Buyer Beware: What to know when buying a used car
If you’re in the market for a used car, you can take a few steps to ensure safety:
Check for recalls: In 2014, the National Highway Traffic Safety Administration set up an online search tool that allows you to check whether recall repairs have been completed on any car. Type in the 17-digit Vehicle Identification Number, and you’ll get detailed information on any recalls that haven’t been addressed.
Don’t assume “certified” means recall-free: Some auto dealers sell “certified” cars advertised as having gone through “a rigorous inspection” and been “repaired for safety issues” — even though recall repairs haven’t been completed.
If you decide to purchase a car with unfixed recalls, repairing it could take a lot of time and money.
Recall repairs can only be completed by manufacturer-authorized facilities. Depending on where you live, this could mean having to travel a long distance to get your car fixed.
Under federal law, manufacturers are required to pay for the cost of recall repairs — but only for 15 years from when your car was recalled. When addressing older recalls, you could end up paying out of pocket.
Recall repairs can sometimes take months, even years, when critical parts are in short supply, or when manufacturers haven’t figured out a fix for the defects.
First, General Motors recalled more than 2.7 million cars in 2014 for faulty ignition switches, which have caused more than 120 deaths and 250 injuries in the U.S.
Federal Trade Commission, for instance, began investigating auto dealers who were selling recalled used cars as “certified pre-owned” or claiming that they had gone through a “rigorous” inspection.
In California, Bakersfield resident Tammy Gutierrez sued CarMax for selling her a recalled used car. The landmark case was initially dismissed by the court, but an appeals court reinstated it last year, ruling that Gutierrez had a valid claim under state laws.
As the pressure grew, auto dealers launched their lobbying campaign for the recall disclosure bill.
The first bill surfaced in New Jersey in September 2014, when Assembly Deputy Speaker
Paul Moriarty introduced a measure that included a $20,000 fine for failing to disclose open recalls to customers.
Moriarty, a Democrat who chairs the
consumer affairs committee, said his initial inclination was to propose a ban on the sale of recalled used cars — until he realized that auto dealers often face a lengthy delay for recall repairs, which can only be completed by a manufacturer-authorized facility.
The delay can sometimes take months, even years, when critical parts are in short supply or when manufacturers haven’t figured out a fix for the defects.
“You could have some small dealer that has 20 cars on his lot — there’s a lot of those people — and they could have their entire lot taken up by cars that are under safety recall,” Moriarty said. “They wouldn’t be able to sell them. And they’d be out of business.”
Behind the push for Moriarty’s bill was Appleton, the lobbyist who heads the
New Jersey Coalition of Automotive Retailers, an influential Trenton lobbying group whose political action committee has given more than $1.6 million to state legislative candidates — including $14,400 to Moriarty — since 2000.
Appleton said a sales ban would be “an exceptionally bad idea” because it would force auto dealers to shoulder the financial burden for manufacturers’ mistakes.
“If automakers were to fairly compensate us for holding recalled vehicles, then we’d gladly hold the vehicle and wait until the fix is made available,” Appleton said. “But the fact that they aren’t paying us means they’re in no rush to find a fix. So placing the burden on the dealers is wrong-headed.”
Driving for a state-by-state solution
As Moriarty’s bill made its way through the legislative process, Appleton was helping craft model legislation at Automotive Trade Association Executives.
What Appleton and his colleagues came up with has two parts: one requiring manufacturers to fairly compensate auto dealers for holding onto used cars awaiting recall repairs; the other requiring auto dealers to disclose open recalls to customers — but not to actually fix the defects that led to the recalls.
Jennifer Colman, president of the Automotive Trade Association Executives, said the model legislation was never intended to be a copy-and-paste exercise. The measure, she said, is better described as “suggested language.”
Indeed, architects of the recall disclosure bill in some states did craft their own language, with the assistance of regional auto dealer associations.
In Virginia, Anne Gambardella, chief counsel of the
Virginia Automobile Dealers Association, said she was aware of the model legislation but worked independently to craft a bill with then-Delegate Greg Habeeb, a Republican who raised $30,000 from auto dealers in his seven years as a delegate.
“We draft our laws here,” Gambardella said.
Still, Habeeb’s bill ended up aligning closely with the model legislation, having both fair-compensation and recall disclosure provisions. The measure was eventually stripped of the recall disclosure provision before then-Gov. Terry McAuliffe, a Democrat, signed it into law in 2016.
In other states, the model legislation played a more prominent role.
In Pennsylvania, then-Rep
James Santora worked closely with the Pennsylvania Automotive Association to craft his 2017 bill using the model legislation as a starting point. The measure went on to win unanimous approval in the Pennsylvania General Assembly the following year and was signed into law by Democratic Gov. Tom Wolf.
