CarMax Loses Round in Dispute Over Recalled Cars

Consumer advocates claim victory in legal battle with the nation's biggest used-car dealer.

Inside A Carmax Inc. Location Ahead Of Earnings Figures
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Consumer advocates are lauding a court ruling this month that allows a claim against CarMax for selling a car with an unrepaired safety recall to continue.

A three-judge panel ruled 2-1 in finding a complaint by Bakersfield, California, resident Tammy Gutierrez against the largest seller of used cars in the U.S. to be legally valid. The Fifth District Court of Appeal in Fresco finding last Thursday sends the case back to a lower court to proceed.

At issue is whether CarMax broke California law when it sold Gutierrez a 2008 Hyundai Elantra with an unfixed defect subject to recall. 

"The new ruling shows a path for victims of such practices who allege that recalled vehicles fail to comply with the implied warranty of merchantability, and are therefore unfit for sale to the public as transportation, to provide additional relevant facts concerning the safety defects," the U.S. Public Interest Research Group, or PIRG, said in a news release. 

"CarMax has led the industry in recall transparency and shares vehicle specific recall information in-store and online," the company said in an emailed statement to The Drive. "The California Court of Appeal's opinion supports the disclosure of open recalls when a dealer is aware of them, which is CarMax's current practice."

CarMax also stressed that the recent opinion is not the final decision in the case.

Safety advocates including the Center for Auto Safety released a report in September that found one in four, or about 27 percent, of vehicles at eight CarMax dealerships had defects subject to safety recalls.