February 29, 2016
CENTER FOR AUTO SAFETY COMMENTS ON PROPOSED CONSENT ORDERS WITH GENERAL MOTORS (File No.152-3101), LITHIA MOTORS (File No. 152-3102), AND JIM KOONS MANAGEMENT (File No. 152-3104)
In the Center for Auto Safety’s (CAS) comments on the Commission’s 2014 Supplemental Notice of Proposed Rulemaking in the Used Car Rule Regulatory Review (Project No. P08764), we stated, “*i+t is an unlawful trade practice under the FTC Act for a dealer to sell a vehicle with an open safety recall and the Commission should be using all its rulemaking and enforcement power to end that practice.” A number of other commenters strongly voiced similar positions. We were, therefore, encouraged when we read in the press in July 2015 that the Commission was investigating General Motors’ certified pre-owned (CPO) vehicle program because dealers certified vehicles that were in need of recall repairs. Surely, we thought, the Commission would maintain the obvious position that vehicles with open recalls are inherently incompatible with the longstanding claims and image of manufacturer CPO vehicle programs.
Our optimism turned to dismay, however, when we read the details of the proposed GM order and the similar Lithia and Jim Koons orders. The core of each order is that, if the company in question represents that the used vehicles it advertises or markets are safe, have been repaired for safety issues, or have been subject to an inspection for issues related to safety, such as in certification, 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 material 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. The Jim Koons and Lithia proposed orders go on to require that the dealer provide a consumer a copy of any written notification it receives from a manufacturer that a vehicle is subject to an open safety recall, prior to the consummation of sale of that vehicle. If we could have ended the second sentence of this paragraph immediately before the highlighted portion, we would be singing praises of the proposed consent orders and congratulating the Commission and Staff. As it is, we strongly request that the Commission not approve the proposed consent orders in their current form.