CarMax under fire for selling recalled cars

by: Jim Strickland Updated:

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ATLANTA - A Channel 2 Action News investigation found CarMax employees making promises that contradicted company policy on getting recalls fixed on its used cars.  Now, that nation’s largest used car dealer will implement policy changes.

Consumer investigator Jim Strickland went shopping under cover at all five local CarMax stores.  Each touted its rigorous 125-point inspection, which does not include a check for recalls. 

Strickland discovered the Federal Trade Commission is gathering evidence about the brand of sales pitch Strickland recorded. 

After learning of the results, Carmax told Strickland it would retrain workers nationwide.  The company will also soon implement a policy to divulge a car's recall status to customers during the sale. The dealership will still not fix recalls.

Strickland's undercover investigation was prompted by a Rockdale County woman whose Carmax vehicle had been recalled at the time of sale.

"I'm buying a car from CarMax that advertises that everything's inspected. Everything's OK. But when I drove off the lot, everything wasn't," said customer Chantelle Tobe.

Tobe bought a Chevrolet Cruze at CarMax in Stockbridge. Strickland found her car parked at a dealer waiting for a recall repair. 

The recall came out March 30. Carmax sold the car to Tobe three weeks later.

Technicians at Ginn Chevrolet in Covington showed Strickland the section of the right axel under recall for a potential fracture. The problem can cause a loss of steering control.

"I've been seeing six- to eight-week wait times," said technician Bill Morris. Tobe was placed in a rental car for her own safety.

The car's Onstar monitoring system alerted Tobe, not CarMax.

"They need to do a full inspection like they advertise," she said.

"We renew every car with a rigorous inspection and a thorough reconditioning process," states a Carmax TV commercial. 

http://youtu.be/35cKBZhZvdA

Under cover, Stickland and producer Josh Wade heard about the inspections from each salesperson they encountered.

Carmax admits recall repairs or checks are currently not included. The company's general counsel argued recently against a proposal in California to make those repairs mandatory.

"Our technicians would love to fix these recalls, but first we can't get access to the information.  We still can't get the parts or the technical data," said Tyler Kidd in June.

"Does that argument anger you?," Strickland asked consumer advocate Rosemary Shahan.

"Of course it does." 

Shahan is credited as the originator of the lemon law concept more than 30 years ago. 

Her new crusade involves petitioning the Federal Trade Commission for action against CarMax. She calls the 125-point inspection "inherently deceptive," since recalls are not included.

"The most important thing they're not doing, and this is getting the known safety defects that led to a safety recall, fixed,” Shahan said.

A top regulator wrote back that the FTC, "will monitor the marketplace for illegal conduct associated with the practices you described."

The FTC did not confirm a formal investigation is underway.

CarMax does not get recalls fixed at the dealer either. Three sales people hinted that they did.

"We keep 'em up to date on the recalls. Um, whenever there's one that pops up, we actually take 'em all and get a carrier and take 'em to a dealership, and have them do it," said one on hidden camera.

"If it's on this lot, then the recall's already been taken care of," said another. 

"There are CarMax (car) owners out there right now that have no idea that their car is under a safety recall," said Shahan.

Tobe is thankful she is no longer one of them.

"What if something happened. That's what I keep replaying. What if something happened," she said.

A CarMax spokesperson initially signaled the company would do an on-camera interview, but ultimately emailed responses to a series of questions:

 

Regarding the information provided on vehicles at the store:

We previously have provided training to associates on CarMax’s recall policy. It is absolutely unacceptable for our customers to receive inaccurate information regarding CarMax’s recall policy. We are taking immediate action to ensure our associates accurately represent our recall policy by conducting enhanced training and practice drills. We are committed to getting this right.  

We notify all customers prior to purchasing any vehicle from CarMax about the importance of registering their vehicle with the manufacturer and having any open recalls fixed. Every customer must sign a form titled “Important Information Regarding Your Purchase - Manufacturer Recalls” before any sales document is presented.

In response to your question about the NHTSA website:


The new NHTSA VIN lookup website is the first to provide detailed VIN-specific recall information for almost every make and model. As part of CarMax’s commitment to transparency, we are planning to leverage the VIN lookup website to provide additional information to our customers regarding open recalls. We are still in the process of implementing this program and will provide more details when it is launched in the coming months.

Regarding your question about CarMax’s new car stores:

CarMax was founded to fundamentally change the way Americans buy used vehicles and is the industry leader in integrity and transparency. As part of our commitment to transparency, we notify all customers prior to purchasing any vehicle from CarMax that their vehicle may have an open recall and they should register their vehicle with the manufacturer and have any open recalls fixed. When customers register their Vehicle Identification Number (VIN), they can get the most up-to-date information on open and future recalls directly from the manufacturer.

The current recall system is based on the manufacturer’s relationship with its franchise dealers and vehicle owners and does not take used auto retailers into account. Under the current system, manufacturers direct recall communications to the vehicle owner of record, not used auto retailers like CarMax. Unlike the manufacturer franchise dealers who are intended under the system to fix recalls, independent used auto retailers, like CarMax, are not provided the authority to complete recall repairs and close out recalls.

Our experience shows us customers are in the best position to act on recall information directly with a manufacturer-authorized dealer. Dealers are often more likely to provide timely recall repair to customers rather than to a competitor, like CarMax, so we will continue to encourage customers to have recalls repaired at a manufacturer-authorized facility.

The new NHTSA VIN lookup website is the first to provide detailed VIN-specific recall information for virtually every make and model. As part of CarMax’s commitment to transparency, we are planning to leverage the VIN lookup website to provide all customers with NHTSA recall information. We’re in the process of implementing this program and preparing for a nationwide rollout in the coming months.