What happens if a car with an open recall is sold?

Federal law on selling new vehicles

Federal law strictly forbids new car dealers from selling a vehicle that has an open safety recall. An open safety recall indicates that the company has identified a defect posing a significant safety risk, but the car has not been repaired. This rule comes from the National Traffic and Motor Vehicle Safety Act.

This law applies only to vehicles that have not yet been titled or registered by a first owner, meaning they are still considered “new.” The dealer must complete the free recall repair before proceeding with the sale. This rule protects buyers from known dangers right from the start.

Federal law on selling used vehicles

The Safe Rental Car Act of 2015 prohibits rental companies (generally those with fleets of 35 or more vehicles) from renting or selling vehicles with open safety recalls until they have been repaired.

This law is important because it applies to both the renting and selling of used cars by these big rental companies. It is essential to note that this law does not apply to most independent used car dealers who do not meet the criteria for a large fleet.

State laws and deceptive practices

All 50 states in the country have laws in place to protect consumers from dishonest business practices. These laws prohibit dealers from using deceptive practices, such as concealing essential facts about a car’s condition. These UDAP (‘Unfair or Deceptive Acts or Practices’) laws exist in all 50 states and can apply when a seller fails to disclose known safety defects.

A dealer’s failure to tell a buyer about a known safety defect can lead to serious legal problems under these state laws. The strongest laws, such as those in California, New York, and Illinois, enforce strict rules that require dealers to disclose the truth to customers.

Fines and penalties for non-compliance

Automakers who fail to follow recall rules can face massive penalties from the government. In 2024, Ford agreed to pay up to $165 million to the NHTSA for recall-related violations. This was for moving too slowly on a recall of over 600,000 vehicles with faulty rearview cameras.

The total penalty was split into different parts. Ford had to pay $65 million right away. An additional $55 million was deferred, meaning it could be released at a later time. The company also agreed to spend $45 million on improving its safety reporting systems.

Consumer legal claims for damages

Consumers who are harmed by a defective vehicle can sue for money in court. The most common type of award is compensatory damages, which pays for expenses such as medical bills, lost wages, or car repair costs. Claims often allege negligence, product liability, or fraud under the Unfair Trade Practices Act (UDAP), depending on the facts and applicable state law.

In cases of particularly egregious conduct, such as a company that intentionally concealed information, punitive damages may be awarded. These are additional financial penalties intended to punish the company for its intentional wrongdoing and prevent it from happening again.

Historical number of vehicles recalled

The number of cars and trucks recalled each year is very high. The year 2014 had the highest volume of recalls in US history, reaching over 63 million vehicles. This record total was caused by major problems with Takata airbags and General Motors’ ignition switches.

The large number of Takata airbag recalls, which involved tens of millions of vehicles globally, continued into the 2020s. This persistent issue showed the massive scale of safety defects. In 2016, the US saw another high number of recalls, with 53.2 million vehicles recalled.

Recent recalls by manufacturer volume

New technology has changed how carmakers handle recalls. For instance, Tesla recalled over 2 million vehicles in a single campaign in December 2023 over an Autopilot safety issue. Most of this volume was handled quickly through software updates.

Tesla’s ability to address many of its issues with over-the-air software updates represents a significant shift in how modern recalls are handled. In contrast, many of Ford’s recalls in 2022 were for physical hardware issues, which required owners to bring their cars to a repair shop.

Recall completion rates by manufacturer

Manufacturers work to fix every recalled vehicle, but not all owners get the repair done. This results in a completion rate that is almost always below 100 percent. For cars older than 15 years, the completion rates are often even lower.

The NHTSA wants car makers to do a better job of reaching owners. They encourage manufacturers to enhance owner outreach through various methods, including mail, email, and phone calls. Owners who ignore the recall notice cause the completion rates to remain low.

Risk of serious accidents and injuries

One of the most tragic examples of a defect is the GM ignition switch problem. This single flaw was linked to at least 124 deaths and hundreds of injuries. The problem allowed the key to slip out of the “run” position, shutting off the engine and airbags.

