The FTC announced today that it had (i) finalized its January 2016 proposed consent orders with General Motors, Lithia Motors and Jim Koons Management Company to resolve allegations of deceptive advertising related to used vehicles that are subject to open safety recalls and (ii) entered into proposed consent orders with CarMax, Asbury Motor Group and West-Herr Automotive Group to resolve similar allegations. Among other provisions, the finalized and proposed consent orders generally prohibit the dealers from stating or implying that used vehicles they offer for sale are safe, have been repaired for safety issues or have been subject to a rigorous inspection unless (i) the vehicles are not subject to an open safety recall or (ii) the dealer clearly and conspicuously discloses – in close proximity to the representation – any material qualifying information related to open safety recalls, including (a) the fact that advertised vehicles may be subject to open safety recalls and (b) how consumers can determine a used vehicle’s recall status. In addition, prior to the consummation of the sale, the dealers must provide to the purchaser any written notification that they have received from a manufacturer that the motor vehicle is subject to an open safety recall or they must provide a document that conveys the same information in a substantially similar format. (Two of the proposed consent orders also permit an alternative type of written notice.) Further, the dealers may not misrepresent whether there is or is not an open safety recall on any used vehicle, whether they repair used vehicles for open safety recalls or any other material fact about the safety or recall status of used vehicles they offer for sale. 

The FTC issued a Statement of the Federal Trade Commission Concerning Auto Recall Advertising Cases that explains the actions in more detail. The FTC’s actions do not address other duties that may apply under state law.

Wes Lutz

Chairman, Regulatory Affairs Committee

National Automobile Dealers Association