Consumer, Safety Groups Blast State Attorney Generals’ Settlement with CarMax Over Deceptive Sales of Hazardous Vehicles with Unrepaired Safety Recalls

Center for Auto Safety

Consumers for Auto Reliability and Safety (CARS)

The Safety Institute

Monday, December 12, 2022
NEWS: For Immediate Release

Contacts:
Rosemary Shahan, President, CARS, 530-759-9440
Bernard Brown, auto fraud expert attorney, 816-283-3100 ext 80
Michael Brooks, Exec. Dir. Center for Auto Safety, 202-328-7700
Sean Kane, President, The Safety Institute, 508-951-1726

Consumer, Safety Groups Blast State Attorney Generals’ Settlement with CarMax Over Deceptive Sales of Hazardous Vehicles with Unrepaired Safety Recalls

Today, leading non-profit consumer protection organizations that focus on auto safety slammed the recent settlement between the nation’s largest automotive used car retailer, CarMax, and the attorneys general of 36 states.

The attorneys general alleged that CarMax told car buyers that some of the dangerous vehicles it offered for sale with unrepaired safety recall defects were “safe.” Clearly, cars that are being recalled by the manufacturer due to federally mandated safety recalls are unsafe, and pose a risk to car buyers and their families, friends, and others who share the roads.

Last year, CarMax sold over 900,000 used vehicles and raked in revenue exceeding $33 billion, profiting handsomely by selling hazardous, defective recalled vehicles at top retail prices. But instead of penalizing CarMax for engaging in deception regarding the safety of vehicles they offer for sale, the state attorneys general agreed to a paltry, pathetic $1 million fine, to be divided among all 36 states, with none of the funds going to harmed individuals.

In comparison, the relatively small District Attorney’s office in Wichita, Kansas, has settled similar cases with recalcitrant car dealers on far better terms for victims and public safety, including obtaining compensation for victims and permanently banning alleged perpetrators and their dealership from conducting business in Kansas.

Worst of all, the Attorney Generals’ settlement allows CarMax to continue advertising that all its vehicles must pass a supposedly thorough and rigorous “125-point inspection,” while failing to get the repairs done to remedy deadly safety recall defects such as faulty brakes, loss of steering, catching on fire, wheels that fall off, hoods that fly open in traffic, seat belts that fail in a crash, sticking accelerator pedals, and exploding Takata airbags that have killed or maimed hundreds of people, as long as they don’t use the words “safe” or “repaired for safety.” Often parts to fix the potentially deadly defects are not available for months, and meanwhile, hapless car buyers are stuck with a hazardous car they paid top dollar to buy.

“Instead of improving the safety of vehicles CarMax offers for sale, this settlement makes it easier for them to continue to sell hazardous vehicles with dangerous, and potentially deadly, unrepaired safety recalls,” said Michael Brooks, Executive Director of the Center for Auto Safety and a leading auto safety advocate.

“Tragically, this settlement will be used against consumers who trust CarMax to actually inspect and ‘recondition’ cars they offer for sale to ensure that they are safe,” said Rosemary Shahan, President of Consumers for Auto Reliability and Safety (CARS). CARS has been in the forefront in working to get CarMax and other auto dealers to stop selling hazardous unrepaired recalled used vehicles, and to preserve existing state consumer protection laws against such practices. “Those at risk include anyone who doesn’t read all the fine print and understand auto jargon, young people buying their first cars, recent immigrants unfamiliar with the U.S. safety recall system, people who may not be proficient in legalistic written English, and people who want to emulate sports superstars featured in ads for CarMax, like Steph Curry and Sue Bird.”

“No one should have to worry that a duly licensed car dealer is deliberately selling them a vehicle they know is unsafe. Unfortunately, this terrible settlement allows that to keep happening. CarMax should be getting hazardous safety defects repaired before selling vehicles to consumers, rather than shifting the burden and risking their customers’ lives,” said Sean Kane, President of The Safety Institute and a leading auto safety expert.