In addition to a $900 million criminal fine paid to the Department of Justice, GM set up a separate compensation fund for victims. This fund paid out money to people who were injured or to the families of those who died. The whole issue caused major congressional hearings.

Legal remedies for the consumer

Federal law requires manufacturers to offer a free repair or replacement for any safety defect that is found to be present in their products. This free remedy is needed for vehicles up to 15 years after they were first sold. The fix is usually a free repair of the problem part.

The remedy applies regardless of how many times the car has been sold; it is not limited to the first owner. Consumers can check their vehicle’s eligibility for the free repair using the NHTSA VIN lookup tool. Manufacturers can also offer a refund or replacement in rare cases.

Advertising and misrepresentation

The Federal Trade Commission (FTC) has taken action against dealerships for engaging in deceptive advertising practices. The FTC settled with large companies like General Motors and Lithia Motors Inc. These companies were advertising used cars as “safe” or “certified.”

The FTC found that the companies did this while concealing known safety defects. The agency stated that advertising a car as “certified” while hiding safety problems is a deceptive business practice. The settlement required dealers to disclose any open recalls in their advertisements clearly.

Private sales and dealer responsibility

If a buyer purchases a used car from a private seller, the legal protections are often minimal. The sale is typically conducted on an “as-is” basis, meaning the buyer agrees to accept the car with all its existing issues and defects. This severely limits the buyer’s right to sue later.

However, a business may attempt to disguise itself as a private seller to evade its legal obligations. Proving a disguised commercial sale may require evidence of repeated transactions or the seller’s business records. If proven, the business may be held liable under state consumer protection laws.

Financial impact on vehicle value

An open recall can lower a vehicle’s value when it is traded in or sold. This reduction in the car’s market price is known as devaluation. For a model with a famous problem or numerous recalls, this lowered value can persist even after the recall repair is complete.

The financial damage can also come from non-safety defects. A lawsuit against Honda revealed that widespread problems, such as premature brake wear, can result in significant costs for owners. Devaluation can persist if a model has a history of publicized mechanical issues.

Time limits for receiving a remedy

Federal law requires a free repair if the vehicle was purchased less than 15 years before the recall notice; the 15-year window determines eligibility for a no-charge remedy.

If an owner paid for a repair out of pocket before the recall was publicly announced, the manufacturer must reimburse them. Owners should keep all repair receipts and contact the manufacturer’s customer service department to start the reimbursement claim process.

Dealer obligations beyond the sale

While many dealers voluntarily check VINs and disclose open recalls, federal law does not generally require used-car dealers to repair or disclose open recalls before sale. Misrepresenting a vehicle as ‘safe’ or ‘certified’ despite open recalls can trigger FTC/state UDAP enforcement.

Dealers who knowingly sell a recalled vehicle without disclosing the recall to the buyer may face lawsuits under state law. Failing to disclose a serious, known defect can be seen as either negligence or a violation of state deceptive practices statutes.

Concerned about what sparked the recall and which models are affected? Learn more in fire risk prompts recall of Corvette Z06 and ZR1 models.

Steps for a concerned consumer

The first step for any concerned consumer is to locate their VIN, a unique 17-digit number. The consumer must then use the official NHTSA VIN lookup tool online to check for any active safety recalls on their specific car.

If a recall is found, the consumer must gather all their vehicle documents and contact the dealer or manufacturer to arrange the free repair. Consumers can also help safety by reporting any serious safety concern directly to the NHTSA, which may then start a formal investigation.

Want to know which models made the list and why it’s such a big deal? Check out Ford and Lincoln recall over 800,000 vehicles for safety issue.

Have you ever bought a car with a recall? Drop your thoughts below.

Read More From This Brand:

• Mercedes orders recall of million-pound hypercars built only three years ago
• Chevrolet issues recall for 23,700 Equinox EVs over low-speed noise issue
• Nissan Leaf owners warned to avoid DC fast charging after fire-risk recall

Don’t forget to follow us for more exclusive content right here on MSN

If you liked this story, you’ll LOVE our FREE emails. Join today and be the first to get stories like this one

This slideshow was made with AI assistance and human editing.