Can a Used Car with a Defect be Advertised as Safe?
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Can a Used Car with a Defect be Advertised as Safe?

Tuesday, March 06, 2018By Richard Alexander

When you buy a used car, sometimes it is hard to know what you are buying. The biggest disadvantage of buying a used car is that you are inheriting all the issues that the prior owner experienced. Most used car buyers purchase a vehicle history report to identify major accidents and title issues. It is also wise to have an independent mechanic examine the car to look for operational or structural problems. Being well informed about the product you are buying is always the best safeguard against problems down the road.

But what are the responsibilities of used car dealers? Can a buyer rely on representations made by the dealer related to the safety of the car? This issue was recently raised in a legal settlement with General Motors and two used car dealers over misleading advertising. The three parties claimed that they rigorously inspect cars that are available for purchase. But these parties failed to disclose that some of the used cars they were selling were subject to safety recalls that had never been redressed. The Federal Trade Commission (FTC) emphasized that disclosure about safety related recalls is an essential part of a thorough inspection process. Many recalls relate to significant defects that used car buyers should be aware of before making their purchase.

The FTC’s proposed order prohibits companies from labeling used cars as “safe” or subject to “rigorous inspection” unless the car is not included in a pending safety recall or the company discloses that the car is subject to a safety recall. Safety groups are not pleased with this rule. They claim that it endangers uninformed car buyers and others on the road because buyers will mistakenly believe that a car designated as “safe” contains no defects and will ignore the recall. When cars that are labeled as “safe” or “certified” are actually subject to open recalls, consumers who are poor, uneducated or don’t speak English may be particularly vulnerable.

Auto manufacturers and rental car agencies are prohibited from selling or renting cars with open recalls; the used car market is not subject to the same restrictions. Despite objections from consumer groups, the FTC is not poised to change its position. As of now, the FTC rule allowing “safe” labeling with mandatory disclosures is the standard for the used car industry.

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