Dealer Fix Obligations

What It Means

Dealer obligations for open recalls differ sharply between new-vehicle dealers, used-vehicle dealers, and rental/loaner operations. For new-vehicle sales, the federal Motor Vehicle Safety Act and 49 CFR 577 prohibit franchised dealers from delivering any new vehicle to a retail customer with an open safety recall until the remedy has been performed, the "no-sale" rule for new cars is strict and well-enforced, with civil penalties reaching six figures per violation. For used-vehicle sales, however, federal law is far weaker: there is no federal prohibition on a dealer selling a used vehicle with open safety recalls, so long as basic Truth-in-Lending and Federal Trade Commission Used Car Rule disclosures (the Buyers Guide window sticker) are provided. A handful of states have closed this gap: California (AB 2016, 2016) requires disclosure of open recalls prior to used-vehicle sale by licensed dealers; several other states require disclosure but not repair. Franchised dealers are paid by the manufacturer to perform recall repairs, but independent used-car lots have no manufacturer reimbursement relationship for pre-sale recall repairs, creating an economic disincentive. For rental cars and dealer loaners, the 2015 FAST Act (Raechel and Jacqueline Houck Safe Rental Car Act, named for two sisters killed by an unrepaired Chrysler PT Cruiser loaner) prohibits rental companies with fleets of 35 or more vehicles from renting or loaning a vehicle with any open safety recall until the remedy is performed. Rental agencies now maintain daily recall feeds against fleet VINs, taking vehicles out of service until remediated. RecallCheck recommends all used-car buyers run a VIN lookup before purchase and require any open recalls to be remedied by a franchised dealer (free) before completing the sale.

Frequently Asked Questions