The groups have reason to be concerned, particularly in light of CarMax’s long history of deception and the shocking and misleading statements CarMax’s Board President, Tom Folliard, made to an audience at Florida Tech that included many college students, downplaying the risks posed by safety recall defects. Folliard said that “Many of them are not really safety issues, they’re just open recalls. But because of all the consumer movement around it, they’re all considered safety recalls.”

In reality, all too often, safety recall defects are deadly. According to the National Highway Traffic Safety Administration, “All recalls are serious.” Sometimes the victims of auto safety recall defects are not the purchasers, but their friends or family members.

Auto fraud expert Bernard Brown, a nationally renowned attorney who has won major victories in court against car dealers who sold hazardous vehicles, said: “This horrible settlement is harmful for used car buyers and their families. It allows CarMax and other dealers to deliberately and deceptively sell hazardous vehicles that they know have unrepaired safety recall defects with misleading disclosures that they may have an unrepaired safety recall. It grossly undermines many existing protections in state laws against deceptive and fraudulent sales of unsafe vehicles and other products. Because of this settlement, CarMax and other unscrupulous car dealerships will find it easier to evade liability under important state consumer protection laws.” Brown also serves on the Board of Directors of CARS.

The attorneys general settled the matter without taking even a single case to court, despite the fact state laws typically have provisions that prohibit false or deceptive advertising, bait-and-switch, and fraud. Some, like New York, also require dealers to certify that used vehicles they offer for sale are “roadworthy,” or, like Massachusetts, to warrant they are safe to operate. In addition, injured victims or their surviving family members have won legal settlements or court cases alleging claims such as violations of the common law duty of care, negligence, or wrongful death. In 2016, a federal judge hearing a case against CarMax, and having seen how CarMax operates, stated that she warned her children, “Don’t you buy a certified car from CarMax!”

CarMax and other auto dealers have repeatedly attempted to persuade state legislatures to enact laws that would allow the dealers to get away with selling dangerous unrepaired recalled used vehicles with “disclosure.” However, consumer / safety organizations have fought back and have generally succeeded in defeating those attempts, including in states such as New York, Connecticut Massachusetts, New Jersey, Maryland, Virginia, and California.

Federal law prohibits dealers from selling unrepaired recalled vehicles that are new. Plus the federal Raechel and Jacqueline Houck Safe Rental Car Act (spearheaded by CARS and Raechel and Jacqueline’s mother Cally Houck) prohibits rental car companies with fleets of 35 or more vehicles from renting or selling unrepaired recalled used vehicles. The federal law supplements existing state laws by giving the National Highway Traffic Safety Administration the authority to crack down on violators and issue fines without anyone having to suffer economic or physical harm.

Car dealers and their allies in Congress have been blocking passage of federal legislation sponsored by Senators Blumenthal, Markey, and Warren, S 1835, that would give NHTSA the authority to crack down on CarMax and other dealers who deliberately or negligently sale hazardous unrepaired recalled used vehicles, in addition to the protections provided by state consumer protection laws.

People victimized by CarMax’s reckless practices sometimes find it difficult to fight back because CarMax imposes forced arbitration on its customers, denying them access to justice in a court of law. However, state attorneys general in states that did not enter into this terrible settlement could still take action without the imposition of forced arbitration.

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CarMax inspection report for a “CarMax Quality Certified” BMW  that a CarMax store in Modesto, California sold a father for his 17-year-old son to drive, indicating (on page 4) that the airbags “meet standards” – even though BMW had previously recalled the car because it had a potentially deadly Takata driver airbag.

Recall notice for the same BMW

Over 117,000 people have signed a petition on Change.org calling on CarMax to stop selling unrepaired recalled cars.

Examples of reports about victims of unrepaired recalled used vehicles:
Carlos Solis (Claims Journal)
Corey Jackson (Chicago Sun-Times)
Rekeyon Barnette (WCNC)
Anthony Burgess (CBS)
Anthony Santos (NBC Bay Area)
Lisa Shelton and other consumers (Checkbook Magazine)
Excerpt from ABC 20/20 undercover investigation showing how CarMax tricks car buyers into purchasing hazardous recalled vehicles

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