. Archives 2017

FOR IMMEDIATE RELEASE
October 15, 2019

INVESTIGATION FINDS 1 IN 9 USED CARS FOR SALE AT AUTONATION
HAVE UNREPAIRED SAFETY RECALLS

WASHINGTON -- AutoNation, America's largest auto retailer, is selling used vehicles with unrepaired safety recalls including explosive Takata airbags, faulty GM ignition switches and defects with no fix available. Unsafe Used Cars for Sale, a new report from U.S. PIRG Education Fund and the Consumers for Auto Reliability and Safety (CARS) Foundation, found that 1 in 9 cars for sale at AutoNation dealerships across the country have unrepaired defects that make them dangerous to drivers, passengers and others who share the roads.

"By selling recalled cars with safety defects, AutoNation puts customers in danger before they even reach home," said Adam Garber, U.S. PIRG Education Fund's Consumer Watchdog. "The only way that AutoNation can ensure a 'worry-free' purchase is to repair every recalled vehicle before selling it."

The survey found numerous unsafe cars among more than 2,400 vehicles analyzed at 28 dealerships in 12 states. The recalled vehicles had defects that could cause vehicles to stall in traffic, seat belts to fail, Takata air bags to propel metal fragments at passengers, cars to catch on fire, or steering to malfunction.

Other findings include:

Nearly 1 in 5 used vehicles at the Chrysler Jeep West (Colo.) dealership had unrepaired recalls. At four other dealerships, more than 1 in 6 used vehicles contained an unrepaired safety recall.
Dealers charge extra for "certified" pre-owned vehicles with extra rigorous inspections, but we found 14 of those vehicles still had unfixed recall hazards.
At the time of the analysis, 47 vehicles for sale were under recalls for which automakers indicated that no fix was available.

U.S. PIRG Education Fund has a new guide to help you determine if the used car you're looking at has unrepaired recalls. If it has an unrepaired recall, the consumer organization recommends not purchasing the vehicle.

"Whenever you buy a car from a duly licensed car dealership, whether it's new or used, you shouldn't have to worry that they're deliberately selling you a car they know has a killer safety recall defect they failed to get repaired for free," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety.

In 2015, AutoNation's then-CEO pledged not to sell any used car with an unresolved safety recall, stating, "These are not that the wrong tire-pressure sticker is on the car or some other little minor item...These are significant safety recalls, and we feel the time has passed that it's appropriate to take a vehicle in trade with a significant safety recall and turn around the next day and sell it to consumers." That pledge lasted less than a year and a half. In 2016, the company announced since the Trump Administration would not address this issue, AutoNation would start selling unsafe recalled used vehicles to consumers.

By selling used vehicles with unfixed recalls, AutoNation and other dealerships may be violating state laws designed to protect consumers from unfair and deceptive practices, fraud or false advertising, violations of express or implied warranties, failures to comply with the common law duty of care, acting with negligence, or causing wrongful death.

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NEWS for Release: Monday, July 15, 2019

Car Dealers Attack Massachusetts Protections
Against Dangerous Recalled Used Cars

          Leading consumer advocates testified before the State House Joint Committee on Consumer Protection today against a bill that would drastically weaken state consumer protection laws by allowing car dealers to sell dangerous used cars with unrepaired safety recalls. The bill, which is part of a nationwide push by car dealers and their trade associations, allows car dealers to sell recalled used cars if they merely provide a "written disclosure" (in English only) "at the time of sale" that the vehicles have an unrepaired safety recall

          HB262 / SB 179, An Act further regulating business practices between motor vehicle dealers, manufacturers, and distributors was filed by Rep. Daniel Hunt and Sen. Marc Pacheco.

          "This special interest bill poses a serious threat to the safety of everyone who shares the roads in our state - not only used car buyers and their families, but also pedestrians, bicyclists and other motorists," said Deirdre Cummings, Legislative Director for MASSPIRG, the state's leading non-profit consumer advocacy organization. "If this bill were to pass, our state would become a dumping ground for unsafe recalled cars."

          Cars under open safety recalls can be deadly. For example, a General Motors recall for a defective ignition switch has been linked to at least 124 deaths. Defective Takata airbag inflators have been linked to at least 23 deaths and more than 230 injuries, including blindness.

          "Automakers are only required to recall if a defect represents an unreasonable safety risk to motorists. If a defect doesn't rise to this level, manufacturers issue technical bulletins or customer satisfaction campaigns. This means that every recall represents a serious safety hazard." said Sean Kane, President of the Board of Directors of The Safety Institute, one of the nation's leading auto safety experts.

          Under the proposed legislation, dealers could legally sell recalled used vehicles with defects such as:

Brake failure
Catching on fire
Sticking accelerator pedals

Steering wheels that come off in the driver's hands
Wheels that fall off
Takata airbags that explode and spew metal shrapnel into people's faces and necks, causing blindness, or making them bleed to death
Hoods that fly up without warning and obscure the driver's vision

"Massachusetts' consumer protection laws have helped protect consumers in the commonwealth for approximately a half a century. To allow an exception for car dealers to sell used cars without repairing known defects would drive a large, dangerous hole in Massachusetts law," said Andrew Nebenzahl, a consumer attorney in Sharon, MA, who represents victims and survivors of auto safety defects, testifying on behalf of the Massachusetts Academy of Trial Attorneys.

Consumers in Massachusetts and other states have been suing car dealers who sold them recalled used cars, citing various state laws, and winning in court or receiving confidential settlements. According to the Federal Trade Commission, "…state product safety, tort, and other consumer protection laws, provide important safeguards to consumers affected by defective cars." Massachusetts Attorney General Maura Healey also cracked down on a car dealer who repeatedly sold used cars that were defective and unsafe, in violation of existing state laws against such practices.

Under current law, Massachusetts requires car dealers to warrant that the used cars they sell for over $700 are "safe to operate on the roads." State laws also prohibit dealers from engaging in unfair and deceptive acts and practices, such as claiming a vehicle has passed a rigorous inspection when in reality it has potentially lethal safety defects. In addition, car dealers are prohibited from violating express or implied warranties, acting with negligence, failing to comply with the common law duty of care, or causing wrongful death.

"This bill is an open invitation for car dealers to play 'recalled car roulette' with their customers' lives," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS), a non-profit auto safety and consumer advocacy organization based in Sacramento, Calif. CARS has been on the forefront in opposing similar car dealer "license to kill" legislation in Massachusetts and other states.

Dealers have pushed similar legislation in California, New Jersey, Virginia, New York, Oregon, Pennsylvania, Tennessee and Maryland. Faced with a firestorm of opposition from safety advocates and parents of children killed by recalled cars, those bills were either defeated or amended to remove the harmful provisions in all the states except for Pennsylvania and Tennessee. The car dealers' strategy to undermine state consumer protection laws was recently exposed in a USA Today/Public Integrity report, The Multi State Push to Let Dealers Get Away With Selling You a Defective Car.

Polling by Public Policy Polling has repeatedly shown, in state after state, including Massachusetts, that likely voters overwhelmingly oppose allowing dealers to sell unrepaired recalled cars, with or without "disclosure," with over 88% opposing such legislation.

Massachusetts U.S. Sen. Edward Markey and Connecticut Sen. Richard Blumenthal recently introduced legislation to add a federal prohibition against car dealers selling, leasing or loaning unrepaired recalled used cars.

Click here for full testimony and supporting organizations.

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News release issued by Senators Richard Blumenthal and Edward Markey:

For Immediate Release
June 26, 2019

***VIDEO***
BLUMENTHAL & MARKEY INTRODUCE LEGISLATION TO PROTECT CAR SHOPPERS FROM BUYING, LEASING, OR LOANING UNSAFE USED CARS

The Used Car Safety Recall Repair Act would close a safety loophole that poses large risk to American drivers & families

[WASHINGTON, D.C.] – U.S. Senators Richard Blumenthal (D-CT) and Edward J. Markey (D-MA) introduced the Used Car Safety Recall Repair Act to ensure used vehicles with unrepaired safety recalls are repaired before being sold, leased, or loaned to consumers. The bill requires used car dealers to repair any outstanding safety recalls in used automobiles prior to selling, leasing, or loaning them to consumers. Current federal law does not prohibit car dealers from selling cars with outstanding recalls despite the incredible risk posed to the safety of everyone on the road. State laws exist that prohibit the selling of unsafe vehicles, but these laws are not being adequately enforced. The legislation addresses this unacceptable gap in consumer protection that confuses car buyers who believe they are buying a product with safety assurances, and threatens the lives of everyone on our nation's roads.

Blumenthal announced his intent to introduce the Used Car Safety Recall Repair Act at yesterday's U.S. Senate Commerce Subcommittee on Transportation and Safety hearing. Full video of Blumenthal's comments highlighting the importance of the bill is available here.

"Consumers shouldn't be sold or leased used cars with unrepaired safety issues. This bill will ensure auto-dealers repair dangerous and defective used cars before letting their customers drive them off the lot and onto our roads," Blumenthal said. "This is a no-brainer measure to protect American consumers and our roads from unsafe cars."

"All cars – whether they are brand new or used – need to be safe before they leave the lot," said Markey. "I am pleased to work with Senator Blumenthal on this important legislation that will make sure unrepaired cars subject to an outstanding recall are not on our roads. Closing this loophole is a critical step toward improving safety for drivers, passengers, and pedestrians.

The bill is supported by Consumers for Auto Reliability and Safety, the Center for Auto Safety, Consumer Federation of America, and Advocates for Highway and Auto Safety.

"Passage of this important auto safety legislation will close a gaping safety loophole in federal law. Meanwhile, consumers victimized by dealers who play 'recalled car roulette' should fight back, using existing state consumer protection laws against such dangerous practices," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety.

