Consumer Watchdog Groups Go After CarMax – but Should OEMs be Involved?

There are a few highs and lows for the largest used car retail­er in the US. Sales vol­umes are up and stores con­tin­ue to open, but that also means being a more vis­i­ble tar­get for watch­dog groups and gov­ern­ment agen­cies. Car­Max has become the tar­get of like­ly inves­ti­ga­tion by the Fed­er­al Trade Com­mis­sion (FTC) over decep­tive adver­tis­ing. This push comes from a coali­tion of 11 con­sumer groups who think Car­Max is not fix­ing recalled cars before sell­ing them. Here’s a few key points from the media cov­er­age:

  • The 11 con­sumer groups say that Car­Max has been decep­tive – it’s ads claim to that the retail­er has rig­or­ous­ly inspect­ed qual­i­ty and safe­ty of its used cars but some of them are still affect­ed by the prob­lems that got the vehi­cles recalled in the first place.
  • The peti­tion fil­ing is get­ting a lot of noto­ri­ety and being tak­en seri­ous­ly, as it was coor­di­nat­ed by a few cred­i­ble orga­ni­za­tions – Con­sumers for Auto Reli­a­bil­i­ty and Safe­ty, Con­sumers Union, the Con­sumer Fed­er­a­tion of Amer­i­ca, the Cen­ter for Auto Safe­ty, the Nation­al Con­sumer Law Cen­ter, and the U.S. Pub­lic Inter­est Research Group.
  • The peti­tion also has the sup­port of Sen­a­tor Charles Schumer (D-New York). “Com­pound­ing the safe­ty risks with mis­lead­ing and decep­tive adver­tis­ing and sales prac­tices only fur­ther endan­gers the safe­ty of used-car cus­tomers and every­one who shares the roads,” he wrote.
  • GM’s mas­sive recall has giv­en more atten­tion to this FTC fil­ing against Car­Max. The way that it’s being car­ried out by con­sumer groups also rais­es the ques­tion of how much say deal­ers should have in the recall process.
  • Casey Wer­der­man, a Car­Max spokesman wrote in an email that Car­Max does pro­vide “the nec­es­sary infor­ma­tion for cus­tomers to reg­is­ter their vehi­cle with the man­u­fac­tur­er to deter­mine if it has an open recall and be noti­fied about future recalls.” Wer­der­man also stat­ed that Car­Max would like to see leg­is­la­tion mak­ing it pos­si­ble for retail­ers to have the author­i­ty to car­ry out recalls at their facil­i­ties, a choice which is only being made by the automak­er.
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