Safety advocates claim the FTC's latest enforcement actions do not go far enough to protect consumers from being misled by CPO advertising.The Federal Trade Commission has been hit with a lawsuit over its recent enforcement action involving certified pre-owned vehicles sold with open safety recalls.The agency in 2015 opened an investigation into General Motors and two of its franchise dealers that allegedly sold unrepaired CPO vehicles. A more recent consent order was reached with CarMax and two other major used-car dealers.
The Center for Auto Safety, one of the plaintiffs in the lawsuit, argues that the consent order with GM provides explicit approval for dealers to advertise unrepaired used cars as "safe," "repaired for safety," and passing a "rigorous inspection," if the companies merely provide a disclaimer stating that the vehicles "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," the CAS said in a statement.
A recent New York Times report suggests the order likely inspired Ford's recent decision to reverse a long-standing policy that prohibited its franchisees from selling CPO vehicles with open recalls. The revised guidance requires dealers to note the recalls on a form that buyers must initial, and contact the buyers to schedule a repair when the parts arrive.
Safety advocates urged the FTC to modify the agreement to "prohibit false advertising, instead of allowing it," or drop the actions altogether, "since the agency's proposed 'solution' would be worse than nothing."
"Clearly the Court should intervene and force the FTC to reverse itself," says CAS acting director Michael Brooks.