"Vehicles with unrepaired recalls are unsafe for drivers, passengers, pedestrians, bicyclists, and everyone on the road. Whether the vehicle was purchased new or used the danger is the same from non-deploying or exploding airbags, ignition switch failures causing a loss of motive power, or preventable vehicle fires. We are glad the Used Car Safety Recall Repair Act will address this unnecessary loophole millions of unsafe used cars fall through every year," Jason Levine, Executive Director, Center for Auto Safety.

"The sale, lease or loan of used cars with known safety defects is a dangerous practice that potentially puts millions of drivers at risk. Recent high-profile recalls, as well as past efforts to cover up safety defects, have led to tragic loss of life and needless injuries. Senators Richard Blumenthal (D-CT) and Ed Markey (D-MA) are to be commended for introducing a commonsense measure that will keep vehicles with unrepaired recalls off the roads. We urge Congress to pass the Used Car Safety Recall Repair Act to close this loophole. Second-hand cars should not mean second-rate safety," said Cathy Chase, President, Advocates for Highway and Auto Safety.

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Beware of car dealers selling deathtrap cars

An exploding Takata airbag in a recalled Honda almost killed Stephanie Erdman. Greedy dealers like CarMax and AutoNation sell hazardous vehicles without getting FREE repairs to fix deadly safety recall defects. Don't fall prey to their scams.

Unscrupulous car dealers like CarMax are selling huge numbers of hazardous vehicles without getting their employees to drop them off at a nearby car dealership to have the deadly safety recall defects repaired, for FREE.

Consumers for Auto Reliability and Safety is spearheading the fight to stop corrupt legislators from allowing greedy car dealers to get away with selling dangerous recalled used cars to consumers, putting lives at risk. We're fighting back against the powerful car dealer lobby in state legislatures coast to coast, in the courts, through online petitions, and in the news.

So far, CARS and our coalition partners have won against the crooked car dealers in California, New Jersey, New York, Maryland, Massachusetts, and Virginia. The only states where the dealers have won are Tennessee and Virginia.

But even though it's illegal for car dealers to sell unrepaired recalled used cars, many car dealers violate state laws and do it anyway.

Did a car dealer sell you a dangerous unrepaired recalled used car? Except in TN and PA, that is illegal, thanks to state consumer protection laws. Courageous consumers who were defrauded or injured because a car dealer sold them a hazardous vehicle without getting the safety recall defects repaired first have been suing car dealers and winning. Usually the cases tend to settle out of court. If a car dealer sold you a dangerous recalled used car, we want to hear your story. Here's where to contact CARS to tell us what happened to you. Together, we can help save precious lives and prevent horrific injuries.

NEWS: For Immediate Release: Tuesday, August 21

Consumer, Safety, Civil Rights, and Environmental Groups Raise Alarm Over Recalled Cars Legislation

          Consumer, safety, civil rights, and environmental groups raised alarms today about legislation that would allow car dealers to get away with selling dangerous unrepaired recalled used cars in New Jersey with safety defects that have killed and maimed people, and that fail to comply with emissions standards. The bills, S2740 and A4292 are on the brink of passage. S2740 was introduced and passed 29-5 in the Senate toward the end of July. The Assembly companion bill, A4292, is scheduled for a hearing before the Assembly Consumer Protection Committee in early September.

          "These bills would allow car dealers to play 'hazardous recalled car roulette' with the safety of New Jersey motorists and their families, and others who share the roads," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS), a non-profit auto safety organization based in Sacramento, California.

          "These bills are anti-safety and anti-consumer, and put lives at risk." said Beverly Brown Ruggia, Financial Justice Organizer, New Jersey Citizen Action. "There are unscrupulous businesses engaged in unfair, deceptive, and abusive practices. These bills sanction these practices. New Jersey consumer protection laws must remain strong and should always put consumers' personal and financial well-being above industry profits. Our assembly members should not advance this legislation."

          "People of color are more commonly the victims of unscrupulous auto dealers because they intentionally prey on our communities and because we purchase a larger percentage of used cars," said NJ NAACP Economic Development Chairman Bruce Davis. "Consumers that typically need to get to work and who don't have the best credit or a lot of experience making major purchases are speed-rushed through a process that involves swarming them with paperwork and overwhelming them with different cars and more options. This can be confusing and highly emotional, leading to these consumers making uninformed and inappropriate decisions. It is deplorable that any business owner would target vulnerable customers to maximize their profits. Anyone who supports this bill is at the least a co-conspirator to illegal misrepresentation."

          "Car dealers shouldn't be able to unload lemons on consumers merely by disclosing defects. Often clunker cars have emissions issues that need repair, but the owner might not know until the next emissions test," said Doug O'Malley, director of Environment New Jersey. "Car dealers shouldn't put used cars back on the road without fixing safety and environmental defects."

          Trinity Wixner, of Toms River, NJ described her car buying experience. On Friday, her attorney filed a lawsuit against Lester Glenn Chrysler Dodge Jeep in Toms River, alleging violations of New Jersey laws that prohibit negligence, violations of express and implied warranties (including the warranty of merchantability), breach of duty of care, and fraud.

          "If the car dealers' bills pass, dealers who sell unsafe cars will be able to get away with it, and consumers like me won't be able to fight back to get justice," said Trinity Wixner of Toms River, New Jersey.

          Last July, she purchased a Dodge Challenger from Lester Glenn Chrysler Dodge Jeep, for over $33,000. She was 20 years old, and it was the first time she shopped for a car on her own. The Challenger was sold to her as a "Chrysler Certified" vehicle that had undergone a 125-point inspection and was free from safety recalls. She was also given a copy of a Carfax report that dated from May, that indicated the car had no unrepaired safety recalls.

          However, according to the safety recall notice for Ms. Wixner's Challenger from the website for the National Highway Traffic Safety Administration, Chrysler issued a safety recall for that vehicle on June 9, 2017 – nearly a month before it was sold to her. Chrysler sent letters to owners of the recalled vehicles alerting them that their cars had a defective alternator and were prone to stalling in traffic without warning, increasing the risk of a crash, and could also short-circuit and catch on fire. The dealership failed to perform the safety recall repair, and also did not tell her about the unrepaired safety recall, which at that time had no remedy available.

          Ms. Wixner found out about the safety recall in November, when she attempted to trade it in at a Chevrolet dealership in Cherry Hill. The manager refused to purchase it, showing her the recall notice and explaining they would be unable to sell it to another consumer in that condition. When she returned to Lester Glenn Dodge, they refused to perform the safety recall repairs until she paid them $800 out of pocket. Under federal law, auto manufacturers are required to ensure that safety recall repairs are performed at no cost to the owners, for at least 15 years after the safety recall is issued.

          "Car dealers who sell unsafe recalled used cars to New Jersey consumers currently face some tough sanctions that work to deter that illegal behavior, and enhance public safety. But if the dealers' bills pass, consumers can kiss their rights good-bye," said Michael F. Niznik, a New Jersey and Pennsylvania consumer protection attorney who is representing Trinity Wixner in her legal case against Lester Glenn Chrysler Dodge.

          Facing increasing numbers of lawsuits filed by consumers who were sold unsafe recalled used cars, and by surviving family members who lost close relatives who were injured or killed due to unrepaired recalled used cars, car dealers have sought to undermine existing state consumer protection laws, and case law, under the guise of requiring dealers to provide "disclosure" – shifting the legal liability onto their victims.

          Statewide polling conducted in New Jersey in 2015 when Assemblymember Moriarty carried a similar "disclosure" bill for the car dealers, that failed to pass, found that likely voters overwhelmingly oppose allowing dealers to sell unrepaired recalled cars, with or without "disclosure."

All but two of the states where dealers have induced legislators to carry their bills have rejected them, or the harmful language was stripped out before passage, including New Jersey (in 2015), California, Virginia, Maryland, Oregon, and most recently, New York and Massachusetts. Realizing the bills are wildly unpopular, in an effort to avoid public scrutiny, dealers and the authors of their bills have resorted to quietly moving them through at the last minute or during budget battles. So far, Tennessee and Pennsylvania are the only states where the dealers succeeded in gaining passage of their anti-consumer bills. States that enacted car dealer "license to kill" legislation are likely to become dumping grounds for dangerous, defective cars that pose a threat to the safety and health of others who share the roads, or breathe the air.

The New Jersey bill is even worse than similar bills in other states, because they also include provisions that would make it impossible for private attorneys or the Attorney General to recoup the costs of representing consumers who purchase used cars against dealers who defraud them, by capping attorneys fees at a low percentage of actual damages, essentially giving car dealers anexemption from New Jersey's tough anti-fraud statute.

Links

Letters of opposition to the car dealer bills, A4292 / S2740 from:

Summary about Trinity Wixner's car buying experience, with links to relevant documents

Lawsuit filed on behalf of Trinity Wixner vs. Lester Glenn Dodge et. al.

NEWS For Immediate Release: Monday June 18, 2018

Safety Organizations Given Green Light to Present Arguments in U.S. Federal Court Battle vs. FTC over GM, CarMax, and Other Car Dealers' Sales of Unrepaired Recalled Used Cars

          WASHINGTON, D.C. Leading auto safety organizations now have the green light to present oral arguments before the U.S. Federal District Court in their case against the Federal Trade Commission.
Last Thursday, the Court ordered the consumer groups and the FTC to appear and present oral arguments on August 16.

