FTC Consent Decree Would Allow Dealers to Sell Certified Cars with Safety Defects

by Jeff Sovern

Some auto dealers advertise and sell "certified" used cars. The word "certified" conveys that the car has gone through a process of inspection and that any problems have been remedied. At least, that's how I understand it.  Sometimes, however, these certified cars have been recalled for safety defects which have not been repaired. The FTC has reached a consent decree with a dealer that has allegedly sold such certified cars and has put it out for public comment.  The consent decree obliges the dealer either to repair the defects or disclose that they have not been repaired, even while selling the car as certified.  In other words, the only protection consumers will get against this particular practice will be, if the dealer opts for it, a disclosure. Regular readers of this blog will know that considerable empirical research demonstrates that consumers often ignore disclosures.  A book-length treatment of the issue, with the title indicating the findings, is  Omri Ben-Shahar & Carl E. Schneider, More Than You Wanted to Know: The Failure of Mandated Disclosure 12 (2014) (“not only does the empirical evidence show that mandated disclosure regularly fails, failure is inherent in it”). I suspect many consumers will interpret the word "certified" as meaning any defects have been fixed and will not go beyond that to read carefully a disclosure, no matter how clear and conspicuous, that contradicts their understanding. That would be consistent with the findings in our arbitration study that many consumers ignore disclosures in favor of their pre-conceptions.  Accordingly, the result of the consent decree would be that consumers pay premium prices for unsafe cars that they believe to be safe and do not have repaired, endangering themselves, their families, and others on the road. Readers inclined to comment on the consent decree can do so here; the comment deadline is February 29. (HT: Rosemary Shahan)


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