Consumers for Auto
Reliability and Safety
Foundation

The C.A.R.S. Foundation

 
 
 
 
 
NEWS for immediate release: Monday, February 27, 2017

Contact: Rosemary Shahan, CARS Foundation, 530-759-9440
               Joe Ridout, Consumer Action, 415-777-9648 ext. 705
               Carol McKay, National Consumers League, 412-945-3242, carolm@nclnet.org
 
 
Consumer / Activist Groups and Wells Fargo Victims Target Wells Fargo
over Forced Arbitration,
Release Letter to Wells Fargo CEO Sloan, Calling on Wells Fargo
To Stop Forcing Customers and Workers to Surrender Constitutional Rights
 
       In news events across the nation, in Washington, DC, and at Wells Fargo's headquarters in San Francisco, consumer and activist organizations closed their accounts with Wells Fargo, to protest the bank's refusal to stop imposing a "rip-off clause" forcing its customers and workers to surrender their constitutional rights, to obtain services or employment.

       The organizations also released a letter from a broad-based coalition of groups calling on Wells Fargo's CEO Sloan to cease forcing its customers and workers to submit to forced arbitration. The bank continues to resist calls from pro-consumer leaders such as Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Representative Maxine Waters (D-CA), and the editors of leading newspapers for the bank to free its customers and employees to pursue cases before a court of law, particularly regarding millions of accounts set up without their permission, through identity theft, forgery, and fraud.

       "After six years of banking with Wells Fargo, we're switching to another bank that respects the the constitutional rights of its customers and workers," said Sally Greenberg, Executive Director of the National Consumers League, based in Washington, DC. The League already established a new account at Bank of Labor, which does not impose forced arbitration, and is closing its account at Wells Fargo, withdrawing its working capital, of approximately $1.8 million.

       The GOP-controlled Congress and the Trump administration are threatening to fire Richard Cordray, the Director of the Consumer Financial Protection Bureau, who has a long record of protecting consumers. Under his leadership, the CFPB has succeeded in forcing banks to refund over $11.8 billion to consumers who were wronged.

       "They want to replace Richard Cordray with someone who will let crooked banks like Wells Fargo get away with charging consumers billions of dollars through engaging in illegal practices. So it's up to each of us to act, to protect ourselves and also send the message we won't tolerate crooked bankers," said Rosemary Shahan, President of the Consumers for Auto Reliability and Safety (CARS) Foundation. The group unveiled a new website, at "We DO Count.org" focusing on the campaign to make the switch from Wells Fargo to more consumer-friendly banks or credit unions.
 
 
 
 
 
       "Wells Fargo opened up a credit card account without my authorization, and it ended up harming my credit and making many purchases, like a car, and even utilities a lot more expensive, for about five years," said Aaron Brodie, who was a freshman college student when Wells Fargo opened a credit card account without his permission, then refused to close it, after he requested that it be closed. He has sued Wells Fargo, and instead of doing what is right, Wells Fargo is seeking to force his case into arbitration.

       "As long as Wells Fargo requires mandatory arbitration, there is nothing to stop Wells Fargo from violating the privacy rights of its customers and engaging in fraud," said Byron Cooper, who closed his accounts with Wells Fargo as soon as he discovered the bank had opened two new accounts and shifted $25,000 from his checking account to his savings account -- all without his authorization, and despite his insistence he did not want the new accounts. The bank also changed his "free" checking account to one that charged $30 per month and required a minimum balance of $25,000 -- also without his permission.

       Joe Ridout, Consumer Services Manager for Consumer Action, personally hand-delivered the letter to the bank's headquarters in San Francisco. Consumer Action also provided tips for consumers about how to find a banking institution or credit union that does not impose forced arbitration on its customers and workers, and also how to make the transition smoothly so that no payments are missed. "We believe many consumers will be pleasantly surprised to discover the higher interest they earn, and the fewer fees and abusive practices they face, once they switch to a more honest financial institution," said Ridout.

       Most credit unions don't require arbitration. In 2015, the Pew Charitable Trust released a report that provides comparisons of banks, including whether they impose forced arbitration. While some of the policies may have changed, that report provides helpful guidance for choosing options that don't impose arbitration.

Links to relevant documents:

Coalition Letter to Wells Fargo CEO Timothy Sloan

"Wells Fargo Victims Deserve Their Day In Court," Sacramento Bee Editorial, December 8, 2016

"Wells Fargo Blocks the Courthouse Door," Des Moines Register Editorial, December 4, 2016

Consumer Action's Tips for Consumers: How to Make the Switch from Wells Fargo

"Checks and Balances" by Pew Charitable Trust, May 2015


###

 
 
 
 
Letter to Wells Fargo CEO Timothy Sloan, hand-delivered to Wells Fargo Headquarters In San Francisco by Joe Ridout of Consumer Action
on Friday, February 24, 2017:
 
 
 
 
Alliance of Californians for Community Empowerment
Consumer Action
Consumer Federation of California
Consumers for Auto Reliability and Safety (CARS) Foundation
Courage Campaign
ForgoWells
Homeowners Against Deficient Dwellings
Housing and Economic Rights Advocates
Level Playing Field
Make the Road New York
Montana Organizing Project
National Association of Consumer Advocates
National Consumers League
National Consumer Law Center (on behalf of its low-income clients)
Public Citizen
Public Good
Public Justice
Progressive Congress Action Fund
Tennessee Citizen Action
TURN – The Utility Reform Network
Workplace Fairness
 
 
February 24, 2017

Mr. Timothy Sloan, Chief Executive Officer
Wells Fargo
420 Montgomery Street
San Francisco, CA 94104


Dear Mr. Sloan:

       On behalf of the above-listed organizations, we write to request that Wells Fargo immediately cease its use of forced arbitration "ripoff clauses" to deny customers and workers their constitutional right to obtain justice before a court of law.