          Consumers for Auto Reliability and Safety (CARS), the Center for Auto Safety, and U.S. Public Interest Research Group (USPIRG) sued the FTC after the agency finalized two sets of Consent Orders with GM, CarMax, and the Lithia, Koons, West-Herr and Asbury auto dealership chains, allowing them to advertise that unsafe used cars with unrepaired safety recall defects are "safe," "repaired for safety," passed a "rigorous inspection" and qualify to be sold as "certified" if they merely disclose that the vehicles "may" have an "open safety recall." The groups argued that the FTC was acting illegally, endangering the lives of the purchasers, their passengers, and others who share the roads.

          The FTC fought back, seeking to have the groups thrown out of court, arguing that since they are not parties to the Consent Orders, they lack legal "standing" to challenge the agency, no matter how harmful and dangerous the practices condoned by the Consent Orders are. However, at the same time, the agency itself signaled to the auto industry that the agency was, in effect, setting the standard for the industry as a whole. According to Jessica Rich, former Director of the FTC's Bureau of Consumer Protection, as quoted in Automotive News: "We really do hope these actions send a signal to the marketplace as a whole. We really do want it to have widespread effects." ¹

          Rather than grant the FTC's motion to dismiss the case as baseless, the U.S. District Court in Washington, DC, issued an order requiring the parties to appear and present oral arguments on August 16, on the FTC's motion to dismiss.

          "The Court's request for oral argument brings us one step closer to getting the FTC's illegal consent orders overturned, sending a message to GM, CarMax, and all car dealers that they cannot

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1    "Used car loophole for recalls tightens up," Automotive News, February 8, 2016. Posted at:
http://www.autonews.com/article/20160208/RETAIL04/302089962/used-car-loophole-for-recalls-tightens-up

engage in false advertising about the safety of dangerous, defective recalled used cars," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety.

          The FTC's Consent Orders would also allow conduct by General Motors that has been prohibited by conflicting Settlement Agreements between GM and the Attorneys General of 49 states and the District of Columbia, which expressly prohibit GM and its dealers from advertising vehicles with unrepaired safety recalls as "certified." Under the Agreements with the attorneys general, GM is permanently enjoined from engaging in that dangerous and false advertising, and is required to instruct its dealers to also refrain from such conduct.

Final Judgment and Permanent Injunction between Attorneys General of 49 States and the District of Columbia and General Motors (see especially pages 8-9).

          It is illegal in all 50 states for car dealers to sell dangerous vehicles to the public, whether their conduct is deliberate or negligent, under various state consumer protection laws. Currently, auto dealers are attempting to get legislation enacted in Massachusetts, New York, Pennsylvania, and New Jersey to eliminate state consumer protection laws against selling unrepaired recalled cars, and allow them to sell them with "disclosure," shifting liability for deaths and injuries onto their victims. The bills are being opposed by auto manufacturers, and by many leading consumer / safety organizations.

          Similar legislation has been defeated in other states, including California, Maryland, Virginia, and New Jersey, where the harmful "disclosure" provisions were stripped from the bills, or they failed to pass. Polling in state after state shows overwhelming public opposition to allowing car dealers to sell recalled used car to consumers, with or without "disclosure," with between 80-90% opposed.

          The consumer groups are represented by the Washington, D.C. public interest firm, Meyer Glitzenstein & Eubanks.

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FOR IMMEDIATE RELEASE
April 23, 2018

Even After Multiple Wells Fargo Scandals, New Report Shows Bank's
Customers Get No Justice in Forced Arbitration

As Wells Fargo shareholders prepare to confront the bank's board on Tuesday at their annual meeting in Des Moines, Iowa, a new report released today by the Consumers for Auto Reliability and Safety Foundation, researched by the nonprofit arbitration database Level Playing Field, found that out of "at least 4.3 million victims of Wells Fargo's illegal activities, only 2 won in arbitration" against the bank last year. One consumer was in California, and the other in Connecticut. They were awarded a total of $17,232.

This new release updates a report from last year, which found that on average, consumers who arbitrated against Wells Fargo between 2009 and 2016 were ordered to pay the bank nearly $11,000. Both reports were commissioned by the Consumers for Auto Reliability and Safety (CARS) Foundation and researched by Level Playing Field, based on data private arbitration firms are required to make public, under California's arbitration disclosure law.

"The fact that just two consumers found any justice in arbitration, out of at least 4.5 million consumers Wells Fargo harmed, shows how crooked corporations exploit forced arbitration to steal from their victims. ," said Rosemary Shahan, President of CARS. "Consumers not bound by these rip-off clauses often get back thousands of dollars while those stuck in arbitration often get nothing – and could even end up owing money to the bank."

When Wells Fargo made headlines for opening 3.5 million fake accounts, reports revealed that customers had tried to sue the financial giant over this fraud since at least 2013. Rather than addressing its systemic wrongdoing, Wells Fargo moved to keep the scandal out of the public eye by forcing consumers to file individual claims in secret arbitration hearings. Despite widespread outcry, Wells Fargo continues to use forced arbitration in its contracts.

"While Wells Fargo says it wants to restore consumer trust, this new report exposes their real agenda," said Amanda Werner, campaign consultant with the CARS Foundation. "Forced

arbitration not only saves these corporations money – it often makes them money. They are not going to respect consumer rights until those rights are restored and consumers can once again force them to abide by the law.."

The report was released today at a news conference in front of Wells Fargo's offices in San Francisco with California Treasurer John Chiang, who has been in the forefront in confronting Wells Fargo over its illegal activity, including co-sponsoring landmark legislation enacted in California that frees victims of fake accounts created through fraud, identity theft, forgery, or other illegal acts to seek justice in a court of law. That law, SB 33, authored by Senator Bill Dodd (D-Napa), was vehemently opposed by big banks and their influential trade associations, but passed despite their opposition and took effect last January.

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NEWS for immediate release: Friday April 13, 2018

Jury Awards over $500,000 to Owner of 2014 Ford Focus,
Finds Ford Defrauded Consumer over Faulty Transmission

Los Angeles: A California jury voted 11-1 to award Ariel Myers of Los Angeles, CA, over $550,000 from Ford Motor Company, after finding that Ford had committed fraud by concealing that the transmission in his 2014 Ford Focus was seriously defective, inducing him to purchase the car, despite a history of massive numbers of transmission failures in China, where Ford sold the vehicles before offering them for sale in the U.S. The verdict was delivered on Friday, April 6.

Myers purchased the Focus brand new from a Ford dealer in Montebello on July 29, 2014, for $40,007, including add-ons and financing. Within three days, the transmission began to slip and "shudder." He took the Focus back to the dealer for repairs. But despite numerous repair attempts, the transmission continued to shudder, overheat, and slip, making the car dangerous to drive. Myers drove the car to work, and he also drove his mother to her medical appointments, including dialysis. One day when the transmission was overheating, she had to miss an appointment because they were stuck on the side of the road because of the defective transmission.

When Myers requested a refund, Ford refused. Eventually, Myers hired the Knight Law Group to represent him. Just before the jury was selected, Ford admitted it had willfully violated California's Song-Beverly Consumer Warranty Act, also known as the "lemon law." Because the violations were willful, Ford agreed to refund Myers' actual, incidental, and consequential damages, plus the maximum allowable two-time civil penalty, totaling over $145,000, plus attorneys' fees and other costs.

Myers sued Ford for defrauding him, by concealing the transmission's history of known defects and malfunctioning at an extremely high rate. Despite this knowledge, Ford continued to manufacture and sell Focus vehicles with the defective design. Unlike typical automatic transmissions, the Focus transmissions, known as "DPS6," lack a torque converter that assists in providing a smooth transition between gears. Instead, they are designed with a "dry dual clutch" that is prone to slipping.

# # #

FOR IMMEDIATE RELEASE
March 21, 2018

35 Groups Urge California Attorney General to Crack Down on
Arbitration Firms Operating in Secret, Violating California Law

Today, 35 national and California-based consumer, labor, and civil rights organizations handdelivered a letter to California Attorney General Xavier Becerra, urging him to investigate the practices of private arbitration firms that operate in secret, in violation of state law. California Code of Civil Procedure section 1281.96 requires these firms to periodically publish basic information about claims they handle, to deter potential abuses and create a level of transparency in the notoriously secret forum.

The public interest in bringing accountability to secret arbitration proceedings has grown after a pitched battle in Congress last October resulted in the narrow repeal of a federal rule, issued by the Consumer Financial Protection Bureau, that would have barred banks and lenders from hiding claims of widespread fraud and other illegal activities by imposing forced arbitration. In recent months, Former Fox News anchor Gretchen Carlson, Uber whistleblower Susan Fowler, and other leaders in the #MeToo movement are pushing federal legislation to lift the veil of secrecy that perpetrators exploit by imposing arbitration, enabling them to repeatedly assault victims with impunity.

"As President Trump's lawyers continue to use secret arbitration to silence allegations against him, the public interest in transparency is clear," said Amanda Werner, campaign consultant with the Consumers for Auto Reliability and Safety (CARS) Foundation. "These firms have brazenly flouted California law for fifteen years. Attorney General Becerra not only has the power to hold arbitration firms accountable, he has a duty to pursue any company that undermines justice in our state."

In the letter, the 35 groups – including Americans for Financial Reform, the National Employment Law Project, UnidosUS, and the Consumer Federation of America – cite reports from the Public Law Research Institute at UC Hastings College of Law which found that no arbitration firm operating in California discloses all information required under the law. Nine of the 32 firms operating in the state do not provide any data at all.

Code of Civil Procedure section 1281.96 was originally enacted in 2003. In March 2013, the California Assembly Judiciary Committee held an oversight hearing to examine the practices of private arbitration firms. Finding widespread non-compliance with disclosure requirements, legislators passed AB 802 to require that the data be more complete and more readily accessible online. However, no Attorney General has yet enforced the California law.

