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Consumer groups target CarMax over handling of recalls

A coalition of 11 consumer groups this week petitioned the Federal Trade Commission to take action against CarMax (KMX), the nation's biggest seller of used cars, taking issue with its promise that all vehicles it sells are inspected for safety even though the company doesn't fix recalls.

"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," the petition said.

The petition comes at a time when auto recalls are at an all-time high largely due to the ongoing GM recall over faulty ignition switches. Groups involved in the petition include Consumers for Auto Reliability and Safety, the Center for Auto Safety, Consumer Federation of America, Consumers Union, the National Association of Consumer Advocates, the National Consumer Law Center, and U.S. PIRG.

The National Highway Traffic Safety Administration does not have the authority to require used car dealers to make recall repairs. So, the consumer groups are trying to leverage federal advertising laws to change the way CarMax is doing business. CarMax promotes that it performs a "125+ point inspection" of every car it sells.

"CarMax's claims clearly go beyond mere puffery, and would very likely mislead even sophisticated car buyers into believing that they do not need to have the vehicles inspected by an independent automotive technician of their choice, or check them out themselves," the petition said. " The company even lists dozens of specific vehicle components that it supposedly checks prior to offering vehicles for sale, without revealing that they may be so defective, they are subject to a safety recall."

In response, CarMax issued the following statement:

New car manufacturers do not give used car retailers, including CarMax, the authority to complete recall repairs. CarMax 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. CarMax 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.

So, for now, it's on used car buyers to learn of safety recalls by checking themselves. Consumers can visit NHTSA's website and check both recalls and known issues with vehicles they are considering purchasing. Recall repairs are typically performed by the repair shops at dealerships.

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