CarMax settles with states
Deal could set new disclosure standards
Used-car chain CarMax Auto Superstores Inc. has worked out a $1 million settlement with 36 states, including Pennsylvania, that will require the company to disclose open recalls before consumers buy cars.
The agreement with the Richmond, Va.-based used-car dealer should establish that the segment of the industry must disclose open safety recalls, according to the announcement Thursday from Pennsylvania Attorney General Josh Shapiro’s office.
Although the used-car market has been hot the past couple of years, the investigation began several years ago. In 2014, a group of attorneys general began looking into the sale of vehicles whose manufacturers had issued notices for the original car owners to bring their vehicles back in to repair safety problems but the repairs hadn’t been done, according to a statement from the Iowa attorney general’s office.
Federal law already prohibits the sale of new vehicles with open recalls but, the statement said, there aren’t official standards that apply to used cars. In the course of their investigation, the attorneys general group alleged that CarMax omitted or misrepresented the recall status of some vehicles sold to consumers.
Under the agreement, CarMax will continue to use the National Highway Traffic and Safety Administration’s vehicle identification number tool to track issues with specific cars, the settlement said. Consumers can also use the tool through NHTSA to check for any open recalls on their vehicles.
The company has agreed to present customers with copies of any open recalls and obtain the consumer’s signature on a disclosure document.
According to the Iowa announcement, CarMax cooperated fully with the investigation.
In its most recent fiscal year, the company reported it had 4% of the nationwide market for used cars under 10 years old and sold more than 1.6 million vehicles. For the full fiscal year, net revenues hit $31.9 billion.