In 2008, San Francisco City Attorney Dennis Herrera sued the National Arbitration Forum (NAF), based on data provided by NAF, "showing that consumers prevailed in just 30 cases out of more than 18,000 arbitrations that went to a hearing — less than two-tenths of one percent." In 2009, the Attorney General of Minnesota, Lori Swanson, brought an action against NAF, which eventually agreed to exit the consumer arbitration business, after Swanson uncovered evidence that NAF had ties to a hedge fund with an interest in the outcome of the disputes.

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NEWS: For immediate release: February 26, 2018

Contact: Rosemary Shahan, Consumers for Auto Reliability and Safety, 530-759-9440
          Robert Starr, attorney for consumer Tammy Gutierrez, 818-225-9040
          Michael Landis, U.S.PIRG, 303-573-5995 ext. 389
          Bernard Brown, auto fraud expert attorney, 816-283-3100
          Steven Taterka, Former Deputy Attorney General of Indiana, 615-952-3661
          Jason Levine, Center for Auto Safety, 202-328-7700

Consumer Wins Landmark Safety Recall Case Against CarMax
California Court of Appeals Rules in Favor of Consumer

          Tammy Gutierrez of Bakersfield, California has won an important victory against CarMax, arguing successfully that she had alleged valid claims that CarMax acted illegally when the auto giant sold her a car with an unrepaired safety recall. The modified ruling issued by the Fifth District Court of Appeal in Fresno on Thursday, February 22, is widely considered to be the first decision challenging the legality of car dealers selling unrepaired recalled used cars that led to a state appellate court ruling.

          "I appreciate the Court's ruling in favor of my client," said Robert Starr, who represented Ms. Gutierrez against CarMax. "I believe that used car buyers deserve the same protections from unsafe, defective recalled cars as new car buyers." Ms. Gutierrez initially filed her case against CarMax without an attorney, then obtained legal representation after CarMax fought back in court.

          The three-judge panel ruled 2-1 that Ms. Gutierrez's complaint stated a valid legal claim that CarMax violated California's Consumer Legal Remedies Act and the state's Unfair Competition Law (which also prohibits unfair and deceptive acts and practices)¹ when it sold Ms. Gutierrez a 2008 Hyundai Elantra with an unrepaired safety recall. The Court's ruling overturned a decision rendered by a lower court. The Court awarded Ms. Gutierrez costs for the appeal and sent the case back to the lower court to proceed with her suit.

          In response to a request from Consumers for Auto Reliability and Safety and attorneys who represent victims of auto fraud in California, the Court of Appeal modified its ruling on February 22, regarding the implied warranty of merchantability. The new ruling shows a path for victims of such practices who allege that recalled vehicles fail to comply with the implied warranty of merchantability,

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1   California Business and Professions Code 17200: "As used in this chapter, unfair competition shall mean and include any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code." Such laws are common in 49 states, and are often referred to as "UDAP" statutes.

and are therefore unfit for sale to the public as transportation, to provide additional relevant facts concerning the safety defects.

          CarMax advertises widely that it subjects each vehicle to a rigorous inspection and "reconditions" vehicles before they qualify to be sold as "CarMax Quality Certified" vehicles. Ms. Gutierrez purchased the dangerously defective Hyundai on May 6, 2013, from CarMax in Bakersfield, CA, which advertised that the car had passed CarMax's "rigorous 125-point inspection." CarMax's inspection checklist included brake lights.

          However, prior to that sale, Hyundai had already recalled that Elantra due to a faulty brake light switch. According to Hyundai, the defective switch could "intermittently malfunction. A stop lamp switch malfunction may result in intermittent operation of the push-button start feature, intermittent ability to remove the vehicle's shifter from the Park position, illumination of the "ESC" (Electronic Stability Control) indicator lamp in the instrument cluster, intermittent interference with operation of the cruise control feature, and may also cause the brake lights to not illuminate when the brake pedal is depressed. Intermittent operation of the stop lamps could increase the risk of a crash."²

          "CarMax should stop violating state consumer protection laws and stop playing 'recalled used car roulette' with its customers' lives," said Rosemary Shahan, President of Consumers for Auto Reliability and Safety.

          "We hope that more consumers who have been placed in danger by CarMax or other auto dealers will seek legal advice, and challenge those reckless practices in court, under state consumer protection laws," said Michael Landis, Litigation Director for the U.S. Public Interest Research Group.

          "Fortunately, Ms. Gutierrez was not injured or killed, but there have been many serious injuries and deaths as a result of defects in recalled cars," said Jason Levine, Executive Director of the Center for Auto Safety. "Cars are recalled either because they are defective or because they are in violation of federal regulations. These are not cosmetic problems, these recalled vehicles can be dangerous to drivers, passengers, and everyone on the road."

          "This Court of Appeals ruling may be taken into account by other courts, including courts in other states, although it may not set a formal legal precedent in other jurisdictions," said Steven Taterka, former Deputy Attorney General of Indiana and former Assistant Attorney General of Tennessee who specializes in representing victims of auto fraud.

          "There are many ways it is obviously wrong for dealers such as CarMax to sell cars with unperformed safety recalls, and I believe many ways it is against existing law; now we have an appellate decision confirming one of the ways it is against existing law," said consumer attorney Bernard Brown, who teaches auto fraud litigation to other attorneys who represent victims of auto fraud.

          Among the findings by the Court of Appeals: CarMax had a "duty to disclose" the facts about the safety recall, but instead of full disclosure, "CarMax made partial representations about the vehicle's braking and lighting systems and those representations were likely to mislead for want of communication of the facts about the recall."³ – page 38 (emphasis added).

________________________
2   Hyundai Safety Recall Notice for owners of the recalled vehicles
3   Fifth Circuit Court of Appeal Modified Ruling in Tammy Gutierrez v. CarMax Auto Superstores, page 38, issued February 22, 2018.

This ruling is further evidence that the anti-consumer, anti-safety Federal Trade Commission's Consent Orders with CarMax and other dealers are not only unnecessary, but are worse than existing law. Those Consent Orders would allow the dealers to advertise and sell vehicles with unrepaired safety recalls as "safe," "repaired for safety," and having passed an inspection and qualified to be sold as "certified" if the dealers merely state that the vehicles "may" be subject to an "open safety recall," without having to repair the safety recall defects. Consumers for Auto Reliability, the Center for Auto Safety, and USPIRG have sued the FTC, seeking to have the Consent Orders overturned. That case is pending before the U.S. District Court in Washington, D.C.

CarMax is the largest retailer of used cars in the U.S. An in-depth report issued by the Consumers for Auto Reliability and Safety Foundation, Massachusetts Public Interest Research Group and the Frontier Group last year found that more than 27% of vehicles CarMax offered for sale in Connecticut, Massachusetts, and California had at least one unrepaired safety recall. One pickup truck CarMax offered for sale in Massachusetts had 6 unfixed safety recall defects.

Related links:

Court of Appeal's Modified ruling in Tammy Gutierrez vs. CarMax, with original ruling attached.

Hyundai Safety Recall Notice for brake light switch defect

Used Car Roulette: CarMax Doubles Down on Selling Unsafe Recalled Vehicles, issued by the Consumers for Auto Reliability and Safety Foundation, MASSPIRG Education Fund, and the Frontier Group, September, 2017

News release announcing lawsuit brought by Consumers for Auto Reliability and Safety, Center for Auto Safety, and U.S. PIRG against the FTC, over its anti-consumer, anti-safety Consent Orders

More than 98,000 people have signed a petition on Change.org calling on CarMax to stop selling unrepaired recalled cars.

###

Testimony of Rosemary Shahan, President,
Consumers for Auto Reliability and Safety

California State Senate Committee on Transportation and Housing
Informational Hearing
February 20, 2018

       Mr. Chair and Members, thank you for the opportunity to testify today. I am Rosemary Shahan, President of Consumers for Auto Reliability and Safety, perhaps best-known for initiating California's landmark auto lemon law, which became the model for similar laws enacted in all 50 states. When then-President Reagan's administration abdicated its responsibility to ensure public safety by deregulating the auto industry, and coddled auto manufactures who made seriously defective and unsafe vehicles, the citizens of California and all 50 states rose up and demanded that the manufacturers honor their warranties, and if they fail to fix the defects, they have to buy back the lemon cars.

       Since then, CARS has spearheaded enactment of numerous landmark laws to improve protections for Californians and the motoring public nationwide. Our experience gaining passage of landmark safety legislation in a Republican Congress may help shed some light on how federal legislation can work to enhance safety, when responsible members of the auto industry decide to put public safety first.

       In 2015, working alongside partners in the rental car industry, we won passage of the federal Raechel and Jacqueline Houck Safe Rental Car Act, sponsored by Senator Schumer and co-sponsored by Senators Boxer and Feinstein, and by Representatives Capps, as well as Members of Congress representing other states, and signed into law by President Obama, as part of the FAST Act. We worked closely with Raechel and Jackie's mother Cally Houck for passage, after her two daughters, ages 20 and 24, were killed by an unrepaired recalled rental car while driving back to Santa Cruz from visiting their parents in Ojai.

       At first, the rental car industry opposed the legislation, which for the first time gives the National Highway Traffic Safety Administration the authority to regulate the rental car industry regarding unsafe recalled cars, and prohibits rental car companies with fleets of 35 or more vehicles from renting, loaning or selling unrepaired recalled cars. To their credit, the rental car companies, who are the largest purchasers of new vehicles in North America, changed their position and lobbied Congress with us, asking to be regulated. They had the wisdom and foresight to realize that the public overwhelmingly expects that the vehicles they rent will be safe to drive, and it was in their own interest to make sure that their vehicles are indeed safe. We also had the strong support of the Obama Administration.

