NEW JERSEY – New Jersey has entered into a settlement with CarMax Auto Superstores, Inc. that resolves a multistate investigation into whether the used vehicle marketplace violated consumer protection laws when it sold used motor vehicles with open safety recalls, Attorney General Matthew J. Platkin announced Thursday.
Open recall means an un-remedied vehicle or vehicle equipment defect as determined by either the vehicle manufacturer or the National Highway Traffic Safety Administration (“NHTSA”).
Under an Assurance of Voluntary Compliance filed with the Division of Consumer Affairs, CarMax will pay a total of $1 million to 35 states and is required to disclose open unrepaired recalls related to the safety of its used vehicles before consumers purchase those vehicles. New Jersey will receive $27,294.97 of the settlement amount. CarMax cooperated fully with the investigation.
This settlement establishes that used car dealers should generally disclose open safety recalls to consumers before they purchase a used vehicle. CarMax now includes hyperlinks for vehicles advertised online and QR codes for vehicles on the lot that link directly to any open recalls on the vehicle so consumers can access this data as they shop. CarMax will also present the consumer with copies of any open recalls and obtain the consumer’s signature on that standalone disclosure document before presenting any other sales paperwork. Additionally, CarMax agrees to not represent vehicles as “safe.”
“Companies that highlight the rigorous inspections they perform on their used cars, but fail to clearly disclose the existence of unrepaired safety recalls lull consumers into a false sense of security that the car they’re driving off the lot is safe when in fact, it could be a ticking time bomb,” Platkin said. “The settlement we’re announcing today requires CarMax to disclose critical information consumers need in order to make informed decisions on whether to buy a used car.”
“Purchasing a used car should not be fraught with danger,” said Cari Fais, Acting Director of the New Jersey Division of Consumer Affairs. “CarMax misled consumers about the safety of the cars they sold, which put car buyers and everyone else on the road at risk. This settlement underscores our commitment to ensuring that companies conduct business with the transparency that consumers deserve and the law requires.”
Under the settlement agreement, so long as CarMax offers for sale used motor vehicles with open recalls, CarMax will:
- Deliver and obtain the consumer’s signature to a standalone written document, which clearly and conspicuously conveys that the used motor vehicle is subject to an open recall that is unrepaired, and the safety risks associated with the recall. This process will occur before sale documents are presented for signature to a consumer;
- Clearly and conspicuously disclose, for used motor vehicles sold online, that the vehicle may have an open recall for safety issues and will include a link to the National Highway Traffic Safety Administration recall page associated with the vehicle identification number;
- Place similar relevant disclosures on the window sticker of all used motor vehicles for sale on the premises of its stores;
- Provide relevant disclosures to third-party websites where its vehicles are advertised;
- Not misrepresent in connection with the marketing, advertising, offering for sale, or sale of used motor vehicles to consumers the following: whether there is or is not an open recall for safety issues on any of its used motor vehicles; whether CarMax repairs used motor vehicles for open safety recalls; and any other material fact about the safety or recall status of the used motor vehicles it advertises or offers for sale, or sells;
- Not advertise that its used motor vehicles are “safe” or have been repaired for “safety” issues; and
- Not represent that its used motor vehicles have been subject to a rigorous inspection if they are subject to an open recall or certain other conditions have not been met.
In addition to New Jersey, the following states are involved in the settlement announced today: Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wisconsin.