       After repeatedly engaging in illegal activities involving millions of its customers, the bank has an obvious interest in repairing its damaged reputation. The public would reasonably expect that Wells Fargo would be eager to take the obvious step of allowing its customers to obtain redress for those violations as easily and efficiently as possible. Instead, it appears that the bank remains entrenched in its view that forced arbitration is so important to the bank's operations that even in the midst of scandal it refuses to restore to consumers and employees a basic constitutional right. This reasoning seems to us deeply miscalculated. It disserves your customers, it continues to harm your reputation, and it compels
 
 
 
 
 
us to continue to call on people across this nation who value their constitutional rights to close their accounts with Wells Fargo, and on institutions that respect those rights to divest from the bank.

       The illegal activities in which Wells Fargo has engaged are not limited to the fraud scandal that captured headlines several months ago. Rather, the bank's violations of the law constitute a pattern of disregard for basic consumer protections. Among those activities are the following:
 
  • Creating roughly 2 million bogus accounts through fraud, identity theft, and / or forgery, causing many victims to suffer significant losses and negative financial consequences, sticking them with nearly $2.5 million in fraudulent fees, and often also harming their credit.
     
  • Illegally repossessing at least 413 vehicles from members of the United States Armed Forces and their families, from 2006 through 2015, while those servicemembers were serving on active duty in defense of our nation – without obtaining a court order, in violation of the Servicemembers Civil Relief Act. This practice was particularly reprehensible, because servicemembers often are assigned to duty in war zones where their expertise is invaluable for our national security. Repossessions can result in a loss of security clearances, costing our nation desperately needed services by highly trained military personnel.
     
  • Illegally foreclosing on homes purchased by 239 members of the United States Armed Forces and their families, while those servicemembers were serving on active duty – again without obtaining a court order, in violation of the Servicemembers Civil Relief Act. This practice is also particularly troubling given its negative impact on our national security, particularly when such practices cause a loss not only of homes, but of security clearances and future job prospects. Wells Fargo was compelled by the U.S. Department of Justice to pay over $28.3 million in relief to the servicemembers and their co-borrowers.
     
  • Engaging in unfair and deceptive practices to maximize the penalties and fees paid by customers to Wells Fargo, by manipulating the chronology of when debits and checks were assessed, costing customers in California alone approximately $203 million in excessive penalties and fees. After a judge awarded refunds to victims of the bank's illegal practices, Wells Fargo continued to litigate and tried to force victims' claims into arbitration, taking their case all the way to the United States Supreme Court. The bank delayed justice for Wells Fargo customers for over ten years, until all avenues for litigation ended and their victims finally won, obtaining $203 million in refunds.
     
There is a common thread in these cases, and it is a disregard for customers' rights when there is a potential impact on the bank's bottom line. Consumers have no reason to believe that Wells Fargo is doing anything differently, when the bank still persists in depriving its customers and workers of their basic constitutional rights. A change in culture does not mean doing the right thing only when it does not cost anything. It means doing the right thing, period. How can Wells Fargo claim to be doing the right thing when it continues to force customers it has wronged into giving up their constitutional rights – even in cases where the account in dispute was created through fraud, identity theft, and /or forgery?

       As the Des Moines Register recently editorialized, after you met with the editors:
 
 
 
 
         "When Wells Fargo's news CEO, Timothy Sloan, met with the Des Moines Register's Editorial Board a few weeks ago, he said the bank intends to do everything it can to win back the trust of its customers…

       "Unfortunately, Sloan made clear in his discussion with the Register that one thing the bank won't consider in its efforts to "make it right" is waiving the contractual requirement that forces customers to take any and all grievances to private arbitration rather than to court. In fact, Wells Fargo recently took the formal step of asking a federal court to disallow the claims of dozens of customers who are attempting to have their case heard by a judge in a court of law.

       "The problem is that arbitration denies customers the legal protections normally afforded through court proceedings, such as the right to appeal. And because arbitration hearings and the evidence they produce are not open to the public, arbitration also helps to conceal widespread, corporate-level misconduct from other potential litigants, as well as from other customers and regulators.

       ...if Wells Fargo is sincere about atoning for its actions and doing the right thing for its customers, it will reverse course and voluntarily waive the arbitration requirement, allowing the people who were victimized by its practices to have their complaints heard in open court." 1

       And, as the Sacramento Bee editorialized:

"As if the rip-off of some 2 million customers weren't enough for Wells Fargo & Co., it turns out that the bank is trying to deprive its victims of their days in court….Wells Fargo has been arguing in federal and state courts that the wronged customers should have to argue their cases, not in public, but in private arbitration.

       "It's a cynical ploy, and destructive to the public trust and the legal system. Forced private arbitration...often tilts contractual arrangements in favor of corporate interests and deprives the public of important consumer information and case law.

       "Companies like it because it keeps bad publicity out of the public record, stymies potential class actions and improves the odds of favorable decisions; private paid judges know that companies often give repeat business to arbitrators who give favorable rulings. Consumers are at a disadvantage in what has come to amount to a shadow system of civil justice….

       "In the Wells Fargo case, the push is particularly reprehensible...the bank claims that those [arbitration] waivers apply to the legitimate accounts, and to the fake ones, even though the signatures were forged in many cases. It's a scam on top of a scam..." 2

       We are plainly not alone in our concern about Wells Fargo's continuing practice of forcing its employees and customers to surrender their constitutional rights as a condition of employment or
1 Editorial: "Wells Fargo blocks the courthouse door," Editorial, Des Moines Register, December 4, 2016. Posted at:
http://www.desmoinesregister.com/story/opinion/editorials/2016/12/04/editorial-wells-fargo-blocks-courthousedoor/94811490/

2 Editorial: "Wells Fargo victims deserve day in court," Sacramento Bee, December 9, 2016. Posted at:
http://www.sacbee.com/opinion/editorials/article119768343.html
 
 
 
 
  services. Forced arbitration is not a sign of respect for an employee or customer; it is the opposite. It also allows Wells Fargo to perpetuate a cover-up of its illegal practices.

