Consumer Groups Are Suing the FTC Because It Allows Sale of Unsafe Used Cars

Exploding airbag that sends shrapnel into passengers? Pickup truck that catches fire for no reason? These are just a few of the safety recalls that could endanger you or your family if unrepaired. Under federal law, you can’t buy a new car with an unrepaired or “open” safety recall, but thanks to FTC consent orders with GM and some mega-car dealers, you can buy a used car with open safety recalls. So we sued the FTC in 2017. We're still in court. Learn more.

Photo credit: Shutterstock photo by Anastasiya Aleksandrenko. 

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Ed Mierzwinski
Senior Director, Federal Consumer Program

Author: Ed Mierzwinski

Senior Director, Federal Consumer Program

202-461-3821

Started on staff: 1977
B.A., M.S., University of Connecticut

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.

Exploding airbag that sends shrapnel into passengers? Pickup truck that catches fire for no reason? Faulty software that could stall engines? Defective brakes? These are just some of the safety recalls that could endanger you or your family if unrepaired.

You can’t buy a new car with an unrepaired or “open” safety recall. And you can’t rent a car with one, either. It’s against federal law. But the FTC’s consent orders with General Motors and five publicly traded mega-car dealership chains -- CarMax, Lithia, Koons, Asbury, and West-Herr -- allow used car dealers to stick a disclaimer on a used car with an open safety recall and sell it to you. See below as some state laws may protect you.

U.S. PIRG, Consumers for Auto Reliability and Safety (CARS) and the Center for Auto Safety cried foul. We sued the FTC over the consent orders in 2017, after the FTC ignored comments on the orders from over 20 organizations. We’re still in court.  

On Labor Day, a U.S. District Court judge ruled that our three leading consumer and auto safety groups lacked “standing” to sue because we didn’t suffer direct harm, even if our members did, without ruling on our case’s merits. We certainly think we win on the merits, and that it’s worth continuing the fight to protect consumers, so this week our counsel filed a “Notice of Appeal” to the DC Circuit, U.S. Court of Appeals.

As Cally Houck, mother of Raechel and Jacqueline Houck, who were ages 20 and 24 when they were killed by an unrepaired, recalled rental car says in a news release on the filing: 

"Under the FTC's Consent Orders, a car dealer can get away with advertising that a used car is 'safe,' 'repaired for safety,' 'passed a 172-point inspection,' and qualifies as a 'certified' vehicle - even if it has the exact same safety recall defect that killed my daughters. That's appalling…"

The federal Raechel and Jacqueline Houck Safe Rental Car Act is named in their memory. It became law as Section 24109 of The FAST Act, HR22, in 2015.

Bernard Brown, a consumer protection attorney and auto rights expert, who serves on the CARS board, explains further in the release: 

“Under state laws, such deceptive advertising has historically been viewed by numerous Courts as being clearly illegal. But the FTC’s consent orders make it more difficult for victims of unscrupulous car dealers to use some of the most important existing state consumer protection laws.”

The PIRGs have long been in the car safety fight. Although not parties to this particular lawsuit, MASSPIRG, ConnPIRG and CALPIRG have also conducted research and exposed the problem of used car dealers selling unrepaired recalled cars.

We’ve also been disappointed that, for 10 years now, the FTC has failed to use enhanced Congressional authority to regulate car dealers. The FTC is generally restricted by unique Congressional limits on its rulemaking authority. While the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act failed to give the new CFPB full authority over car dealers, Congress removed what have been called “medieval” shackles on FTC rulemaking – for car dealer regulations only. It’s high time for the FTC to do more to rein in car dealers.

The Used Car Safety Recall Repair Act, S1835 (Blumenthal-CT), would also solve the problem. Its passage is doubtful in a divided Congress. So, U.S. PIRG, CARS and the Center for Auto Safety will continue to push the FTC to do the right thing. We’ll see them in court.

Meantime, as the news release explains, you may be protected by state law and should contact a knowledgable attorney:

"Consumers victimized by car dealers’ deceptive sales of unrepaired recalled used vehicles should consult an attorney familiar with state consumer protection laws. Some state laws may still apply, despite the FTC’s consent orders. For example, Indiana law makes it an unfair and deceptive act or practice for any merchant to sell a recalled product. Some victims and surviving family members have won confidential settlements, alleging violations of express warranties or the implied warranty of merchantability, a breach of the dealer’s common law duty of care, or negligence or wrongful death."

These consent orders were agreed to before any of the five current FTC commissioners were seated. The new FTC can and must protect consumers better.

Ed Mierzwinski
Senior Director, Federal Consumer Program

Author: Ed Mierzwinski

Senior Director, Federal Consumer Program

202-461-3821

Started on staff: 1977
B.A., M.S., University of Connecticut

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.