       Now we are faced with a new challenge, and that is how to regulate the burgeoning industry of developing autonomous vehicles, at a time when the Trump Administration is on a deregulatory binge, and the National Highway Traffic Safety Administration lacks the resources and expertise to do its vitally important job of protecting the American public from the pitfalls of premature deployment of new autonomous vehicle technologies. Unfortunately, the impending lack of federal oversight and the cut-throat competition to be first in offering autonomous vehicles threatens to not only result in unnecessary fatalities and injuries, but it may undermine the public's confidence in the promising new technology that is emerging, and harm the businesses that are placing risky bets in hopes of huge returns.

As the Committee's analysis points out, and as polling has shown, the public is already skeptical about autonomous vehicles. But Washington seems intent on realizing their worst fears.

       As the President of Advocates for Highway and Auto Safety, whose Board of Directors includes leading safety and health advocates and representatives of the nation's leading auto insurance companies, recently testified before Congress:

"….the process created in the AV START Act [S 1885] will allow untested and unproven AVs to be sold to the public without appropriate independent or governmental oversight to provide necessary protections to both those in the AVs and those sharing the roads with them. In addition, the AV START Act will potentially allow the sale of hundreds of thousands of AVs that are exempt from existing federal motor vehicle safety standards (FMVSS). In fact, longstanding federal law was recently amended to allow for an unlimited number of vehicles that are not in compliance with FMVSS to be tested on public roads, despite opposition from consumer, public health and safety organizations. This was a massive increase from the previous limit of 2,500 vehicles for most manufacturers… The AV START Act 'takes a wrong turn' by allowing for the sale of potentially millions of AVs to the public without minimum safety standards, without necessary consumer information so that the public understands their capabilities and limitations, and without cybersecurity standards to protect against hackers." ¹

       As the FBI and other cyber-security experts have warned, the advent of autonomous vehicle technology makes the need for cybersecurity standards to prevent hacking all the more urgent. "According to Patrick Linn, director of the Ethics and Emerging Sciences Group at California Polytechnic University, 'Self-driving cars may enable new crimes that we can't even imagine today.'" ²

       "The FBI, in an unclassified report obtained by the Guardian in 2014, voiced concern about how 'game changing' autonomous cars may become for criminals, hackers and terrorists, turning the vehicles into more potentially lethal weapons than they are today."

       Unfortunately, with the notable exceptions of Senators such as Blumenthal, Markey, and Feinstein, too many members of Congress appear to be ignoring that stark reality. The message from Washington is that we should trust that the auto manufacturers, which have a long history of engaging in widespread illegal activity, concealing safety defects, failing to report fatalities and injuries, and defrauding the public, this time will somehow change their stripes, and "voluntarily" get it right.

       Should we just trust Toyota, which paid $1.2 billion in fines to the US Department of Justice for concealing the sudden acceleration defect, which came to light only after a crash near San Diego that killed a CHP officer, his wife, their 13-year-old daughter, and his brother-in-law?

       Should we just trust Fiat Chrysler, which paid $105 million in fines, for failing to complete 23 safety recalls covering more than 11 million vehicles?

       Should we just trust General Motors, which paid $900 million in fines and was forced to recall over 30 million cars, after it concealed the deadly ignition switch defect for over a decade, leading to at least 174 deaths?

       Should we trust Volkswagen, which pleaded guilty to criminal activity in gaming the results of its emissions tests, and was forced to pay billions of dollars in penalties and in refunds to VW owners?

       Should we just trust Honda, GM, Toyota, Subaru, Ford, and many other manufacturers which installed ticking time bomb Takata airbags in tens of millions of their vehicles, leading to the largest auto safety recall in U.S history, killing at least 21 people and maiming hundreds of others, causing blindness and other debilitating injuries, and ending with Takata in bankruptcy while tens of millions of angry and frustrated consumers are forced to wait months, or even years, for repair parts?

       Should we trust Tesla, which blames the drivers of its "Autopilot" semi-autonomous vehicles for not being sufficiently attentive and braking in time, after they collide with a tractor trailer in Florida or, very recently, a fire truck that was parked on the 405 freeway in Los Angeles? Note: Tesla's owner's manual does warn that the system is ill-equipped to handle this exact sort of situation: "'Traffic-Aware Cruise Control cannot detect all objects and may not brake/decelerate for stationary vehicles, especially in situations when you are driving over 50 mph (80 km/h) and a vehicle you are following moves out of your driving path and a stationary vehicle or object is in front of you instead.'" ³

       Should we trust Uber, which concealed for over year the fact that hackers had stolen personal data, including driver's license numbers and addresses, from 57 million driver and rider accounts, and paid ransom to the hackers, then attempted to make it appear that the hackers were doing them a favor and merely helping de-bug their system? Note: Uber is asserting arbitration in the ensuing lawsuit, further concealing its wrongdoing and the ensuing cover-up.

       Should we trust Uber, which advertises that its vehicles are safe, but fails to screen out vehicles with potentially lethal safety recalls?

       Should we trust any of the dozen companies that currently test autonomous vehicles in California to sell autonomous vehicles in our state, when they report to the California DMV that last year, in the aggregate, their test fleets had disengagements, when the drivers had to take control in order to drive safely, once every 220 miles?

       Of course, the answer to each of these questions is NO. Particularly absent federal safety standards, what California does to protect its citizens is all the more important, both for protecting public safety and to provide for the necessary regulatory framework to ensure that the industry doesn't continue to make the same tragic and preventable mistakes.

       Accordingly, CARS opposes federal preemption regarding the regulation of AVs. States should remain free to protect their own citizens. We also oppose allowing manufacturers of AVs to impose forced arbitration, which denies victims recourse in a court of law and allows the concealment of defects, perpetuating fatalities and injuries.

       CARS also makes the following recommendations, specifically for adoption in California, that our state should:

Require a rigorously proven track record of safe operation, without disengagements, in all kinds of traffic conditions and in various weather conditions including fog, rain, heavy smoke, and snow, prior to allowing deployment (sale / leasing / ride sharing)
Require AVs to pass a "driver's test" proving that they can "see" objects and the driving environment accurately, and avoid collisions, including collisions with stationary objects, prior to allowing them to be deployed / sold to the public
Prohibit deployments of Level 3-4 vehicles, which rely on human drivers not to become distracted, and to take the wheel at a moment's notice; or are restricted to limited geo-locations or weather conditions
Mandate full public disclosure / reporting of crashes involving AVs
Establish reasonable standards for financial stability /insurance prior to sale of AVs to the public (existing law requires only $5 million, which is inadequate to weed out entities that are undercapitalized for purposes of selling vehicles to the public)
Prohibit misleading terminology and false advertising regarding AVs and their capacity to drive safely

Thank you again for the opportunity to testify. I look forward to any questions you may have.
_______________________________________________________________________________________

Attachments and further resources:

California DMV definition of "disengagement": "A deactivation of the autonomous mode when a failure of the autonomous technology is detected or when the safe operation of the vehicle requires that the autonomous vehicle test driver disengage the autonomous mode and take immediate manual control of the vehicle."

Autonomous Vehicle Disengagement Reports, 2017

"California's Autonomous Vehicle Reports are the Best in the Country, But Nowhere Good Enough," Jalopnik, February 1, 2018:

"...there's the potential for serious gaps in what even qualifies as an event that required a human to manually take control of the car. That only means the public's going to have to rely more and more on the company's word—something that became evident last year, when it emerged that federal regulators could only rely entirely on Tesla's data to conclude the automaker's Autosteer capability led to a 40 percent drop in crashes. That seems like quite a gamble when it comes to garnering the public's trust to eventually let go of the wheel entirely and sit back while the automated tech steers."

"Consumer Watchdog Warns U.S. Senate New Data Shows Self-driving Cars Cannot Drive Themselves," John Simpson, Consumer Watchdog

"FBI Warns Driverless Cars Could be Used as Lethal Weapons: Internal report sees benefits for road safety, but warns that autonomy will create greater potential for criminal 'multitasking,'" The Guardian, July 16, 2014. Available at: https://www.theguardian.com/technology/2014/jul/16/google-fbi-driverless-cars-leathal-weapons-autonomous

"Why Tesla's 'AutoPilot' Can't see a Stopped Firetruck," Wired, January 25, 2018, available at: https://www.wired.com/story/tesla-autopilot-why-crash-radar/ :

"On Monday, a Tesla Model S slammed into the back of a stopped firetruck on the 405 freeway in Los Angeles County….How is it possible that one of the most advanced driving systems on the planet doesn't see a freaking fire truck, dead ahead?

Tesla['s]...manual does warn that the system is ill-equipped to handle this exact sort of situation: 'Traffic-Aware Cruise Control cannot detect all objects and may not brake/decelerate for stationary vehicles, especially in situations when you are driving over 50 mph (80 km/h) and a vehicle you are following moves out of your driving path and a stationary vehicle or object is in front of you instead.'

Volvo's semi-autonomous system, Pilot Assist, has the same shortcoming. Say the car in front of the Volvo changes lanes or turns off the road, leaving nothing between the Volvo and a stopped car. 'Pilot Assist will ignore the stationary vehicle and instead accelerate to the stored speed,' Volvo's manual reads, meaning the cruise speed the driver punched in. 'The driver must then intervene and apply the brakes.' In other words, your Volvo won't brake to avoid hitting a stopped car that suddenly appears up ahead. It might even accelerate towards it.