       As the current Chairman of the United States Senate Judiciary Committee, Senator Charles Grassley (R-Iowa), stated in presenting legislation in Congress to restore protections from forced arbitration for auto dealers, granting them a special exemption from the Federal Arbitration Act:

       "When mandatory binding arbitration is forced upon a party, for example when it is placed in a boiler-plate agreement, it deprives the weaker party the opportunity to elect another forum. As a proponent of arbitration I believe it is critical to ensure that the selection of arbitration is voluntary and fair. The purpose of arbitration is to reduce costly, time-consuming litigation, not to force a party to an adhesion contract to waive access to judicial or administrative forums for the pursuit of rights under State law.

       "This legislation will go a long way toward ensuring that parties will not be forced into binding arbitration and thereby lose important statutory rights. I am confident that given its many advantages arbitration will often be elected. But it is essential for public policy reasons and basic fairness that both parties to this type of contract have the freedom to make their own decisions based on the circumstances of the case." 3

       Clearly the same principles apply to individual consumers and workers, who have vastly unequal bargaining power when entering into contracts with lending institutions as large as Wells Fargo.

       We call on Wells Fargo to do the right thing, and to immediately cease using forced arbitration clauses in its consumer and employment contracts. A number of competing banks and credit unions already have decided to respect their customers and workers, and not to deny them their constitutional rights. Until Wells Fargo ends its practice of depriving its customers and workers of their constitutional rights as a condition of obtaining products, services, or employment, we will continue to call upon all Americans who value those rights to close their accounts with the bank, and all institutions to divest from Wells Fargo.

       In order to reply to this letter, please contact: Rosemary Shahan, President of the Consumers for Auto Reliability and Safety (CARS) Foundation. We look forward to your prompt action to restore precious, fundamental constitutional rights to your customers and employees.

       Sincerely,
 
Alliance of Californians for Community Empowerment
Consumer Action
Consumer Federation of California
Consumers for Auto Reliability and Safety (CARS) Foundation
Courage Campaign
ForgoWells
Homeowners Against Deficient Dwellings
Housing and Economic Rights Advocates
Level Playing Field

3 Statements on Introduced Bills and Joint Resolutions, United States Senate, June 29, 2001. Statement by Senator Grassley of Iowa.
 
 
 
 
 
 
Make the Road New York
Montana Organizing Project
National Association of Consumer Advocates
National Consumers League
National Consumer Law Center (on behalf of its low-income clients)
Public Citizen
Public Good
Public Justice
Progressive Congress Action Fund
Tennessee Citizen Action
TURN – The Utility Reform Network
Workplace Fairness
 
 












 
 
 
 
Federal Court Rules Against CarMax
over Failures to Provide Completed Inspection Reports

 
In a major blow to CarMax, a Federal Ninth Circuit Court ruled that CarMax fails to comply with California's Car Buyers Bill of Rights, by failing to provide completed inspection reports describing the condition of components the company inspects. CarMax sells all of its vehicles as "certified" cars that have supposedly passed a "rigorous 125+ point inspection." But the auto retailing giant neglects to name which parts passed or failed their tests.

The three-judge panel's decision was unanimous. The consumer who won the case, Travis Gonzales, bought a 2007 Infiniti G35 from CarMax in Costa Mesa, California. The car had badly worn brake pads, malfunctioning windows, a defective transmission and warning lights that lit up intermittently on the dashboard. CarMax claimed the car had passed its inspection program. The dealership argued that putting a generic list of components that were supposedly checked, and putting it in the glove box, was enough "disclosure."

The buyer's lawyer, Hallen Rosner of the law firm Rosner, Barry & Babbitt, successfully argued that CarMax's business practices are "a farce" that cheats customers.
 
 
FTC Chairwoman Edith Ramirez Responds to
Alarms Raised by Auto Safety Champion
in Congress
 
 
Edith Ramirez, Chairwoman of the Federal Trade Commission
In response to alarms raised by U.S Representative Jan Schakowksy (D-IL), a leading auto safety champion in Congress, FTC Chairwoman Edith Ramirez wrote that: "I agree with the National Highway Traffic Safety Administration that recalls pose safety risks to consumers." This makes it all the more puzzling why FTC Commissioners Ramirez, Ohlhausen, and McSweeney have not already rejected the FTC staff's proposed agreements, which would allow dealers to advertise that cars are "safe" and "repaired for safety" and passed a "rigorous inspection" without getting the lethal safety recall defects repaired.

Read more: Letter from FTC Chairwoman Edith Ramirez to Rep. Schakowsky

Also: Letter from Rep. Schakowsky to FTC Chairwoman Edith Ramirez
 


Federal Judge:
I warned my children never to buy a car from CarMax.
 
During a hearing before the U.S. Federal District Court in Pasadena, California, Federal Judge Wardlaw tells CarMax's attorney, "I have to tell you, having read what CarMax does, I have told both my children, don't you buy a 'certified' car from CarMax."

