FTC Finalizes Three More Consent Orders with Dealers Over Certain Used-Vehicle Ads
The Federal Trade Commission has approved three proposed consent orders with auto dealer groups to resolve allegations that they advertised "how rigorously they inspect their used cars" without disclosing that some of the vehicles were subject to open safety recalls. Among other provisions, the consent orders prohibit the dealers from representing – either expressly or by implication – when marketing, advertising, offering for sale, or selling used motor vehicles to consumers that the vehicles are safe, have been repaired for safety issues, or have been subject to a rigorous inspection, unless:
- The vehicles are not subject to any open safety recalls, or
- The dealer discloses, in close proximity to such representation, any material qualifying information related to open recalls, including but not limited to:
In addition, if the dealer receives a written notice from a manufacturer that a motor vehicle is subject to an open safety recall, the dealer must provide to a consumer – prior to the consummation of the sale of the vehicle – the manufacturer notice or a document that conveys the same information using a substantially similar format. (As an alternative to providing the manufacturer notice, two of the three consent orders permit the dealers to provide to consumers – prior to the consummation of the sale of a used motor vehicle – a written notice that conveys that the vehicle is subject to an open recall that is unrepaired and the safety risks associated with the recall that is made available by the National Highway Traffic Safety Administration (see safercar.gov) or a commercial provider of recall information.)
- the fact that its used motor vehicles may be subject to recalls for safety issues that have not been repaired, and
- how consumers can determine whether an individual used motor vehicle is subject to an open recall for safety issues that has not been repaired.
All of these disclosures and notices must be clear and conspicuous and not otherwise misleading.
These three finalized consent orders follow separate FTC consent orders with similar terms involving General Motors and two dealer groups that were finalized in December 2016. Dealers are advised to review with legal counsel the full terms of these consent orders along with any applicable state law requirements to help assess the legal sufficiency of their used vehicle advertisements.
If you have questions on any legal or regulatory topic, please contact:
Tammi McCoy, VP, firstname.lastname@example.org, 303.282.1449
Tim Jackson, President, email@example.com, 303.282.1448
DISCLAIMER: CADA is not authorized to dispense legal advice. The information contained in this weekly email is intended to provide important updates and reminders regarding statutes, litigation, and regulations. CADA always advises that dealers should consult legal counsel on the specifics of any laws or regulations to ensure proper compliance.