CarMax agreed to pay $1 million to settle claims by 36 states that it sold cars without disclosing open safety recalls.
The states alleged that CarMax engaged in deceptive advertising by telling consumers its cars were safe due to its reporting and inspecting practices, though it sold cars with open safety recalls without proper inspection or disclosures to buyers.
The settlement establishes legal precedent for a requirement that used car dealers must disclose open safety recalls to consumers before selling them, said the Massachusetts attorney general’s office in a statement about the settlement. Heretofore, only new cars were required to be sold with such notice by federal law.
The Virginia-based company, the biggest used-car retailer in the U.S., agreed as part of the settlement to give car buyers copies of any open recalls on the vehicles they’re considering purchasing before presenting other sales paperwork. It must also provide to shoppers hyperlinks for vehicles advertised online and QR codes for those sold on lots that link to open recalls.
“Consumers deserve to know if a vehicle they are considering purchasing has an unrepaired recall that could jeopardize their safety and the safety of the motoring public,” said Illinois Attorney General Kwame Raoul, who led the CarMax probe, in a press release.
The investigation began in 2014, and since that year, CarMax said in a press release about the settlement that it has disclosed safety recalls in its sales process and online ads. “The settlement terms are consistent with CarMax’s longstanding practices,” it said.