FTC: GM, Jim Koons Management, Lithia Motors Failed to Disclose Recalls on Certified and Inspected Vehicles

FTC: GM, Jim Koons Management, Lithia Motors Failed to Disclose Recalls on Certified and Inspected Vehicles
Image: NCCC
January 28, 2016

General Motors (GM) and two dealership enterprises have settled Federal Trade Commission (FTC) complaints that they neglected to inform buyers that pre-certified and inspected cars may still have open safety recalls.

General Motors, Jim Koons Management and Lithia Motors will not pay any fines, but have agreed to disclose any open recalls for vehicles on the sales floor. The companies will also contact previous customers to inform them their cars may have open recalls.

According to the FTC's complaint against GM, the company and its dealerships advertised Certified Pre-Owned vehicles that underwent a 172-point inspection and reconditioning process. Those advertisements, however, failed to disclose that certain cars were subject to previously announced and unrepaired recalls. Open recalls included the infamous ignition switch issue, which causes the car's engine to shut off, cutting power to critical safety features, like airbags.

Jim Koons Management, which has 15 dealerships in the Mid-Atlantic region, and Oregon-based Lithia Motors Inc., which has more than 100 stores in the West and Midwest, are two of the nation's largest used car dealers.

Both companies made similar claims that cars must pass rigorous and extensive quality inspections before they can be sold. Both companies also failed to disclose that certain cars for sale had open safety recalls that could cause fires, fuel leaks, or engine stalls.

Under the consent orders, which, once approved, will remain in effect for 20 years, the companies are prohibited from claiming 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.

The companies also have to inform recent customers that their vehicles may have open recalls.