 


Leading Auto Safety Champions in Congress
Slam Federal Trade Commission
over proposal to allow dealers to advertise unsafe, unrepaired
recalled cars as "safe" and "repaired for safety"
Rep. Jan Schakowsky (D-IL) stands up for protecting used car buyers, their families, and others who share the roads.
     U.S. Rep. Schakowsky (D-IL) a leading champion for auto safety in the U.S. House of Representatives, joined CARS, other consumer groups, and leading Senate safety champions in urging the Federal Trade Commission to reverse course over the agency's controversial proposal to allow dealers to advertise unsafe recalled cars as "safe" and "repaired for safety" and having passed a " rigorous inspection" -- without repairing the safety defects that led to a federal safety recall.

     In her letter, Rep. Schakowsky writes:

          "I am writing to express my deep concern with regard to the consent orders with General Motors Company (GM), Jim Koons Management, and Lithia Motors, Inc. proposed by the Federal Trade Commission (FTC)... While the FTC does not have the authority to prohibit the sale of used cars with unrepaired defects, it can and should prevent the misleading advertising of those cars.

          When auto dealers imply cars are safe even though the cars have unrepaired safety defects subject to a recall, those are precisely the unfair and deceptive practices the FTC has the power to stop. However, the proposed consent orders stop short of banning deceptive language...the weak remedies in these proposed consent orders would likely affect other attempts to curb the sale or advertising of vehicles under recall...the FTC should stop auto dealers from deceiving their customers.

          I call on the FTC to revise or reject these proposed orders to truly look out for consumer safety."


Read more: US Rep. Schakowsky letter to Federal Trade Commission
 


 
 
 
For Immediate Release
July 14, 2016
 
 
BLUMENTHAL, SCHUMER, MARKEY, NELSON, DURBIN: FTC SETTLEMENTS ALLOWING USED CAR DEALERS TO ADVERTISE CARS WITH UNREPAIRED RECALLS AS ‘SAFE’ ARE ANTI-CONSUMER & ANTI-SAFETY
 
Recent proposed settlements between the FTC and used car dealers allow dealers to continue advertising used cars as certified and “safe” even if those vehicles have unrepaired safety recalls

Senators today called on FTC and NHTSA to redraft the proposed settlements to ensure consumers have the information they need to stay safe


[WASHINGTON, DC] – U.S. Senators Richard Blumenthal (D-CT), Chuck Schumer (D-NY), Edward J. Markey (D-MA), Bill Nelson (D-FL), and Dick Durbin (D-IL) today called on the Federal Trade Commission (FTC) and National Highway Traffic Safety Administration (NHTSA) to ensure used car dealers cannot advertise a car as ‘safe’ if it has an unrepaired safety recall. Recent proposed settlements between the FTC and used car dealers allow dealers to continue advertising used cars as certified and “safe” even if those vehicles have unrepaired safety recalls. The Senators today called on the FTC and NHTSA to redraft the proposed settlements to ensure consumers have the critical safety information they need when buying a car.

“Congress has long debated whether dealers should be allowed to sell used cars subject to open safety recalls,” the Senators wrote. “We firmly believe that the law should prohibit such sales, as it currently does for new cars with open safety recalls. These proposed settlements wade into this contentious public policy debate, and we believe they would establish an anti-consumer, anti-safety precedent with far-reaching policy implications. Accordingly, we urge you to work together, and in good faith, to leverage your respective agency’s expertise and redraft the proposed settlements so they ensure that consumers receive meaningful information regarding the safety of their potential used vehicle purchases and that public safety is not compromised.

The text of today’s letter is available here and below:

Dear Administrator Rosekind and Chairwoman Ramirez:

       We write with serious safety concerns regarding the Federal Trade Commission’s (FTC) recent proposed settlements with General Motors Company, Jim Koons Management, and Lithia Motors Inc, regarding their failure to adequately disclose unrepaired safety recalls when advertising their used car inspection programs. The proposed settlements would allow dealers to continue to advertise used cars as “safe,” “repaired for safety issues,” and having been rigorously and extensively inspected, including that they are certified—a term that connotes safety—even if those vehicles have unrepaired safety recalls. As such, in their current form, these proposed settlements would fail to address the wrongdoing at hand.

       We understand that, at our behest, your two agencies have discussed these proposed settlements. Nevertheless, we remain concerned that this important public safety and public policy matter has not received the heightened scrutiny it deserves. Congress has long debated whether dealers should be allowed to sell used cars subject to open safety recalls. We firmly believe that the law should prohibit such sales, as it currently does for new cars with open safety recalls. These proposed settlements wade into this contentious public policy debate, and we believe they would establish an anti-consumer, anti-safety precedent with far-reaching policy implications. Accordingly, we urge you to work together, and in good faith, to leverage your respective agency’s expertise and redraft the proposed settlements so they ensure that consumers receive meaningful information regarding the safety of their potential used vehicle purchases and that public safety is not compromised.

       The National Highway Traffic Safety Administration (NHTSA) has publicly stated time and time again that all recalls are safety recalls that need to be fixed. In 2011, a spokeswoman for NHTSA said, “All safety recalls resulting from defects present an unreasonable risk to safety and we believe it is inappropriate to suggest that some defects are not risky enough to require repair.”[1] In a 2013 hearing, former Administrator David Strickland testified, “All NHTSA safety recalls address an unreasonable risk to safety and should not be ignored.”[2] In addition, NHTSA’s current FAQ on vehicle recalls explicitly states, “A recall is issued when a manufacturer or NHTSA determines that a vehicle, equipment, car seat, or tire creates an unreasonable safety risk or fails to meet minimum safety standards.”[3] There is no question that any vehicle with an outstanding recall is an unsafe vehicle.

