Consumer Groups Take Aim at CarMax Over Recalled Cars

Consumer groups want the courts to force CarMax to stop selling used cars with unrepaired recalls.

Posted in News

— Consumer groups are again waving red flags about CarMax, the largest retailer of used cars in the U.S. that allegedly pose a safety hazard to consumers because the "certified" cars may have open (unrepaired) safety recalls.

The groups include MASSPIRG (Massachusetts Public Interest Research Group) Education Fund, Consumers for Auto Reliability and Safety (CARS) Foundation and the Center for Auto Safety.

According to the consumer groups, CarMax has more than doubled the percentage of unrepaired recalled used vehicles for sale to consumers. The results are based on surveys of 1,700 vehicles CarMax advertised for sale in Connecticut, Massachusetts and Northern and Southern California.

Data was compared with the sales of unrepaired recalled cars by CarMax in those same locations in 2015. Based on the research, about 27 percent of vehicles surveyed had unrepaired recalls, with some locations indicating an even higher percentage.

Based on results of the survey, one "certified" used car up for sale had six unrepaired safety defects, and a Jeep sold to a consumer advocate had three open recalls that weren't disclosed to the buyer before purchase.

The groups say 43 vehicles had unrepaired safety recalls for which no repairs were available, leaving consumers stuck driving cars for an indefinite period before they can get the cars repaired.

Additionally, 86 vehicles allegedly had more than one unrepaired safety recall and 19 vehicles had three or more unrepaired safety recalls. The vehicle with six open recalls was a GMC Sierra pickup truck.

In one example, the consumer groups have serious problems with a sales contract for a Jeep in Massachusetts with the wording, “ATTENTION PURCHASER: All vehicles are WARRANTED as a matter of state law. They must be fit to be driven safely on the roads...”

However, that specific Jeep had three unrepaired safety recalls, leaving the consumer groups to question the "fit to be driven safely on the roads...”

CarMax says potential customers and staff review recall information available on the website of the National Highway Traffic Safety Administration (NHTSA), and links on the CarMax website refer consumers to NHTSA's site to verify recall information.

CarMax also says every customer signs a form acknowledging they have been made aware of the recall information, something that must be signed before signing any sales documents.

However, the consumer groups say the recall "disclosure" form that CarMax says is provided to car buyers is bogus.

Safety advocate Sean Kane says he bought a Jeep in 2015 and told CarMax staff about how the Jeep needed to be safe since it would be used for Kane's 15-year-old son. Mr. Kane says the recall disclosure form was provided to him only after he signed the purchase contract.

In addition, the disclosure form was allegedly false and misleading because the form indicated that NHTSA said there was at least one open recall on the Jeep, but AutoCheck said there was no safety recall. In the end it was determined the Jeep had three unrepaired safety recalls, one concerning faulty brakes, another over concerns of stalling and a third recall about Jeep fires.

The groups argue the AutoCheck vehicle history report provided by CarMax to potential buyers gives buyers a false sense of security, making a consumer believe their newly purchased vehicle has no open recalls and is perfectly safe to drive.

As for performing recalls, CarMax says what it has said in the past: Open (unrepaired) recalls can only be cleared at a repair facility approved by the manufacturer, such as a dealership.

The company says the current recall system is based on a relationship between a dealer, manufacturer and the registered owner of a car. CarMax says as an independent retailer doesn't have the authority to repair the recalled vehicles and close out the recalls.

The consumer groups admit CarMax isn't authorized to perform safety recall repairs, but considering the company made more than $15 billion in 2016, CarMax should be able to pay employees to drive the recalled cars to dealerships to have the work performed for free.

The groups say without that, CarMax should sell recalled vehicles at wholesale since the company won't have the recalled vehicles repaired.

CarMax argues the customer is in the best position to act on recall information, especially considering many dealers see CarMax as a competitor. In other words, the recall repairs will allegedly be performed at a quicker pace if the customer is the one who takes the vehicle in for free repairs.

Although the Federal Trade Commission (FTC) has already tangled with CarMax that led to federal consent orders, the consumer groups say the legal system needs to overturn those consent orders to put a stop to CarMax and others from advertising cars as "safe" when they have unrepaired recalls.