The same is true for any car currently equipped with adaptive cruise control, or automated emergency braking. It sounds like a glaring flaw, the kind of horrible mistake engineers race to eliminate. Nope. These systems are designed to ignore static obstacles because otherwise, they couldn't work at all…. Raj Rajkumar, who researches autonomous driving at Carnegie Mellon University, thinks those assumptions concern one of Tesla's key sensors. 'The radars they use are apparently meant for detecting moving objects (as typically used in adaptive cruise control systems), and seem to be not very good in detecting stationary objects,' he says."

"A Cheaper Airbag, and Takata's Road to a Deadly Crisis," the New York Times, August 26, 2016.

Consumers for Auto Reliability and Safety (CARS) comments to the California Department of Motor Vehicles, April 24, 2017

Consumers for Auto Reliability and Safety (CARS) comments to the California Department of MotorVehicles, October 26, 2017
_______________________________________________________________________________________

¹ Statement of Catherine Chase, President, Advocates for Highway and Auto Safety, on "Driving Automotive Innovation and Federal Policies", Submitted to the U.S. Senate Committee on Commerce, Science, and Transportation, January 24, 2018.

² "Want guns? Drugs? Self-driving cars may become the perfect delivery vehicle," Sacramento Bee, January 9, 2018.

³ "Why Tesla's 'AutoPilot' Can't see a Stopped Firetruck," Wired, January 25, 2018

Visit StopKillerCars.org now!

NEWS For immediate release: Tuesday December 19, 2017

Contact: Rosemary Shahan, Consumers for Auto Reliability and Safety Foundation 530-759-9440
Jason Levine, Center for Auto Safety, 202-728-7700
Andy Spears, Tennessee Citizen Action, 615-815-4544
Steven Taterka, former Assistant Attorney General of Tennessee, 615-952-3661
Sean Kane, The Safety Institute, 508-252-2333

Consumer Groups Raise Alert: Unprecedented New Attack
On Safety of Used Car Buyers
Tennessee Opens Floodgates for Deathtrap Cars

Auto safety / consumer organizations today raised alarms about an unprecedented new attack on the safety of used car buyers. On January 1, Tennessee will become the first, and only, state in the nation to ease restrictions against auto dealers who wish to profit from selling unrepaired recalled used cars to consumers at top dollar, without getting the safety recall repairs performed first.

Earlier this year, in the waning hours of the legislative session, legislators in Nashville caved in to auto dealers and quietly sneaked through legislation that has been rejected in every other state where it was introduced.

Similar legislation backed by auto dealers in other states, such as New Jersey, California, Maryland, and Virginia, were opposed by leading auto safety organizations and consumer groups, and defeated.

The groups warned about the new Tennessee law on a billboard located in a high-visibility area of Nashville, and through a new website, quietly StopKillerCars.org.

"Tennessee's new law makes it easier for crooked car dealers to get away with selling unsafe, defective recalled cars," said Andy Spears, Executive Director of Tennessee Citizen Action.

"This horrible law weakens state legal protections that helped deter unscrupulous dealers from selling cars with lethal safety defects to consumers," said Steven Taterka of Kingston Springs, TN, a former Assistant Attorney General of Tennessee who specializes in representing consumers in auto fraud cases against car dealers and auto manufacturers.
"Tragically, Tennessee's new law is likely to result in more dealers in that state engaging in 'recalled used car roulette,'" said Jason Levine, Executive Director of the Center for Auto Safety.

Statewide polling conducted December 14-15 in Tennessee by Public Policy Polling found that a whopping 89% of the state's voters agreed that when there is a federal safety recall for a dangerous car, auto dealers should not be able to sell them until they have been fixed. The percentage is even higher – between 93-94%, when the defects are specified, such as catching on fire, steering loss, exploding airbags. The public in Tennessee also resoundingly rejects the concept of allowing dealers to sell unsafe recalled used cars if they merely "disclose" the recall status.

Under federal law, it is illegal for auto dealers to sell new vehicles that the manufacturers have recalled due to safety defects. There is also a federal law that prohibits rental car companies with fleets of 35 or more rental vehicles from renting, loaning, or selling unrepaired recalled cars. This law, the Raechel and Jacqueline Houck Safe Rental Car Act, applies to millions of used cars.

While there is no similar federal prohibition against dealers selling other recalled used cars, state laws in all 50 states have made it illegal for dealers to sell unsafe recalled used cars. For example, such practices may violate the dealer's common law duty of care, or statutes against unfair and deceptive acts and practices, or express or implied warranties, or against negligence or wrongful death.

Dealers who sell unsafe vehicles face tough sanctions under various state laws in other states, including loss of their license to sell vehicles, or – if someone is injured or killed as a result – even fines and other criminal penalties.

Laws in all 50 states already make it illegal for dealers to sell unsafe recalled used cars. This law means that Tennessee car buyers and their passengers and families are losing protections that existed before, and continue to exist in the other 49 states.

"Unfortunately, Tennessee will become a dumping ground for unsafe recalled cars," predicted Rosemary Shahan, President of Consumers for Auto Reliability and Safety, a non-profit auto safety organization which has been in the forefront in defeating similar dealer-backed bills in other states.

"The new law doesn't even require dealers to disclose safety recalls, because it lets them use any database they wish – including private databases with big holes that fail to include many vehicles that are being recalled. If the car doesn't show up in that database, they don't have to disclose anything," said Sean Kane, Founder and President of The Safety Institute.

The new law requires dealers to repair recalled used vehicles only if the safety recall notice the dealer chooses to check indicates that the manufacturer has issued a "do not drive" or "do not sell" warning. However, safety recall notices generally do not include such information. So any supposed safety benefits are a sham.

Furthermore, historically auto manufacturers have issued such warnings only regarding about 6% of recalled vehicles, usually when the vehicle is being launched as a new model and bad publicity about fatalities and injuries might hamper new car sales. The National Highway Traffic Safety Administration lacks the authority to require manufacturers to issue "do not drive" warnings, no matter how dangerous the vehicles are.

Types of safety defects where the manufacturer did not issue a "do not drive" warning:

Catching on fire
Wheels that fall off
Exploding Takata airbags that spew shrapnel into the passenger compartment, causing blindness or
GM ignition switch defect that causes loss of power steering and braking, and airbag failures to inflate when needed in a crash
Faulty brakes
Sticking accelerator pedals

________________________________________________________________________

Links to related documents:

New Tennessee law to protect crooked car dealers, that takes effect January 1, 2018

Autocheck report for the Jeep that Sean Kane bought from CarMax, giving the Jeep a glowing report

"Disclosure" form CarMax handed Sean Kane to sign, after he had already signed a purchase contract buying a recalled Jeep. The form states that according to Autocheck there are "NO" recalls pending. But according to the National Highway Traffic Safety Administration, based on data Fiat Chrysler is required to provide to NHTSA and update at least every 7 days, there were 3 unrepaired recalls – catching on fire, bad brakes, and stalling in traffic.

Without laws like the new Tennessee law, dealers face potential legal liability under state laws or common law.

Automotive News: "New software helps dealership track safety recalls better"

"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."

Car dealers admit they want laws like Tennessee's because they believe that allows them to evade legal liability when their victims are injured or killed.

Automotive News: "Honda pushes dealers for buyers' signatures on airbag liability"

"….Laurie McCants, managing partner of Honda of Covington in suburban New Orleans, says she believes the signed document helps protect dealers. "If there is a process and we follow the process, I don't feel liable," she says….Neither does Joe Wagner, operating partner of Winter Haven Honda in Florida. He says he is getting no pushback from consumers about signing the document. 'I believe it takes away the liability,' he said about the document…." [Emphasis added.]

Automotive News: "Recall bill cruises, but will it help?"

"The California bill – which dealers see as a potential defense against lawsuits – would require used-car dealers and rental companies to notify their customers of any outstanding recalls, though they wouldn't have to undertake any repairs… dealers have faced new liability risk since the creation of an internet database that allows a customer or a dealer to check for recalls by entering a vehicle identification number."

Courier-Post in New Jersey: "Auto-related bills roll through Assembly"

"The safety recall disclosure bill has 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."

###

Honda owners in U.S. may be able to get cash compensation
and rental cars in Takata air bag settlement

Don't take any chances. Recalled Takata airbags are ticking timebombs.

Three years into what is now, by far, the largest auto safety recall in history, some vehicle owners may be able to get a bit of relief for the time, frustration, worry and misinformation that so many of them have had to deal with since this whole fiasco started.

Honda, who has had the greatest number of vehicles affected by these faulty airbag components, has "agreed to a $605 million class-action settlement covering economic losses suffered by the U.S. owners of vehicles fitted with Takata air bags.", according to reporting by USA Today.

A separate settlement has been designated for victims who have been injured or killed by the defective airbags.

The settlement, which still needs to be approved by a federal judge, would cover roughly 16.5 million owners of Honda and Acura vehicles in the U.S., providing "financial aid in getting their cars fixed and up to $500 in compensation", according to the article. Benefits would include the cash payments, as well as a free rental car, and reimbursement of other related expenses.

Part of this program will include outreach by Honda to help owners recognize the importance of having their vehicles repaired as soon as possible. " 'This agreement will not only expand awareness of the Takata recalls and improve driver safety by accelerating the removal of defective airbags from our roads, but will provide compensation to affected Honda consumers,' said Peter Prieto, court-appointed lead counsel for the plaintiffs, in a statement."

