Page 49 - GIADA-Dec 2017-Final

RECALLS

difficulties if he or she fails to disclose that transparent, it could be argued that a dealer dealer has a car that comes under recall,
information. who does not disclose recall information that dealer can protect himself by taking
doesn’t meet the “reasonable” dealer it to a franchise dealership and getting the
“In the past,” McCarter said, “the Federal standard in court. recall taken care of before selling it.”
Trade Commission and state attorneys
general have alleged independent dealers And that’s never good. Sometimes the parts needed to complete
not disclosing that a vehicle they are recall repairs aren’t available until some
trying to sell is under open recall could be Shaun Petersen, an attorney and NIADA’s time after the recall is announced, and
considered a deceptive sales practice.” senior vice president of legal and dealers don’t want to let the vehicle sit and
government affairs, said he agrees “100 depreciate while they wait. So they sell it.
McCarter cited a recent case involving the percent with the notion that dealers should
sale of certified pre-owned cars in which be transparent concerning informing It that’s the case, Petersen advised, tell the
the dealer got into trouble because of an potential buyers of recalls.” buyer about the recall.
unrepaired recall on the vehicle.
If they are not, he said, they potentially open Justin Osburn, moderator for NIADA’s
While that’s a special case because CPO themselves up to claims of common law Retail 20 Groups, said that scenario is
vehicles are advertised as meeting certain fraud and other similar legal precedents or actually an opportunity for dealers to build
quality standards and having undergone arguments asserted by plaintiffs’ attorneys. trust with customers by disclosing the
inspection procedures, McCarter said it information up front and advising them on
should be taken as a warning by dealers. “The theory is that if you have information how to get the recall fixed.
material to the transaction and don’t
“There’s a lot of ambiguity out there,” he disclose it, that’s fraud,” Petersen explained. “Recalls are common,” Osburn said. “I’ve
said. “There are a lot of deceptive trade “If you don’t tell a customer about a recall, he seen situations where 20 percent of a
practices laws that a smart plaintiff’s could argue that you intentionally withheld dealer’s used inventory comes under an
attorney might use in a lawsuit against a material information about the vehicle open recall and parts weren’t available to
dealer. that you knew or should have known. get the cars fixed.
The argument is recall status is material
“The takeaway is that dealers information, and if you fail to disclose “That can create a crisis atmosphere in a
should really get ahead of any you’re withholding material information.” dealership. So if the dealer decides to sell
the cars, he can minimize exposure by
potential problem by making And whether those arguments are informing the buyer of the recall.”
sure a car in their inventory successful or not, just the fact they are
under open recall gets the brought can have a negative impact on your Osburn said dealers can protect themselves
by having procedures in place to check
business.
repair work done before it’s vehicles when they are bought and when
sold. Or at the very least, that “Lawyers cost money,” Petersen said. “And they are sold. When a customer is handed
they inform any potential consumer attorneys will bring every kind the sales file containing all the paperwork,
of claim they can. Don’t put any arrows in that file should contain any recall notices.
buyers of the recall.” their quiver, because they’ll fire them at By checking recall status automatically as
you.” part of the sales paperwork process, the
It’s possible a buyer might know a car is dealer is able to show the customer he or she
under a recall, and when not informed of Those attorneys, Petersen said, are not is on the ball and is being open and honest.
that fact by a dealer could decide to take picky. In the case of air bags, for example,
that dealer to court. he said lawyers sued automakers, the air Have your purchaser run a check when the
bag manufacturer – “anybody who was car is acquired. Have the salespeople do a
“I’m not aware of any cases like that out a kind of touch point with the vehicle in check when it’s sold.
there,” McCarter said, “but why take the question.”
chance? Even if a dealer wins in court, it will If you have a service department, have
cost him or her a lot of time and money.” But, Petersen said, independent dealers can them check the recall status during
avoid being a touch point if they are smart. reconditioning.
And because vehicles under open recall
are listed on www.safercar.gov, a free and “Independent dealers can’t fix a vehicle Double- and triple-checking won’t take
easily accessible website, and industry under recall,” he explained. “That vehicle much time, and while any one department
organizations from NIADA to NAAA has to be repaired by a franchise dealer’s might let something slip through the cracks
to NADA are encouraging dealers to be service department. So if an independent Continued on page 48

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