       In contrast to NHTSA’s longstanding position, the FTC’s proposed settlements would allow dealers to continue committing the same wrongdoing that was the impetus for the Commission’s actions. Car dealers would still be able to represent that a pre-owned vehicle is “safe,” has been “repaired for safety issues,” and has passed a “rigorous safety inspection” or to label a pre-owned car as being certified even when it is being sold with an unrepaired safety recall. A certified used vehicle with an unrepaired safety recall is inherently misleading. Perhaps more alarming, the proposed settlements would only require dealers to make a blanket statement that their rigorously inspected and certified used vehicles “may be subject to unrepaired recalls.” Consequently, this “disclosure” arguably amounts to nothing more than a legal disclaimer that could absolve dealers from their responsibilities and would likely do little, if anything, to meaningfully convey to consumers the existence of an open recall and dissuade them from purchasing such vehicles due to their safety risks.

       The sale of any car with an unrepaired safety recall is a threat to public safety. We support the concerns raised in the comments recently filed by a number of consumer groups that no dealer should be able to advertise that a car is certified or any similar terminology connoting safety, if the car is subject to an outstanding recall.[4] Please report back by August 10, 2016 on how you intend to cooperate and work together to amend the proposed settlements and ensure that car dealers cannot mislead and deceive consumers about the safety of their prospective purchases.

                     Sincerely,
 
###
 
________________________________________
________________________________________
________________________________________

[1] Christopher Jenson, Faced With Recalls, Rental Companies Sometimes Decide to Wait, N.Y. Times Wheels, Apr. 19, 2011, http://wheels.blogs.nytimes.com/2011/04/19/faced-with-recalls-rental-companies-sometimes-decide-to-wait/.

[2] Hearing on S. 921, the “Raechel and Jacqueline Houck Safe Rental Car Act of 2013” Before the Subcomm. on Consumer Protection of the S. Comm. Commerce, Science, and Transp., 113th Cong. (2013) (statement of David Strickland, Adm’r, Nat’l Highway Traffic Safety Admin., available at https://www.commerce.senate.gov/public/_cache/files/492dcbd0-de37-4ea6-9810-8b72d07bb4c0/F2BA003C793F45BA47EB84D6116C92BD.strickland.pdf.

[3] Nat’l Highway Traffic Safety Admin., Vehicle Recalls: Frequently Asked Questions, Safercar.gov, https://vinrcl.safercar.gov/vin/faq.jsp (last visited June 10, 2016).

[4] Letter from Consumer Groups to Federal Trade Commission (Feb. 29, 2016), available at https://www.ftc.gov/system/files/documents/public_comments/2016/02/00011-100830.pdf.

 
The fatal flaw in the FTC's proposed
consent agreement with General Motors
 

The FTC's proposed consent agreement states that General Motors:

"shall not, in any manner, expressly or by implication:

A. Represent that used motor vehicles that
[GM] advertises are safe, have been repaired for safety issues, or have been
subject to a rigorous inspection, unless:

1. The used motor vehicles are not subject to any open recalls relating to
safety, and the representation is otherwise not misleading, OR

2. [GM] discloses, clearly and conspicuously, and in close proximity to
such representation, any qualifying information related to open recalls,
including but not limited to: i.the fact that used motor vehicles that it advertises may be subject to recalls for safety issues that have not been repaired...


Read more: FTC's proposed consent agreement -- see page 4
 


NEWS FLASH: CarMax Caught on Camera Selling Unsafe Cars - AGAIN
"Used cars with open safety recalls for sale"
WCBV -TV, Boston
By Kathy Curran
December 14, 2015
 
"Risk of engine failure, brake failure and even fire -- all potential problems with a Jeep Grand Cherokee put on display on Boston Common by two consumer protection groups.

5 Investigates went undercover, partnering with the Massachusetts Public Interest Research Group and research analyst Sean Kane of The Safety Institute. We hit the CarMax lot in search of used cars for sale with unaddressed safety recalls and also searched the dealer's inventory online.

CarMax Caught on Camera Selling Unsafe Cars - AGAIN 
We found car after car with serious safety problems and 5 Investigates' cameras watched as Kane bought that 2012 Jeep Grand Cherokee Laredo at the CarMax dealership in North Attleboro.

The car looks great and according to CarMax it passed the dealer's comprehensive quality inspection. So you would think it's safe to drive. Well, think again.

5 Investigates discovered the Jeep has some serious safety issues, so serious that the National Highway Transportation Safety Administration's website shows it has three safety recalls that have not been fixed.

'The bottom line is I've got a $29,000 vehicle that has a potential for a brake failure, the potential for the engine to shut off intermittently and the potential to catch fire,' Kane said."

Watch video: "Used cars with open safety recalls for sale" WCBV -TV, Boston, 12/14/15
 


Deirdre Cummings (MASSPIRG Education Fund) and Sean Kane (Safety Institute) release report with the CARS Foundation, exposing CarMax's sales of dangerous unrepaired recalled vehicles in Massachusetts
Photo courtesy of Caley Mcguane
 
 
 
 

Consumers for Auto Reliability and Safety Foundation
 
 
NEWS for immediate release: December 14, 2015
Contact: Deirdre Cummings, MASSPIRG Education Fund - 617-747-4319
Rosemary Shahan, CARS Foundation – 530-759-9440

Consumer Groups: CarMax Endangers Lives in Massachusetts
Selling Unsafe, Unrepaired Recalled Cars

 
       (Boston, MA) CarMax, the nation's largest retailer of used cars, is endangering lives in Massachusetts by selling recalled vehicles with potentially lethal safety defects. According to a report released today by the MASSPIRG Education Fund and the Consumers for Auto Reliability and Safety Foundation, research conducted on October 28, 2015, found that over 17 percent of cars offered for sale at the CarMax North Attleboro dealership – 42 out of 243 – were subject to a federal safety recall that had not been repaired, despite the fact that repairs for many of these safety defects were readily available – at no cost to CarMax. While some of the recalls may involve delays due to parts shortages or temporary non-availability of a remedy, CarMax could have simply waited until the repair was provided by the manufacturer before offering the cars for sale.