Read more: Honda owners to get up to $500, rental cars in Takata air bag settlement

FOR IMMEDIATE RELEASE: OCTOBER 11, 2017
Contacts:
National Consumer Law Center: John Van Alst (jvanalst@nclc.org) or Jan Kruse (jkruse@nclc.org);
(617-542-8010)
Consumers for Auto Reliability and Safety: Rosemary Shahan; (530) 759-9440

National Consumer Law Center Report Finds Discretionary Pricing and
Racial Disparities in California Auto Add-on Products Sold by Car Dealers

A Groundbreaking First Look, Based Upon a National Data Set, Reveals What Dealers Pay for Add-ons and What They Charge Customers; Advocates Urge Federal and State Action

Download the report, 19 charts, and tips for consumers at: http://bit.ly/2kmubox

BOSTON - Most consumers would be surprised to learn how car dealers prey on them with sucker pricing of add-on products, such as service contracts and window etching, which can add thousands of dollars to the price of a car. For example, one customer in California who paid $1,431 for a service contract that cost the dealer $499 never knew that two other customers at the same dealership paid $831 for a service contract that also cost the dealer $499. But now, for the first time, NCLC unlocks the door on this hidden market in Auto Add-Ons Add Up: How Dealer Discretion Drives Excessive, Arbitrary, and Discriminatory Pricing, an analysis of a national data set of three million add-on products sold from September 2009 through June 2015. Key findings: add-ons lead to unreasonably high and inconsistent pricing, and Hispanics pay higher prices than non-Hispanic customers for the same product (charts 11 – 15).

"Our analysis demonstrates the negative consequences of opaque and inconsistent pricing of auto add-on products and the urgent need to bring transparency and consistency to this market," said John W. Van Alst, director of the National Consumer Law Center's Working Cars for Working Families Project and the report's primary author. "Our findings also reveal the troubling practice of dealers charging Hispanic customers more for the same product."

"These predatory practices bury consumers deep in debt before they even leave the lot, and trap people in older, less-safe, higher-polluting vehicles," said Rosemary Shahan, president of Consumers for Auto Reliability and Safety. "For the amount of money millions of consumers are being charged for worthless add-ons, they could buy a much newer, safer, more fuel-efficient car. For the sake of consumers, their families, their communities, and the environment, state attorneys general, as well as the CFPB, FTC, and Federal Reserve need to step up their game and put a stop to the discrimination and abuse."

Key Findings

Add-on products are sold at prices far higher than dealer costs and marked up much more than similar products. For example, the average markup for service contracts was 83 percent and for window etching 325 percent, while independent auto insurance agents' commissions average 11- to-18 percent.
Dealers are inconsistent in the pricing of add-on products, with even individual dealerships charging some consumers many times more than other consumers for the same product with the same dealer cost. For example, during May 2013 one dealer in Michigan charged customers from $349 to $5,000 for the same window etching product, while the dealer's cost was $50 (chart 6).
This inconstant pricing for the same add-on products leads to pricing discrimination, with Hispanics charged higher markups than non-Hispanics, including in Calfornia. For example, the average percentage markup for a service contract was higher for Hispanics than non-Hispanics in 44 states. While demographics and sample sizes limited the number of states where differences were statistically significant, there were14 states for which the differences in both percentage and absolute markups were statistically significant. In each of those 14 states, Hispanics were marked up more on a percentage basis, and in all but one state, Hispanics were marked up more on an absolute basis. These states were: California, Massachusetts, Virginia, New York, Florida (percentage only), Kentucky, Minnesota, New Jersey, Connecticut, Missouri, Nebraska, Arizona, Oklahoma, and Texas (chart 13).

Companies that provide car financing play an important role in allowing excessive and discriminatory markups of add-on products. About 80 percent of car buyers obtain financing at the dealership. Potential creditors give dealers conditions about what sort of transactions they will accept. In order to get more business from dealers, some creditors allow higher markups for add-on products. For example, in Ohio, Ally Bank financed just 10 percent of GAP insurance where the dealer cost was $150 to $250 (chart 18) but it financed 74 percent of these same deals where the customer price exceeded $900 (chart 19).

These excessive markups on add-on products set in place a chain of negative consequences for the entire auto market. The expensive add-ons increase the price of cars and also increase the loan to value (LTV) ratio for cars. This increases the amount that consumers finance without providing any real increase to the value of the car, resulting in more negative equity and higher default rates.

"The National Consumer Law Center findings are incredibly troubling," said Marisabel Torres, senior policy analyst at UnidosUs. "The fact that Latino consumers were charged in excess for unnecessary add-ons in the car buying process demonstrates a need for increased oversight in this sector of the market. It is entirely unacceptable that corporations use race and ethnicity as a factor in determining what they charge customers for the same product. We urge state and federal authorities to further investigate and bring enforcement actions against those found to be engaging in these discriminatory practices."

Key Recommendations

Dealers should be required to post the available add-ons and their prices on each car in the lot, along with the price of the car. To prevent the dealer from reintroducing non-transparency by offering discounts to some customers but not others, the prices for the add-on products must be non-negotiable.
To root out pricing discrimination, the federal Equal Credit Opportunity Act regulations should be amended to require documentation of the customer by race or national origin for non-mortgage credit transactions, as is currently required for home mortgage transactions. If discrimination remains hidden, it will not be possible to end it.
State and federal enforcement authorities should investigate discrimination in pricing of add-on products and bring enforcement actions against a dealer if discrimination is shown. The Consumer Financial Protection Bureau, the Federal Trade Commission, the Federal Reserve Board, and state attorneys general all have authority in this area.

###

Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has used its expertise in consumer law and energy policy to work for consumer justice and economic security for low-income and other disadvantaged people, including older adults, in the United States. NCLC's expertise includes policy analysis and advocacy; consumer law and energy publications; litigation; expert witness services, and training and advice for advocates. NCLC works with nonprofit and legal services organizations, private attorneys, policymakers, and federal and state government and courts across the nation to stop exploitative practices, help financially stressed families build and retain wealth, and advance economic fairness.

How did Wells Fargo turn fees for items like $3 cups of coffee
into over $1 billion in profits? Well, it's like this:
"Lawsuit over Wells Fargo's Predatory Lending
Heads to Appeals Court on Friday"

Benzinga / MoneyGeek.com

By Steve Evans
August 23, 2017

"Scandals continue to buffet Wells Fargo & Co. with each new accusation of misconduct, whether it's predatory lending, what board members knew about fake customer savings accounts or the bank forcing unwanted auto insurance on its customers who took out car loans.

But lesser-known legal problems have been stalking Wells Fargo since 2008, when it was among the major U.S. banks to be slapped with a nationwide class-action lawsuit for allegedly deceptive overdraft policies. For years, Wells Fargo and other banks reordered customer transactions from highest-to-lowest payments to maximize the overdraft fees they could collect...

A related class-action lawsuit in California involving overdraft fees was settled in 2016, with Wells Fargo ordered to repay $203 million to customers. A federal judge reaffirmed his ruling that Wells Fargo had misled customers to think the transactions were paid chronologically when they were actually paid in a high to low order solely to yield more overdraft fees.

The average award payout for the more than one million members of the California class action suit was $162, with a few members on the high end receiving several thousand dollars, according to Michael Sobol, one of the attorneys representing the plaintiffs...

A $39 cup of coffee

Here's how the contested overdraft policy worked: A customer who had, say, $74 in the bank might use a debit card for a $3 coffee, a $7 lunch and then pay a $75 Internet bill. By reordering the transactions, Wells Fargo would deduct the $75 first, which would throw the account into overdraft, then debit the $7 lunch, followed by the $3 coffee, then charge overdraft fees on all three. The fees could reach as high as $37 each – meaning that cup of coffee ultimately cost $39. Just by juggling the transaction order, Wells Fargo would make an extra $74 or so in overdraft charges.

Add a few more small debits here and there, and bank customers could easily owe more than $200 in overdraft fees overnight – charges that would grow daily if they didn't realize the problem or couldn't pay them off immediately...

'There's no question that the high-to-low overdraft fees were set up solely to make more money for the bank, but they were a terrible deal for the consumer,' says Rosemary Shahan, president of Consumers for Auto Reliability and Safety (CARS) and a longtime activist for consumer rights....All the laws we've fought to get on the books to protect people don't mean a thing if banks can force you into arbitration,' Shahan says. 'If this (Wells Fargo case) goes to arbitration, most consumers would get hardly anything.'"

Read more: Benzinga / MoneyGeek.com: Lawsuit over Wells Fargo's Predatory Lending Heads to Appeals Court on Friday

NEWS: For immediate release: Wednesday, June 28, 2017

Contacts:
               Jeff Barbosa, Office of CA Senator Bob Wieckowski, 916-651-4010
               Rosemary Shahan, Consumers for Auto Reliability and Safety Foundation, 530-759-9440
               Prof. Steven Bonorris, U.C. Hastings College of Law, 415-260-3980
               Michael Waldron, U.C. Hastings College of Law, 978-490-0405

Scofflaw Arbitration Firms Fail to Comply with California's Disclosure Law "Kangaroo Courts" Operate in Secret

A major new report released today found that private arbitration firms that hear cases brought by consumers, workers, victims of nursing home abuse, homeowners, victims of sexual harassment, and others against corporations that engage in fraud, sexual harassment, wage theft, abuse of nursing home residents, and other illegal activity are themselves scofflaws. They all fail to fully comply with California's law that requires them to disclose basic information about the cases and their outcomes.

The report was written by the Public Law Research Institute (PLRI) UC Hastings College of Law, which pored over records, analyzed data, and contacted arbitration firms directly as part of its investigation into whether compliance had improved since the PLRI issued its earlier report in 2013.

