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?
There are different types of recalls that fall into three main categories:
 Service Campaigns
These are not safety recalls, but might be Customer Satisfaction Programs, Warranty Extensions, Technical Service Bulletins, etc. They are not life-threatening, but may cause other issues. There are no National Highway Traffic Safety Administration (NHTSA) fines associated with them.
Like 'Campaigns”, emission recalls are not safety recalls. Some states, notably California raise the importance to such a level that dealerships are impacted: vehicles should not be registered unless the emission recall has been remedied.
Unlike service campaigns and emission recalls, safety recalls - if not repaired - can cause serious injury or death. It is illegal to sell new vehicles with an unremedied safety recall. Although it is not illegal to sell used vehicles in most states, in some it is illegal to sell a vehicle without disclosing it to the buyer. In others, it is illegal to sell or 'offer to sell' vehicles with open safety recalls.
NHTSA can and has fined dealerships for selling vehicles without open recalls… without disclosing them. Even the Federal Trade Commission (FTC) has fined dealers for false advertising - selling Certified Pre-Owned (CPO) vehicles with open recalls.
Dealers, rental car companies, fleets and fleet managers put their customers, drivers and others at risk if they do not fix safety recalls and open themselves up for lawsuits - in some cases millions of dollars by taking short-cuts.
Some people and companies insist that there are different 'severities' of safety recalls. Currently, this is not true. A safety recall is a safety recall, Full Stop. Even a missing sticker in the User Manual could put someone at risk. For instance, if the tire pressure is stated incorrectly and someone is pulling a tailor and the tire plows out due to incorrect information, then someone could die.
However, there different types:
Non-compliant safety recalls
These are recalls that are non-compliant with the Federal Motor Vehicles Safety Standard (FMVSS).
Stop Sale safety recalls
Dealers are instructed by their manufacturer to not sell a vehicles with an open safety recall.
Do Not Drive safety recalls
Drivers are instructed to not even drive a vehicle with this type of recall.
Do you have a policy?
Having a written-out policy for how to handle safety recalls is always the best first step. It conveys your overall approach to dealing with vehicles under recall. And, it helps reduce your liability. Especially if everyone in your company reads, signs and implements the policy.
Do you have a recall point person?
Having one person who not only is responsible for the policy and processes to manage recalls, but also has the authority to ensure these are implemented is essential to minimizing risks and liabilities associated with safety recalls.
Do you have an automated process?
If you are checking vehicles manually, then you are likely buying, selling, driving and/or de-fleeting vehicles with open safety recalls. Manual methods do not work. Only by having a multi-sourced, automated system that checks your inventory / fleet and notifies everyone in your organization what your recall status is can you increase compliance, decrease liability and risk - and for franchised dealers, increase revenue and profit. While saving time and money.
When acquiring vehicles
If you know the safety recall status of a vehicle before you buy, it will enable you to make even better buying decisions. If it has an in-brand recall with a remedy available, that's an average of nearly $400 warranty reimbursement (if you're a franchised dealer).
With vehicles in your inventory or fleet
Because you are liable! If someone is injured or dies in a vehicle you sold, rented or de-fleeted, it is highly likely they will sue you.
Your customers' vehicles
Safety recalls give dealers the opportunity to keep their customers safe and bring back customers who have not visited the dealership since purchasing their vehicle. This also can increase your CSI score. And as important, generate significant revenue for you.
This depends on who you are.
OEMs have 60 days to send official recall notices via first-class mail, with "Safety Recall Notice" and federal logos printed on the label. Mailed recall notices rarely reach second or third owners; automakers find it difficult to locate vehicle owners who have changed addresses. (MP Note: This is a rat-hole regarding each state's laws regarding consumer privacy, etc. So, best to not even bring it up. Plus - it really has nothing to do with us.)
Rental Car Companies and Fleets
Due to NHTSA's 60-day requirement for OEMs to notify owners, rental car companies and fleet owners and managers also receive notices in the mail. Almost always delay (from when they could know!) and even then, they have to sort through these manually, with many regarding vehicles they've already de-fleeted. We've heard from some rental car companies that upwards of 70% to 80% are for vehicles they no longer own.
They do not get notified by the OEMs, so if the dealer is not checking for recalls from a multi-sourced, automated system, they are buying and selling vehicles with open recalls and do not know it.
Although they receive notifications from their OEM, they are for 'in-brand' vehicles, only (Ford dealer will only receive notices about Fords, not Chevrolets or Toyotas). This makes it a little more than just problematic. In fact, OEMs might not even know that a used in-brand vehicle has been acquired - before it is sold.
Franchised dealerships are buying and selling recalled vehicles and can't know it - due to the errors and delays in the broken safety recall ecosystem - even if they have the best intentions. Again, unless the dealer is checking for recalls from a multi-sourced, automated system, they too are buying and selling vehicles with open recalls and do not know it. Only, their fines and liability are so much higher because they are the only authorized repair facility for safety recalls.
Every day, if you want to make sure you are completely covered, everyday. With an automated system, checking recalls goes from a tedious, lengthy, manual process to an easy, quick, and automated task. Automation allows you to know the safety recall status of all your vehicles, every day.
They do not. They would only expire if that OEM were to go out of business, removing the option for dealers to get reimbursed and parts shipped.
Yes, but you may not want to. Used vehicles can be sold with open recalls, but you are liable. And, each state has a different law regarding vehicles sold with recalls, so the best practice would be not to avoid these where possible, unless you can repair them.
No, you don't have to, but not managing recalls leaves you and your dealership, rental car company or fleet management company open to serious liability.
Yes! If you are a franchised dealership. If you are a rental car company, fleet owner or independent dealership, you cannot. Along with making money from recall repair, your CSI scores will increase due to satisfied customers!
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.