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On Behalf of | Oct 12, 2016 | Dealer Fraud

Readers of this blog know that I consider Certified programs to be a complete scam. This is not real supevision and accountability and thus no real standards. It’s a real and growing area of Dealer Fraud and Manufacturer Fraud as well.

A recent article published by comments upon Certified Pre-Owned Vehicle Programs and recalls. You may think these terms are mutually exclusive. It seems pretty obvious. A vehicle subject to a recall and needs corrective repairs cannot be Certified until the corrective repairs are made. But not to dealers. That would cut into their profit margins.

In Recall impact on CPO vehicle marketing, the author notes that millions of recalls at issue. He also notes the good work the FTC has done on the subject.

Back in January, the FTC indicated GM as well as Jim Koons Management and Lithia Motors touted how rigorously they inspect their vehicles, yet failed to disclose that some of the used models they were selling were subject to unrepaired safety recalls.

Under proposed consent orders, which would remain in effect for 20 years, the FTC said the companies are prohibited from claiming that their used vehicles are safe or have been subject to a rigorous inspection unless they are free of unrepaired safety recalls, or unless the companies clearly disclose the existence of the recalls in close proximity to the inspection claims.

And with the ongoing Takata airbag inflator issue involving possibly 60 million units, recalls could include a wide array of CPO models.

The article quotes compliance expert Randy Henrick who complains about the difficulty selling vehicles needed corrective repairs as Certified. Duh!

“Having to advertise for every certified vehicle that this vehicle may be subject to a recall – unless the dealer services the brand and cures the recall or gives the customer a copy of the recall certificate – dilutes the certification value as recall information can be accessed on the (National Highway Traffic Safety Administration) website,” said Henrick, who was Dealertrack’s regulatory and compliance counsel for 12 years and now conducts industry consulting at [3].

No fair minded person could quibble with the FTC proposed orders, because they would prohibit the companies from misrepresenting material facts about the safety of used vehicles they advertise. Importantly, these proposed orders will also require the companies to inform recent customers, by mail, that their vehicles may have an open recall.

The article quotes the FTC. And the FTC has it right. The FTC hits the nail right on the head.

“Safety is one of the biggest considerations for consumers shopping for a car,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection said when the regulator announced its settlements at the beginning of the year.

“So companies touting the comprehensiveness of their vehicle inspections need to be straight with consumers about safety-related recalls, which can raise major safety concerns,” Rich continued.

You can see the entire article by pointing your browser here:

If you or someone close to you has been the victim of dealer fraud, then you should contact a qualified attorney right away.

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