Key findings:

No firm discloses all of the required information for all of its cases
Out of 32 firms that apparently offer arbitration services in California, only 3 provide information that is readily accessible on the home page of their website, and is searchable and sortable, as required by law
9 arbitration firms do not provide any data at all, and claim they are not required to comply with the law. However, at least one of those firms' websites promotes its arbitration services as an alternative to small claims court
The American Arbitration Association, which has closed 1021 cases in California since 2014, fails to provide required information about the prevailing party in most cases where there was a hearing and an award (reporting the prevailing party in only 46% of such cases)
The Kaiser Office of the Independent Administrator reports 98 arbitrated cases since 2014; of those, the non-Kaiser party prevailed only 6% of the time
Despite the greater efficiency touted by proponents of arbitration, the report notes the interval between filing and disposition of cases ranging from 150 days to more than 350 days for the major arbitration firms

"The Public Law Research Institute's report shows that even years after AB 802 became law, widespread noncompliance and a stunning lack of transparency remain the standard operating procedure for California's private arbitration firms," said Senator Bob Wieckowski (D-Fremont), the author of 2014's AB 802. "The persistent failure to disclose required information only serves to reaffirm doubts that consumers don't get a fair

shake in such a secret, privatized system. The industry touts its fairness and efficiency, but by refusing to disclose critical information, it is little wonder why consumers think the deck is stacked against them."

       "The ripoff clause hidden in consumer and worker contracts denies American citizens their Constitutional right to hold crooked corporations accountable in an open, public court of law," said Rosemary Shahan, President of the Consumers for Auto Reliability and Safety Foundation, the non-profit consumer organization that commissioned the report.

       "It's bad enough how corporations take away consumers' rights through these kangaroo courts; this report shows how they add insult to injury by keeping the results of the cases a secret," said Joe Ridout, spokesman for Consumer Action.

       The CFPB has proposed rules to protect the public from corporate crooks like Wells Fargo, that exploit arbitration to hide their widespread illegal activity. The proposed rules would require arbitration firms to provide basic data about their operations. If the rules are promulgated and the firms fail to comply, they could face sanctions by the CFPB.

       "Corporate crooks like Wells Fargo hide behind arbitration to get away with cheating their customers and employees," said Richard Holober, Executive Director of the Consumer Federation of California. "We need effective enforcement of California's arbitration disclosure law, plus we need to keep a strong, independent Consumer Financial Protection Bureau to crack down on illegal activity."

       Proponents of arbitration claim that it is quick and convenient. But it is often used to evade, deny, or delay justice. Some corporations force victims into arbitration, then fail to pay the filing fees for the process, leaving their victims stuck in "arbitration purgatory."

       "Because of all the delays in arbitration, it took over 7 years for me to get justice," said Jon Perz of San Diego. In 2007, Mossy Toyota in Pacific Beach, CA sold him an unsafe used car. When Perz sued, the dealer forced the case into arbitration, then refused to pay the fee required to initiate the arbitration process. After years of delays, the American Arbitration Association dumped the dealer, due to non-payment. Then Perz had to wait to get a hearing before a different arbitration firm. In 2014, JAMS arbitrators found that the car was unsafe, and awarded him double the purchase price plus interest and his attorneys fees. Meanwhile, he had been unable to drive his car, after paying $12,000 for it.

       Susan J. Fowler, who shed the spotlight on sexual harassment at Uber, writes that "ending forced arbitration...is the single most important thing a company can do to prove to its employees that it is dedicated to acting ethically, legally, responsibly, and transparently."¹

Documents / video:

The full report is posted at: Arbitration Reporting in California: Compliance with CCP [Code of Civil Procedure] § 1281.96.

A video about Jon Perz' used car nightmare has received over 1.3 million views on YouTube.

###

1 "Five Things Tech Companies Can Do Better" - Susan J. Fowler, May 20, 2017. Posted at: https://www.susanjfowler.com/blog/2017/5/20/fivethings-tech-companies-can-do-better

An Australian woman is fighting for her life
after a low-speed crash in a recalled Toyota SUV

Beware: CarMax and AutoNation dealerships sell cars with recalled Takata airbags, without waiting until they have been repaired. CarMax advertises that all of their cars passed a rigorous inspection and qualified to be sold as "CarMax Quality Certified." AutoNation is the largest new car dealership chain in the U.S. Their biggest investor is Bill Gates. Apparently he thinks your life isn't worth waiting to make sure the cars are safe to drive before they are sold.

If you buy one of these recalled cars, you may not be able to get them repaired for years. Meanwhile, you could be stuck driving an automotive deathtrap.

Read more: Wellington Times: Darwin woman almost killed by faulty Takata airbag

"Check for Recalls before You Buy a Used Car"

"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."

Read more: Consumer Reports: New legal settlement means used cars for sale with safety recalls may become more common

NEWS
For immediate release: April 21, 2017

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

1 “New York City’s Department of Consumer Affairs Launches Investigation into the Sale of Unrepaired Recalled Used Cars, Aggressively Protecting New Yorkers from Potentially Fatal Defects,” News Release, July 30, 2014, (emphasis added). Posted at: https://www1.nyc.gov/assets/dca/downloads/pdf/media/Media_News_PR073014.pdf

2 Testimony of Commissioner Julie Menin, New York City Department of Consumer Affairs, Before the New York City Council Committee on Consumer Affairs Oversight Hearing on Used Car Sales in New York City: Ensuring Consumer Protections and Safety in the Sale of Used Vehicles Recalled by the Manufacturer.” October 28, 2014, posted at: https://www1.nyc.gov/assets/dca/downloads/pdf/partners/Advocacy-Used-Car-Sales-102814.pdf

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

4 “Honda pushes dealers for buyers’ signatures on airbag liability,” Automotive News, July 28, 2014. Posted at: http://www.autonews.com/article/20140728/RETAIL04/307289962/honda-pushes-dealers-for-buyers-signatures-on-airbag-liability?cciid=email-autonews-&r=1794I0214467F8V

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.

– ## –

Related Documents:

New Jersey polling results: New Jersey citizens overwhelming reject allowing car dealers to sell defective recalled cars with "disclosure"

Nationwide polling results: Americans overwhelmingly reject allowing dealers to sell defective recalled cars with "disclosure"

Florida statewide polling results: Floridians overwhelmingly reject allowing dealers to sell defective recalled cars with "disclosure"

"E-Contract Abuse Alert:
How Car Dealers Can Fake Your Auto Loan"

Forbes

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]."

Read more: Forbes: "E-Contract Abuse Alert: How Car Dealers Can Fake Your Auto Loan"

One of the biggest winners would be Credit Acceptance Corp. What’s their business model?

Mother Jones: “They Had Created this Remarkable System for Taking Every Last Dime from Their Customers: Welcome to the Lucrative, Predatory World of Subprime Auto Loans”

Here’s why pro-consumer groups that work on behalf of consumers and against powerful, crooked special interests are opposing AB 380:

Large coalition of pro-consumer, pro-economic justice organizations opposes AB 380

Consumers for Auto Reliability and Safety opposes AB 380 (Dababneh)

Consumer Federation of California

CALPIRG

Public Counsel

Consumer Federation of America

Attorney David Valdez, who represents many victims of unscrupulous auto dealers and lenders

"Is Your Used Vehicle a Timebomb? Loophole Lets Auto Dealers Sell Millions of Recalled Cars as 'Safe'"

Forbes Magazine

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."

Read more: Forbes: "Is Your Used Vehicle a Timebomb? Loophole Lets Auto Dealers Sell Millions of Recalled Cars as 'Safe'

"Very Safe, Except for One Thing...
Legal Clash with FTC on Marketing of Used Cars"

Fair Warning

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."

Read more: Fair Warning: "Very Safe -- Except for One Thing"

"FTC Sued for Allowing Car Dealers to Sell Recalled Vehicles with Potentially Lethal Defects"

NBC News

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."

Read more: NBC News: "FTC Sued for Allowing Car Dealers to Sell Recalled Vehicles with Potentially Lethal Defects"

"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."

Read more: Washington Post: "New lawsuit could force used car dealers to repair recalled vehicles"

NEWS for immediate release: February 6, 2017

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.

1 "How to Buy a Used Car in an Age of Widespread Recalls," by Ron Lieber, New York Times, January 27, 2017. Posted at: https://www.nytimes.com/2017/01/27/your-money/used-cars-takata- recalls.html?_r=0

       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.

– ## –

2 "Traffic Safety Facts," U.S. Department of Transportation, National Highway Traffic Safety Administration, August, 2016. Posted at: https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/812318

3 "New NHTSA Study Shows Motor Vehicle Crashes have $871 Billion Economic and Societal Impact on U.S. Citizens," National Highway Traffic Safety Administration, May 28, 2014, posted at: https://www.nhtsa.gov/press-releases/new-nhtsa-study-shows-motor-vehicle-crashes-have-871-billion-economic-and-societal

CarMax and Two Other Dealers Settle FTC Charges That They Touted Inspections While Failing to Disclose Some of the Cars Were Subject to Unrepaired Safety Recalls – 12/16/16

Congress:

Congresswoman Janice Schakowsky Letter to FTC – 9/12/16

U.S. Senators' Letter to NHTSA Administrator and FTC Chairwoman – 7/14/16

News:

Buyer Beware: 'Certified' Used Cars May Still Be Under Recall – 12/16/2016

Feds criticized for allowing GM to sell recalled cars – 8/26/16

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?

Read more: New York Times: "How to Buy a Used Car in an Age of Widespread Recalls"

CARS tips for how to get a good deal on a nice, safe, reliable used car without having to set foot on a car dealer's lot: carconsumers.org/usedcarbuyingtips.htm

In Memoriam: Clarence M. Ditlow III

Nation's Leading Auto Safety Advocate

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.

Read more: New York Times: Clarence M. Ditlow III, Auto Safety Crusader, Dies at 72

Sweet Victory for Military Family

Toyota drops lawsuit, buys back unsafe lemon car

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).

Read more: Comments filed by CARS and many consumer and safety organizations, opposing FTC's dangerous proposed consent orders

C.A.R.S. Archives 2017 - 2019