       The vehicles were recalled due to defects including stalling in traffic; catching on fire; seat belts that may fail in a crash; Takata air bag inflators that rupture and propel metal fragments, blinding drivers or passengers or causing them to bleed to death; sticking accelerator pedals, and faulty steering that can cause a crash.

       Five vehicles were subject to two or more recalls each, and 15 cars had unrepaired safety recalls where the manufacturer advised that a remedy, or repair, was “not yet available.” Consequently, purchasers who attempted to get those safety defects fixed after purchase would be unable to get them repaired until fixes were made available.

       “CarMax is playing recalled car roulette with the public's safety,” said Rosemary Shahan, President of the CARS Foundation.

       "Used car sales should not need a safety 'Buyer Beware' sign – the cars should be free of safety recalls before they leave the lot. I introduced the Used Car Safety Recall Repair Act to require car dealers to repair any outstanding safety recalls in used cars prior to selling or leasing them. It’s time we end the confusion of car buyers who believe they are buying a product that is safe but could end up threatening the lives of families on our Massachusetts roadways," said Senator Edward J. Markey (D-MA).



 
 
 
 
       Senator Markey is championing legislation in Congress, along with Sen. Blumenthal (D-CT), to make it a violation of federal law, enforceable by the National Highway Traffic Safety Administration, for dealers to sell unrepaired recalled used cars without getting the free repairs done first.

       “Consumers rightly have the expectation that when shopping at any car dealership they will be sold a safe car, and at the very least, they certainly would not expect that any car for sale would still be under a safety recall,” said Deirdre Cummings, Consumer Program Director with the MASSPIRG Education Fund.

       Sean Kane, founder and president of the board of directors of The Safety Institute and a nationally known safety advocate, described his experience buying a 2012 Jeep from the CarMax store in North Attleboro on November 30. The Jeep was on display at the news conference. Kane told the salesperson that the Jeep was for his wife and his 15 year-old son Jake, who accompanied him to the dealership. The salesperson repeatedly reassured him that it was safe and that it had cleared the CarMax inspection. It wasn't until after Sean specifically requested information about recalls that they were identified – and even then the safety hazards associated with the recalls were said to be insignificant.

       After Sean signed a contract purchasing the Jeep and wrote a check, and the dealership had verified that the check would clear, he was presented with a document1 to sign that said CarMax had disclosed that the NHTSA had reported that the Jeep had unrepaired safety recalls, but that AutoCheck, a vehicle history service that provides information on used cars, reported “no open recalls.”2

       The Jeep purchased by Kane had three unrepaired recalls, for the following defects: 1) A brake problem that “could cause a crash without warning,” 2) intermittent stalling in traffic, which “could cause a crash without warning,” and 3) faulty wiring in the visor that may short out and cause a fire.

       A vehicle history report for the Jeep provided by CarMax, from AutoCheck (owned by Experian), indicated that “your vehicle checks out” and the Jeep received green checkmarks for a long list of potential problems. There was no indication on the report that the Jeep had any safety recalls pending.

       As concerning is that CarMax advertises that all the vehicles it offers for sale must pass a rigorous “125 point inspection” in order to qualify to be sold as “CarMax Quality Certified” vehicles. It also advertises a long list of specific components that are checked including brakes, engine and transmission, electrical, and steering, to name a few. Such ads are inherently deceptive when the vehicle has a safety defect that led to a safety recall, and is not repaired.
 
 

________________________
1 The disclosure document is posted at: http://carconsumers.org/img/CarMax_MA_2012-Jeep_disclosure_form.jpg
2 A more detailed account about Sean Kane's car buying experience at the CarMax store in North Attleboro is posted at:
http://carconsumers.org/pdf/CarMax_MA_Sean_Kane-Jeep-Purchase_Summary.pdf



 
 
 
       “I specifically told CarMax I wanted to buy a safe vehicle for my family, and they sold me a vehicle with three potentially lethal safety defects – sudden engine shutdown, faulty brakes and a fire hazard,” said Sean Kane.

       The report found that car buyers shopping at CarMax's dealership in North Attleboro faced an even higher risk of being sold unsafe, unrepaired recalled cars with potentially lethal safety defects than used car buyers in CarMax stores in California or Connecticut, based on research in those states.

       Research earlier this year by the CARS Foundation and the CALPIRG Education Fund in California found that 10 percent of vehicles at the CarMax in Oxnard and 9 percent of the vehicles at CarMax's South Sacramento dealership had unrepaired safety recalls.3 Research conducted in Connecticut found that 16 percent of CarMax cars offered for sale in East Haven and 10 percent of CarMax cars in Hartford had unrepaired safety recalls.4

       The groups called on Attorney General Maura Healey to investigate CarMax's sales of unrepaired recalled vehicles in Massachusetts and take appropriate action to protect the public.

       The findings are particularly troubling given CarMax’s plans to open more stores in Massachusetts, including in Norwood, Danvers and Westboro.

       Consumer complaints to the National Highway Traffic Safety Administration regarding the defects in the Jeep and other models with the same defects are posted here:

http://carconsumers.org/pdf/FiatChrysler_Recall_brakes_consumer_complaints_to-NHTSA.xlsx
http://carconsumers.org/pdf/FiatChrysler_Recall_stalling_consumer_complaints_to-NHTSA.xlsx
http://carconsumers.org/pdf/FiatChrysler_Recall_visor_fire_consumer_complaints_to-NHTSA.xlsx

The Consumers for Auto Reliability and Safety (CARS) Foundation, founded in 1982, is dedicated to preventing motor vehicle-related fatalities, injuries, and economic losses through education, outreach, aid to victims, and related activities.


