FTC Targets CPO Claims From General Motors And Two Dealer Groups

January 28, 2016 1 Comment

The Federal Trade Commission has settled with General Motors as well as two dealer groups over what they should or should not tell consumers purchasing a used vehicle.

The FTC has settled with GM, Lithia Motors and Jim Coons Management have all settled individual FTC administrative complaints about disclosing safety recalls. Jessica Rich, director of the FTC Bureau of Consumer Protection, spoke about the issue in a statement, “…Companies touting the comprehensiveness of their vehicle inspections need to be straight with consumers about safety-related recalls, which can raise major safety concerns.”

The complaint against General Motors provided information about the 172-point vehicle inspection and reconditioning process in order to certify a certified pre-owned vehicle. In the complaint against GM, part of the 172-Point process was explained as, “…from the engine block to the shocks, right down to the floor mats, no major system is overlooked. If it fails a single point, we completely recondition it – or it won’t be certified.”

The FTC complaint indicates one of the points on the 172-Point inspection is whether or not the vehicle has open recalls. The concern is that consumers will purchase CPOs without realizing they may have open recalls. The FTC complaint alleged GM advertised the 172-Point inspection on CPOs at some of their dealerships, without indicating some of the vehicles had open unrepaired safety recalls.

The same issue arose in complaints against Lithia Motors and Jim Coons Management. In both cases the FTC was concerned consumers were purchasing used vehicles that had a multi-point inspection, but didn’t know about open and unrepaired safety recalls. GM, Lithia Motors and Jim Coons Management are subject to a consent order which means, “the companies are prohibited from claiming that their used vehicles are safe or have been subject to a rigorous inspection unless they are free of unrepaired safety recalls, or unless the companies clearly disclose the existence of the recalls in close proximity to the inspection claims.”

Should dealers be required to inform consumers about safety recalls in their advertising or at the point of sale? Are the complaints by the FTC legitimate or is and example of the government trying to overregulate private business?

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