CAS 2016 Letter to US Attorney Preet Bharara

August 25, 2016
Mr. Preet Bharara, US Attorney Southern District of New York One St. Andrews Plaza
New York, NY 10007
Dear Mr. Bharara:
The Center for Auto Safety (“CAS”) calls on your Office to act to preserve the integrity of the Office’s authority under the Deferred Prosecution Agreement (“DPA”) reached with GM on September 16, 2015, which provides for the Independent Monitor to “Review and assess the adequacy of GM’s current procedures for addressing known defects in certified pre-owned vehicles.”1 In a proposed consent agreement with General Motors,2 the Federal Trade Commission (“FTC”) would emasculate Section 15(a)(4) of the DPA by allowing vehicles with open recalls to be sold in GM’s certified pre-owned (“CPO”) program.3
The core of the FTC’s proposed order is that if GM represents that the used vehicles it advertises or markets are safe, have been repaired for safety issues, or have been subject to a rigorous inspection, then the used vehicles may not be subject to open safety recalls, unless it discloses clearly and conspicuously and in close proximity to the representation any qualifying information related to open safety recalls, including the fact that its used vehicles may be subject to an open safety recall and how consumers can determine whether an individual vehicle is subject to an open safety recall. In the Matter of General Motors LLC, Agreement Containing Consent Order, Section I (A). Thus, the Proposed Order would allow GM to market and advertise and its dealers to sell open recall vehicles in its CPO program, so long as the disclosures described above in bold italics are made in GM’s relevant advertisements. There is no bigger known defect than an open safety recall.
There is no place in a CPO program for vehicles with open recalls which endangers the life of anyone who buys such a vehicle. In the absence of an overlapping FTC consent order, the Independent Monitor could make recommendations to ban sale of such vehicles unless the safety defect is remedied, pursuant to Section 15 of the DPA. It may be possible that Independent Monitor recommendations would be made and adopted requiring more of GM regarding recalled CPO vehicles than the FTC Order, but this would be an untenable situation for several reasons. First, the Order’s presence would create a natural tendency for the Monitor’s recommendations to be weaker than if they were made on a clean slate. Second, the terrible precedent of the terms of the FTC GM order would already have been irrevocably established. In addition, the FTC order would have a duration of 20 years, while the DPA will last for only three years, with the possibility of extending to four. We see nothing in the DPA that would prevent GM from backsliding to policies taking advantage of what the FTC Order allows.

Read the full CAS Letter to US Attorney Preet Bharara.