The MASSPIRG Education Fund is an independent, non-partisan group that works for consumers and the public interest. Through research, public education and outreach, we serve as counterweights to the influence of powerful special interests that threaten our health, safety, or well-being.

 
 

________________________
3 “CarMax’s Sales Practices Endanger Lives in California,” Consumers for Auto Reliability Safety (CARS) Foundation and CALPIRG Education Fund, 2015. Accessed at http://www.carsfoundation.org/pdf/CarMax-Sales-Practices-Endanger-Lives.pdf.
4 “CarMax: Endangering Lives in Connecticut,” Consumers for Auto Reliability Safety (CARS) Foundation and CONNPIRG Education Fund, 2015. Accessed at http://carconsumers.org/pdf/CarMax-CT-report_New-Haven_Hartford-6.pdf.



 
 
CarMax Endangers Lives in Massachusetts
Report Issued Dec. 14, 2015
Documents CarMax's Sales of Unsafe Recalled Cars
 
Read the full report: CarMax Endangers Lives in Massachusetts

Additional documentation:

Purchase Contract for unrepaired recalled Jeep Sean Kane bought from CarMax in North Attleboro, MA

AutoCheck report for unrepaired recalled Jeep Sean Kane bought from CarMax in North Attleboro, MA

CarMax sold this unsafe recalled Jeep to Sean Kane, who told them he was shopping for a safe car for his wife and 15-year-old son to drive
Photo courtesy of Caley Mcguane
 


 
 
CarMax Selling “Certified” Recalled Cars with Lethal Safety Defects—Blumenthal, Consumer Advocates Call on FTC to Crack Down on Deceptive, Potentially Deadly Sales Practices
 
Monday, August 24, 2015

CARS Foundation Investigation Found CarMax Dealerships in Hartford and East Haven  Connecticut offered for sale 74 “Certified” Cars With Potentially Lethal Safety Defects Subject to Recall

Blumenthal Champions Federal Legislation to give the National Highway Traffic Safety Administration Authority to Bar Car  Dealers' Sale of Unrepaired Recalled Used Cars

(Hartford, CT) – Today, U.S. Senator Richard Blumenthal (D-Conn.) and consumer advocates urged the Federal Trade Commission (FTC) to take immediate action to halt CarMax’s dangerously deceptive marketing of used cars with lethal safety defects. U.S. Senator Blumenthal also called for enactment of federal legislation to give NHTSA authority to police car dealers' sales of recalled used cars.

A bombshell investigation by Consumers for Auto Reliability and Safety Foundation and M & R Strategic Services found 74 “certified” recalled used cars with potentially-lethal safety defects offered for sale at CarMax dealerships in Hartford and East Haven during two 24-hour periods in July and August. The safety defects included airbags that may not inflate when needed in a crash, short circuits that can cause electrical fires, child safety seat anchors that may fail to latch, faulty fuel pumps that can cause engines to cut off in traffic, and other serious safety defects. CarMax advertises that each of its cars must pass a rigorous “125+ point inspection" before it can be sold as "CarMax Quality Certified," yet the CARS Foundation/M &R report found that CarMax had not taken even basic measures to get known safety recalls repaired.

“CarMax's practices endanger the lives of their customers, their customers’ families, and everyone who shares the roads,” Blumenthal said. “CarMax advertises that all its vehicles must pass a rigorous ‘125 point inspection,’ but no inspection that routinely ignores outstanding safety recalls can be called ‘rigorous.’ Regardless of whether they are buying a new or used car, all consumers deserve to know they are buying a safe car.”

CarMax should not be allowed to make Connecticut, or any other state, a dumping ground for unsafe recalled vehicles with potentially lethal safety defects,” said Evan Preston, ConnPIRG Executive Director.

“CarMax is playing recalled roulette with its customers’ lives,” said Rosemary Shahan, President of the Consumers for Auto Reliability and Safety Foundation. “That is also putting their families, other passengers, and everyone who shares the roads at risk.”

Blumenthal has introduced the Used Car Safety Recall Repair Act, which would make it a violation of federal law, enforceable by NHTSA, for car dealers to fail to get any outstanding safety recalls repaired before selling or leasing a used car.

###


 
CarMax: Endangering Lives in Connecticut
CARS Foundation, ConnPIRG, and M&R Report
Read the report
 
 
"CarMax sells used cars with unresolved recalls"
NBC Connecticut
August 24, 2015
By Max Reiss
 
 
Watch news report




 
 
 
 
IMMEDIATE RELEASE
June 10th, 2015

CONTACT:
Rosemary Shahan
Consumer for Auto Reliability and Safety Foundation
530-759-9440
rs@carconsumers.org

Jason Pfeifle
CALPIRG Education Fund
510-844-6809
jpfeifle@calpirg.org

CARMAX IS ENDANGERING LIVES IN CALIFORNIA

CALPIRG Education Fund, CARS Foundation release report on CarMax’s sales of unrepaired recalled cars and urge crackdown by CA Attorney General Kamala Harris and Department of Motor Vehicles
 
SACRAMENTO / OXNARD - CALPIRG Education Fund and the Consumers for Auto Reliability and Safety (CARS) Foundation today released the results of research into CarMax’s sales of unsafe, defective recalled cars in California, and called upon California Attorney General Kamala Harris and the California Department of Motor Vehicles to protect the public from CarMax’s sales of unrepaired, defective vehicles that are subject to federal safety recalls.

“CarMax is playing recalled car roulette with its customers' lives, and endangering the safety of others who share the roads,” said Rosemary Shahan, President of the CARS Foundation, a Sacramento-based non-profit educational and auto safety research organization.