Interested in accountability? So are we.
Get our deep-dive investigative reports delivered to your inbox.
In May 2017, Tennessee became the first state to pass the recall disclosure bill.
The winding path that led to the bill’s passage dates back to 2014, when Lara Gass, 27, died in a crash caused by a faulty ignition switch in her Saturn Ion, which had been recalled just weeks earlier by GM.
Gass’ parents, Jay and Gerri, then embarked on a crusade for a law in Tennessee that would ban the sale of recalled used cars. They sat down with
Mark Green, a Republican who represented their district at the time, and convinced him to introduce a bill, dubbed Lara’s Law, on their behalf.
Following the untimely death of their daughter, Lara, five years ago, Jay and Gerri Gass pushed a law that would ban the sale of recalled used cars in Tennessee. (Charlotte Kesl for USA Today)
But it turned out that, when crafting his bill, Green consulted other stakeholders — including Bob Weaver, an influential Nashville lobbyist who heads the
Tennessee Automotive Association. The result: Lara’s Law was watered down to mandate only recall disclosure, not a sales ban.
“To say the least, we were very upset,” Jay Gass said. “We could not have our daughter’s name associated with a bill that included a disclosure requirement.”
Green, who has raised at least $56,000 in contributions from auto dealers, later withdrew the bill. He did not respond to requests for comment.
The following year, Green again introduced Lara’s Law, this time calling for a sales ban. On the House side, state Rep.
Rick Staples, a freshman Democrat, sponsored an identical bill.
But both bills stalled in the business-friendly
Tennessee General Assembly.
Then came a surprise: At the end of the legislative session, with Staples’ help, auto dealers succeeded in adding their bill as a last-minute amendment to an unrelated measure regulating rickshaws. It was quickly passed and signed into law by Republican Gov. Bill Haslam.
Motor Vehicle Recall and Disclosure Law allows auto dealers to continue selling recalled used cars — unless they’re subject to “do-not-drive recalls” or “stop-sale orders,” which are issued on rare occasions for serious safety defects.
Parts of a 2015 recall disclosure bill in California (left) were repeated, word for word, two years later in a Tennessee bill (right).
All auto dealers have to do is to disclose open recalls to customers and have them sign a form acknowledging that they were notified.
Staples said he introduced his bill because the only alternative was the status quo.
“Nothing was in place as far as protecting consumers dealing with those recalls,” Staples said. “I didn’t want to live with not having done anything to deal with the issue.”
In a statement, Weaver said the feedback from a number of stakeholders led to changes in the law’s language. While no stakeholders got everything they wanted, he said, “there was widely shared consensus that this law achieved a major step forward to benefit Tennessee automotive buyers.”
For the Gasses, however, a law that mandates only recall disclosure, not a sales ban, is a bitter disappointment. “This is absolutely the one thing that we did not want,” Gerri Gass said. “I feel so sorry for the people of Tennessee.”
Andy Spears of
Tennessee Citizen Action, a consumer advocacy group, said the whole experience was a sober reminder of how much sway auto dealers — who have collectively given more than $1.4 million in contributions to state legislative candidates in Tennessee since 2000 — hold over lawmakers.
“They were more inclined to follow Weaver and protect unscrupulous dealers than to work to protect the lives of used-car buyers in our state,” Spears said.
A national ban?
For consumer advocates, one of the ultimate goals is to secure a federal ban on the sale of recalled used cars — through Congress or by regulatory means. Either approach would neutralize the laws now in place in Tennessee and Pennsylvania.
But a long road appears to lie ahead. A case in point: In 2017, a coalition of six advocacy groups filed a lawsuit against the FTC after it reached settlements with CarMax, GM and its franchisees that allow them to continue selling recalled used cars, so long as they disclosed open recalls to customers.
The case is pending before the U.S. District Court for the District of Columbia, which held oral arguments in September.
Meanwhile, U.S. Sen.
Richard Blumenthal, a Democrat from Connecticut, co-sponsored a bill in 2017 to propose a sales ban, saying consumers should be protected “from driving a ticking time bomb off the lot and onto our roads.”
But Blumenthal’s bill soon faced opposition from the
National Automobile Dealers Association, which represents about 16,000 auto dealers, and stalled without getting a single hearing.
Jason Levine, executive director of the Center for Auto Safety, a Washington, D.C.-based consumer advocacy group, said getting Congress to act on a sales ban is a daunting challenge.
“One would hope that more education of policymakers about the dangers would be sufficient,” Levine said. “One fears that more deaths and serious injuries will be necessary.”
Joe Yerardi and Pratheek Rebala contributed to this report.
Who We Are
The Center for Public Integrity is an independent, investigative newsroom that exposes betrayals of the public trust by powerful interests.