Legally: Although there are Federal laws against selling new vehicles with open safety recalls, there is no federal laws against selling used vehicles.
However, many states have laws, rules and regulations against ‘some aspects’ of selling used vehicles with one or more open (unrepaired) safety recalls. (More, below.)
Liability: Although you might be not break any laws by selling a used vehicle with an open safety recall, should you do so and should your customer, renter or employee/driver get injured – or worse – because of an unrepaired safety recall, anyone can sue anyone. If you knew – or should have known – a vehicle had a safety recall, you are significantly more liable than if you found and fixed it before selling, renting or loaning it.
State laws: Each state has different rules and regulations regarding safety recalls. Just a couple examples: Tennessee allows the sale of a vehicle with an open safety recall as long as it is disclosed at time of sale. However, if the recall is a Stop Sale or Do Not Drive safety recall, it is against the law to sell it, even with disclosing it. Further, there are specific requirements on what needs to be in – and the format of – the recall disclosure form. Pennsylvania has a similar law. The California Motor Vehicle Safety Standard makes it illegal to sell or offer to sell any vehicle with an unrepaired safety recall that is not in compliance with the Federal Motor Vehicle Safety Standard (FMVSS). Check with your attorney and state Automobile Trade Association Executive to be sure.
Of course you don’t have to disclose anything, if that’s what you choose to do. But it is illegal to sell new vehicles with an unrepaired safety recall!
However, transparency isn’t only the best policy (to build trust for the long term), it is illegal in some states to not disclose recalls and puts your dealership and you at risk. Not to mention the risk your customers would have.
Our clients lose sleep over this issue: They want to disclose. However, with all the errors and delays in the system (NHTSA, SaferCar, VHRs, even the OEMs), even diligent dealers are at risk and don’t know it!
If you don’t know, you can’t disclose!
Won’t that protect me if I print their results to use for disclosure statements?
There are five major issues with relying on the Government for free information:
1) Anyone can sue anyone else.
2) Printouts from SaferCar.gov have no disclaimer statement, nor places for customers to sign that they have read and understood the results
3) There are significant data errors and publication timing delays* with information from NHTSA and SaferCar.gov
4) Pasting a VIN into SagerCar.gov is manual. You could save a lot of time and money by automating your recall discovery and disclosure statement printing.
5) SaferCar printouts typically have 6 to 12 pages – mostly without pertinent information. It takes time to figure out which pages to print, or else you’re doing so after printing. A waste of time and resources.
In order to protect yourself and your customers/drivers, automating the recall-discovery and reporting process not only saves time, but doing so through a trusted third party (i.e., not the Government) helps reduce your liability, finds more recalls and will save you time and money!
Because you are not a “safety recall expert”, how can you know how flawed the ecosystem is? Until and unless you get into the details of the errors and timing delays in the safety recall ecosystem, it is unknowable.
* Even though there have been news articles calling out NHTSA’s operational difficulties (here and here), most people are unaware of the flawed safety recall ecosystem. Our research shows a consistent 30% error rate in NHTSA’s database!
Yes, they are the source of which VIN has which part, and therefore determine which vehicles are affected by which safety recalls.
However, AutoAp regularly discovers errors and delays in the OEMs’ own information. We stumbled upon these issues in 2014 when we developed our flagship service (Dynamic Recall Management – DRM). We were amazed that a small company in Beaverton, Oregon could (regularly!) identify errors and delays with the OEMs. They are there and anyone managing vehicles (dealers, rental car companies, fleets, etc.) are at risk!
Ignorance is not a defense!
There are five major issues with relying on the OEMs for free information:
1) Again, anyone can sue anyone else.
2) Printouts from DCSs (Dealer Communication Systems) have no disclaimer statement, nor places for customers to sign that they have read and understood the results.
3) There are also data errors and publication timing delays with OEM information.
4) OEM's own systems do not always agree*.
5) Pasting a VIN into your DCS or off-brand OEM VIN-verification sites is manual. You could save a lot of time and money by automating your recall discovery and disclosure statement printing.
* If you would like to see proof points, get the book: “Safety Recalls: Think You’re Covered?”
Again - automate the recall-discovery and reporting process to save time, money and to reduce your liability and your customers’/drivers’ risk!
If you are a gambler, sure. If you are concerned about the safety of your customers, then it’s best to get your policy, point person and automation in place.
If liability is the key to action, then consider the FAST Act (or the used car safety recall repair act: search for 24104, so you don’ have to wade through the entire 491 pages). It not only requires rental car companies to not rent vehicles with open safety recalls (or swap them out if a recall is issued after renting a vehicle), the Act also affects dealerships who rent or loan vehicles. Some states have enacted more stringent modifications to this Act, so check with your attorney.
Yes and no. Federal laws affect dealers across the board. However, different states have different laws when it comes to safety recalls. Check with your attorney for those that affect you.
You can either make a decision based on the legal aspects or you can make a decision from a business perspective. If you want to save time, money, reduce your liability and customer risk – and if you’re a franchised dealer – increase your revenue and profitability – automate the recall verification, monitoring and reporting process.
Your answers to a few questions might shine a light on what to do to effectively manage safety recalls… to increase revenue while decreasing liability.
1) Do you have a written safety recall management policy, that all employees have signed?
2) Do you check every vehicle for recalls upon acquisition and sale?
3) Do you use multiple sources for recalls, or do you rely on just one source?
4) Do you check off-brand as well as your brand?
5) Do you check every vehicle for recalls every day? In-brand, off-brand, new and used?
6) Do you print a consumer disclosure statement for every vehicle sold?
7) Do you receive early warning alerts on upcoming recalls?
8) Does everyone on your team receive a daily report as to your inventory’s status?
9) Is your system manual?
If you answered “No” to any of the questions, you are probably missing recalls (= lost revenue & selling vehicles with open safety recalls).
If you have other questions regarding safety recalls, please let us know: Send your questions via email to FAQs@autoap.com.
Note: None of the comments in this FAQ should be construed as legal advice. Please consult your attorney for legal advice.