CALPIRG researchers found that during a 48-hour period, 10% of the vehicles CarMax offered for sale in Oxnard, CA, and 9% of the vehicles CarMax offered for sale in South Sacramento, CA, were subject to federal safety recalls due to unrepaired defects including:
  • Catching on fire
  • Faulty anti-lock brakes
  • Hoods that fly up while the car is being driven
  • Seat belts that may not provide adequate protection in a crash
  • Air bags that may not inflate when needed in a crash
  • Cruise control that may not disengage when the driver brakes
  • Rolling away while unattended
 
 
 
 
“We all have a stake in seeing that CarMax ensures that the cars it sells are safe to drive, and gets all unrepaired safety recalls fixed prior to selling cars to consumers,” said Jason Pfeifle, Acting Program Director of CALPIRG Education Fund, a consumer group that works to advance the public interest through research, policy analysis, and citizen outreach.

When a dealer sells a used car that is unsafe, the buyers may not have time to get it repaired before tragedy strikes. This is particularly true when there are not enough repair parts or skilled automotive technicians to meet demand, as millions of vehicles are being recalled because of problems such as exploding Takata air bags that blind or kill drivers and front-seat passengers. It may take months before those defective air bags can be replaced.

The groups pointed out that in the tragic crash that led to the recall of millions of defective Toyotas, CHP officer Mark Saylor, his wife Cleofe Lastrella, their 13-year-old daughter Mahala, and his brother-in-law Chris Lastrella were all killed the same day, within hours of when a dealer handed Mr. Saylor the keys to an unsafe Lexus. The defective car sped out of control over 120 miles an hour on the freeway in San Diego, and narrowly missed colliding with other vehicles before it crashed and caught on fire.

“One of the best ways to ensure cars with open safety recall notices get fixed is to require all car dealerships to get them repaired before they leave the lot,” said Jason Pfeifle. For CarMax, that would involve taking the car to a franchised new car dealership for free repairs.

However, instead of fixing safety recalls, CarMax is actually misleading consumers with advertisements that tout their 125+ point inspection and the safety of the cars they sell. The problem is that their “inspection” omits getting known safety defects that have triggered a federal safety recall repaired.

"When lives are at stake, there's no excuse for CarMax to neglect to get safety recall repairs done -- for free -- before they hand over the keys to consumers," said Jim Beno, Directing Business representative District 190 Machinists Union.

The groups released letters calling upon California Attorney General Kamala Harris and the Department of Motor Vehicles to investigate and crack down on CarMax over its sales practices, under existing consumer protection laws. Depending upon the results of any investigation, possible sanctions could include fines, restitution for victims, and / or suspension or revocation of CarMax's license to do business in California.

“CarMax is selling ticking time-bomb cars in California,” said Shahan. “That has to stop.”

# # #

The Consumers for Auto Reliability and Safety (CARS) Foundation is dedicated to preventing motor vehicle-related fatalities, injuries, and economic losses through education, outreach, aid to victims, and related activities.

CALPIRG Education Fund conducts research and public education on behalf of consumers and the public interest. Our research, analysis, reports and outreach serve as counterweights to the influence of powerful special interests that threaten our health, safety or wellbeing.

 
 
Read More:

Letter to California Attorney General Kamala Harris

Letter to California DMV Director Jean Shiomoto  


Exploding Takata air bags: take this safety recall seriously.
 
How risky is the Takata exploding air bag defect? Some commentators are downplaying the risk, and may mislead consumers into thinking they can ignore the safety recall. They point to reports about the number of known fatalities linked to the faulty air bags, which have been pegged at 6, with another 100 people suffering serious injuries.

Stephanie Erdman was blinded in one eye by an exploding Takata air bag that a car dealer failed to repair in time.
However, as the GM ignition switch defect has taught us, the initial numbers can be deceiving. GM acknowledged only 13 fatalities. But we now know that the toll was actually much higher, numbering over 100 lives lost. Plus many more people suffered serious injuries.

In addition, the Takata air bag defect is getting worse. The problem with the air bags is linked to exposure to the elements. Over time, the number of air bags that are prone to exploding with excessive force will inevitably rise. So will the risk to drivers and front-seat passengers.

If you own a car that is among those equipped with Takata air bags, here are some steps you can take to stay as safe as possible:

1. Check your car’s safety recall status by entering the Vehicle Identification Number on the website for the National Highway Traffic Safety Administration, here: vinrcl.safercar.gov/vin

2. Register to receive updates about any changes in your car’s recall status, here: www-odi.nhtsa.dot.gov/subscriptions/index.cfm

3. If your car is being recalled to replace one or both front air bags, contact a local new car dealer and get on the list for repair parts.

4. If the repair parts are not yet available, insist that the manufacturer provide you with a rental car from a rental car company that ensures that its rental cars are not subject to a safety recall, such as Hertz, Enterprise, Avis, Dollar Thrifty, Alamo, and other major rental car companies or smaller companies (except Rent-a-Wreck).

5. Be wary of loaner cars, which dealers have on their lots. Dealers argue that they should be able to foist off unsafe, unrepaired recalled cars onto consumers as loaner cars. Yes, it’s nuts. But hey, they’re car dealers.

6. If a manufacturer refuses to provide you with a safe rental car, while you wait to get your unsafe, defective car repaired, let the CARS Foundation know. We’re going to publicize stories about manufacturers refusing to provide safe alternative transportation, like they have promised members of Congress and the media. Sometimes a bit of sunshine can go a long way toward convincing a company to do the right thing. Where to contact the CARS Foundation: carsfoundation.org/contact.php
 


 
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Avoid buying cars with killer safety defects
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12 used car buying tips that can save you thousands of dollars and help you avoid lemons and cars with killer safety defects

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