House Bill 1898 enjoyed broad support among state lawmakers and car dealers, who claim that the measure will protect consumers because it requires dealers to inform buyers about open recalls on their cars.
The law mandates that dealers provide “formal disclosure” to vehicle purchasers about open recalls. Such a disclosure “alerts [buyers] to the existence of a condition that the vehicle manufacturer, through their dealer network, will correct free of charge,” according to testimony given last year by Pennsylvania Automotive Association Executive Vice President Mark Stine, who supported the bill.
But that “formal disclosure” could very well be buried in the fine print of a purchase, according to car safety groups. Advocates suspect that vehicle dealers are only throwing their support behind the “disclosure” law because it could be used as a defense should they face a lawsuit relating to a defective vehicle they sold.
And for many recalled cars, such as cars with defective airbags, there is such a long backlog for repairs that consumers are left with no choice but to wait.
The law will “give dealers in Pennsylvania a new ‘safe harbor, for selling dangerous recalled used cars,” Ralph Nader wrote in a letter to Pennsylvania's governor, before the bill was signed into law. Consumers for Auto Reliability and Safety, The Consumer Federation of America and several other car safety groups also wrote to the governor urging him to veto the bill.
Protecting car dealers
In the past, dealers and car companies have acknowledged that requiring disclosures helps protect them if a consumer who bought a car under open recall tries to sue.
“The form of disclosure doesn't have to make it clear and conspicuous,” Rosemary Shahan of the Consumers for Auto Reliability and Safety tells ConsumerAffairs. In addition, dealers who don’t follow the state law face a penalty of just $1,000, she says.
Federal laws currently ban dealers from selling new cars that are under open recall, but there is no similar law that applies specifically to used cars.
Some consumers who purchased unrepaired used cars instead have successfully sued dealerships by invoking state laws meant to protect consumers generally against fraud or negligence.
The law in Pennsylvania would make such lawsuits more difficult for consumers to win, Shahan adds.
Preventing liability
The auto industry is currently grappling with the largest recall in its history thanks to airbags produced by the Takata Corporation that have proven to be explosive as they age. At least 24 people have died due to the defect, but car manufacturers say a massive backlog is preventing them from replacing the airbags for millions of consumers in a timely manner.
The majority of deaths and injuries related to the airbags have occured in Honda cars, leading government regulators and the company to prioritize repairs for Honda owners.
But in a measure that is strikingly similar to the bill in Pennsylvania, Honda in 2014 reportedly began pushing dealers to have buyers sign paperwork stating they were aware that their used car had a defective airbag that had not been repaired.
“I believe it takes away the liability,” a Honda dealer told Automotive News at the time.