Richmond, VA – February 18, 2023 – A used-car dealer CarMax (NYSE: KMX) has agreed to disclose open recalls on cars that it sells in certain states. The agreement follows on the heels of a multi-state investigation into allegations that the company failed to disclose that some of the cars on sale were subject to unrepaired recalls.
This is at least the second time the company settles such allegations.
Buying a car with an open recall can put your life and that of your passengers and other motorists at risk.
This CarMax settlement comes on the heels of an investigation that started in 2014 and was settled on December 5, 2022. That is when the company agreed to disclose open recalls in 36 states, including Alabama, Nevada, Wisconsin and Texas.
To ensure compliance, Carmax will have to implement several mechanisms when selling cars with open recalls.
First, all cars on sale will have to have a link or sticker with a QR code, which would lead to a site like MotorSafety.org that would have more specific information on the recall.
Secondly, before buying the vehicle, the customer would need to sign a waiver that would disclose that the vehicle is subject to a recall. He or she will also be given a copy of the said recall.
Third, CarMax cannot market their cars as “safe or repaired for ‘safety issues.'”
As part of the agreement, the company has also agreed to pay $1 million that is going to be split between the states involved in the settlement.
Is it legal to sell cars with open recalls?
It is illegal for dealers and manufacturers to sell new cars with open recalls. However, “due to legal loopholes and loose regulations,” in some states used cars can be sold with open recalls.
With the settlement, however, it becomes illegal for CarMax to do so in the 36 states that are subject to the agreement without proper disclosure.
What led to the investigation
According to the investigation – that started in 2014 – CarMax did not disclose that “repairs that were necessary on vehicles with open safety recalls, and it represented that those vehicles were safe despite open recalls for airbags, brakes, fuel pumps, and other critical parts and safety features. “
It is not clear how exactly the non-disclosure was accomplished but, in a related settlement that was achieved by the Federal Trade Commission (FTC) in 2016, the used-car dealership claimed that all the cars were subject to a rigorous, 12-hour, 125-point inspection. However, some of these cars were subject to open recalls which CarMax did not adequately disclose.
Does your vehicle have an open recall?
In some states it may be legal to sell used cars with open recalls. One way to check if your car is one of them is to plug in your VIN into MotorSafety’s free vehicle lookup tool. You can use the same tool to check for open settlements. For tips on how to find your VIN and other ways to discover if your car is in need of a repair, please see this article.