FTC Enforcement on Used Car Advertising and Safety Recalls

Note that used car ads claiming that vehicles are safe or have been inspected should include clear and conspicuous disclosures about the possibility of open safety recalls, including how consumers can find out about open recalls.

On March 31, 2017, the Federal Trade Commission approved final consent orders involving three major dealership groups. In addition to being subject to continuing record-keeping requirements and oversight by the FTC, the FTC Order prohibits these dealers from “claiming that their used vehicles are safe, have been repaired for safety issues, or have been subject to a rigorous inspection,” unless: (a) the dealer’s vehicles are free of open recalls, or (b) the dealer clearly and conspicuously discloses that its vehicles may be subject to unrepaired recalls for safety issues and explain how consumers can determine a vehicle’s recall status, such as by checking the VIN at the NHTSA recall website. Click here to read the FTC’s Press Release.

Consumer groups filed suit in February, claiming that similar earlier FTC consent decrees do not go far enough in protecting the public because they allow dealers to sell used vehicles with open safety recalls. Most recently, in late April, the New York Attorney General issued fines against 104 dealerships for selling vehicles without disclosing open safety recalls. The NY AG’s settlement included disclosure guidelines that well exceed those set forth in recent FTC Orders. Click here to read the New York Attorney General’s press release.

State and federal regulatory approaches to addressing safety recalls in used vehicle retailing is evolving and dealers should closely monitor developments in this area, both with respect to advertising compliance and their inspection, conditioning, and sales processes.