Used car dealers are not required to fix open recalls, but their inspection programs are considered misleading in such scenarios.
The Federal Trade Commission has negotiated settlements with CarMax and two other major used-car dealers accused of misleading practices involving vehicles with open recalls.
Used car dealers are not required to complete recall repairs before selling a car, but they must be careful to avoid implying that such vehicles have passed rigorous inspections.
In the case of CarMax, the dealer is accused of selling unrepaired cars that completed its "125+ point inspection" that involves "12 hours of renewing -- sandwiched between two meticulous inspections." The company's televised advertisements included fine print at the bottom of the screen stating "Some CarMax vehicles are subject to open safety recalls."
"Despite highlighting their inspections, the FTC alleges that CarMax failed to adequately disclose that some of the cars had open recalls," the FTC said in a statement. "These recalls included defects that could cause serious injury, including the GM key ignition switch defect, as well as the Takata airbag defect."
The consent orders prohibit CarMax, Georgia-based Asbury Automotive Group and New York's West-Herr Automotive Group from misrepresenting the status of open safety recalls. They are also required to inform customers dating back to July 2013 that their vehicle may be subject to open recalls.
Some safety advocates have called for new regulations forcing used-car dealers be prohibited from selling unrepaired recalled cars, however the proposals have not yet gained enough momentum to become law.