CarMax Should Be More Transparent About Selling Recalled Vehicles

When CarMax, the nation’s largest seller of used vehicles, claims each of its “Quality Certified” cars has undergone a “125+ point inspection,” and that only 1-in-3 of the cars it considers is accepted for sale, you might assume this means it isn’t selling recalled vehicles. This is not always true, and a coalition of consumer advocacy groups allege that it’s a case of deceptive marketing.

Citing this NY Times article from May 2014, the coalition of 11 different groups — led by Consumers for Auto Reliability and Safety, and including our colleagues at Consumers Union — have filed a petition [PDF] with the Federal Trade Commission asking it to investigate CarMax’s practice of marketing quality-control while still selling vehicles that require repairs.

“It is inherently deceptive for an auto dealer to represent that its vehicles have passed a rigorous inspection, while failing to take even the most basic step of checking the vehicle’s safety recall status in order to identify known safety defects that have triggered a federal safety recall, and ensuring that the safety recall repairs have been performed, prior to selling the vehicle to a consumer,” reads the petition.

The petitioners claim that CarMax’s marketing — which makes a big deal out of the aforementioned “125+ point inspection,” a 12-hour “renewal” process, and its rejection of vehicles with frame or fire damage — “tend to lull car buyers into a false sense of security.”

See, while it’s illegal for consumers to sell recalled microwaves, blenders, or other products, the folks at the National Highway Traffic Safety Administration lack the authority to actually force people people to fix recalled vehicles before they are sold or rented.

CarMax and others oppose NHTSA’s recommendation to Congress that it make it against the law for dealerships to sell un-repaired recalled vehicles. The company is also trying to shoot down legislation in California that would make it the first state to ban the sale of recalled cars until they’ve been fixed.

Thus, the petitioners have asked the FTC to look through the millions of cars already sold by CarMax to determine how many recalled vehicles were sold, then notify the owners of those vehicles that they purchased cars with unresolved recall issues.

One thing that’s not mentioned in the petition but which gives us concern is this statement on the CarMax website:

So even if CarMax decided not to sell a recalled vehicle, it would just send that car over to another seller who could sell it without revealing that there might be a safety issue.

We reached out to CarMax for a comment on the petition.

The company explained that it doesn’t do recall repairs because “New car manufacturers do not give used car retailers, including CarMax, the authority to complete recall repairs.”

However, that doesn’t explain why CarMax wouldn’t just take a recalled vehicle to a dealership and get the necessary repairs done, as it would be free of charge.

CarMax also tells Consumerist that it “provides the necessary information for customers to register their vehicle with the manufacturer to determine if it has an open recall and be notified about future recalls,” without explaining why it doesn’t do these easy checks and then tell the customer about the recall when he or she is purchasing the car.

With regard to its opposition to legislative and regulatory actions that would prohibit the sale of recalled vehicles, CarMax says it “supports federal legislation that requires used car retailers to fix recalls so long as the legislation also mandates that manufacturers fully enable used car retailers to make the repairs. The legislation should require manufacturers give used car retailers all recall notices, the same diagnostic and repair information, and the tools and parts that manufacturers make available to their franchise dealers.”

The odds of such legislation — which would seem to require that every car company to provide proprietary information, parts, training and certification to used car dealers — ever passing are about as good as the odds of me starting at third base for the Phillies.

by Chris Morran via Consumerist