CarMax Inc. and two other used-car retailers have settled complaints from federal regulators that they touted their inspections in advertising but failed to disclose that some of the vehicles were under safety recalls and unrepaired.
The Federal Trade Commission on Friday announced the agreements with CarMax, the largest U.S. used-car dealer, Asbury Automotive Group Inc. and West-Herr Automotive Group.[AddToAppearHere]
The agency also finalized agreements in similar cases with General Motors Co. and two other retailers.
Under the FTC's proposed consent orders, which are open to public comment through Jan. 17, CarMax, Asbury and West-Herr can't claim that used vehicles are safe unless recall repairs are made or open recalls are disclosed. The companies were not fined.
They also have to notify recent customers by mail that cars they bought as far back as July 1, 2013 may be subject to recalls.
After the public comment period closes, the FTC will decide whether to make the proposed consent orders final.
Companies that advertise car inspections and safety must be honest about recalls, the agency says. The FTC says it has taken about 40 actions to protect car buyers since 2012.
CarMax noted that it will change some language about recalls in its advertising. The company, based in Richmond, Virginia, said in a statement that it shares vehicle-specific recall information in its stores and online to ensure that customers are aware of them before buying cars. "We will continue to make enhancements to our comprehensive recall disclosure program," CarMax Chief Operating Officer Cliff Wood said in the statement.
The consent orders with GM, Jim Koons Management and Lithia Motors Inc. were proposed in January.
A consumer group criticized those agreements as failing to protect car buyers and actually harming consumers. By permitting the companies to disclose that cars may be subject to recalls, the FTC is allowing them to advertise that recalled and unrepaired used cars are safe and have been "repaired for safety," Consumers for Auto Reliability and Safety said in a statement.
The consent orders may lower the standard for the industry in this type of advertising and are weaker than state laws, the group said.[AddToAppearHere]