Consumer groups seek CarMax probe over 'deceptive' ads

A spokesman said CarMax supports legislation mandating used-car retailers to fix recalled cars.

UPDATED: 6/24/14 4:38 pm ET

WASHINGTON (Reuters) -- Car-safety groups and a U.S. senator asked the Federal Trade Commission today to investigate CarMax Inc., the biggest seller of used cars nationally, for deceptive advertising claims.

In a petition filed with the FTC, the groups allege that CarMax engages in deceptive advertising by claiming every vehicle it sells passes a rigorous 125-point inspection. The groups said the inspection fails to examine and disclose whether a car has been recalled and repaired.

The petition also seeks to block CarMax sales of unrepaired recalled cars.

CarMax, however, said that used-car retailers were not authorized by automakers to carry out repairs to recalled cars.

"CarMax provides 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," CarMax spokesman Casey Werderman said in a statement to Reuters on Tuesday.

The petition is being supported by Sen. Charles Schumer, D-N.Y., The New York Times and Los Angeles Times reported.

“Car dealers shouldn't sell used cars that have a safety recall to consumers, period,” said Schumer. “Far too many times we have seen the tragic and often fatal consequences when deficient cars are allowed on the road, and it's time for the FTC to do everything it can to put a stop to it.”

Werderman also said CarMax supports legislation mandating used-car retailers to fix recalled cars.

The company sold 526,929 used cars in the year ended Feb. 28, according to its latest annual filing.

Consumers for Auto Safety and Reliability supported a bill in California that would ban dealers from selling used cars that have been recalled but not fixed, but the legislation died in an committee earlier this month.

In a June 2 letter to the California Assembly's Business, Professions and Consumer Protection Committee, which was weighing the bill, attorneys for CarMax argued it was impractical for the used-car retailer to manage repairs, the L.A. Times reported.

The company would have to devote staff resources and time to take a recalled vehicle to the nearest authorized dealer for repairs.

The manufacturer, not CarMax, would still pay for all recall repairs.

Such a mandatory process could cause long delays in CarMax’s efforts to sell a vehicle, the company claims.

GM, for example, has recalled about 2.2 million older small cars in the United States to fix a defective ignition switch linked to more than 50 crashes and at least 13 deaths. GM has said it will take until October to have enough parts to repair all the vehicles.

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