THE OMBUDSMAN ALERT: Federal Trade Commission Fails to Address Critical Need for Implementation of Safety Recalls of Used Cars

BY DR. LOUIS ALPERT

Just over a year ago on April 14, this writer initiated his Ombudsman Alert Column with an article addressing the vital topic of Automobile Safety in relation to the tragic February 3, 2015 collision of a 2011 Mercedes-Benz SUV with the Metro-North train in Valhalla, New York, which resulted in six deaths and millions of dollars in property damage.

This article returns to the subject of automobile safety but its focus is on the need for the implementation of safety recalls of used cars, which is unlike the safety recalls of cars still owned by the original purchaser that are tracked by both the automaker and the new car dealer, so that the original owner is made fully aware of the critical need for any necessary recall. The original owner can merely bring his car to the dealer for the repair or replacement of any defective part.

The situation for the implementation of safety recalls when the car is purchased as used (or even as a certified pre-owned car) will usually entail the prospective purchaser to use the VIN number of his purchase to electronically determine if it is subject to a current safety recall. The Federal Trade Commission does not force all used car dealers to display warnings to the prospective purchaser on each car with current safety recalls!

On the other hand, the New York Attorney General, Eric Schneiderman, announced settlements with 104 car dealerships that sold used cars with unresolved safety defects without informing the buyers of these defects! The settlements allow these 104 dealers to continue to market and sell used cars with open safety recalls as long as they disclose this information prior to the sale.

Unfortunately, this settlement does not apply to any other of the countless number of dealerships within New York State, which are only governed by the weaker rules of the Federal Trade Commission that apply nationally!

Consumer groups have been most unhappy with those “settlements” of both the FTC and the NY Attorney General, since most consumers (apart from the ones served by one of 104 NY dealerships) are not always diligent in pursuing VIN numbers and following through on arranging to have the recall implemented. This will certainly result in an increase of unsafe cars on our highways!

Consumers Union, the Policy Mobilization Division of Consumer Reports, criticized these “settlements” as follows: “No company should offer to sell a car that has a defect that hasn’t been fixed. It is an irresponsible practice that could put the consumer at risk.” Their statement continues: “It is even more deceptive if the car has been labeled Certified Pre-Owned.”

This ombudsman would like to note that recalls are becoming increasingly common with automakers reporting defects in more than 50 million vehicles in each of the last three years. It is further alarming to report that the National Highway Traffic Safety Administration claims that as much as 25 percent of these defects go unattended! This Ombudsman wonders how much of this 25 percent is due to unrecalled used cars?

Finally, I would like to bring to our readers’ attention the organization known as the Center for Auto Safety, originally created by Ralph Nader in 1970, several years before I was Nader’s representative in this region of New York state when I served as chairman of his “Congress Watch.”

This week I contacted Michael Brooks, acting director of the Center for Auto Safety and he asked me to relate the following to our readers:

“We don’t believe the FTC’s consent orders go far enough-if a vehicle has an open recall, it should never be allowed to be advertised for sale as ‘safe’ or ‘certified’ until the repair is completed. Neither settlement (FTC’s or Schneiderman’s) requires the repair of a dangerous recall prior to the sale, allowing motorists in New York and across America to leave the dealership in a death trap.”

  Eric Sneiderman, FDC, Federal Trade Commission