CarMax Accused of Hiding Car’s History

Written on:January 23, 2012
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As reported in this story in the New York Times, CarMax may have some trouble headed it’s way.

A judge in Maryland is currently looking into finding CarMax in contempt of court for it’s failure to abide by the terms of a 2008 class-action lawsuit settlement. The settlement in question ordered CarMax to provide a “clear warning” to customers when they were offering a vehicle for sale that had seen duty in a rental fleet.

“CarMax still does not disclose its vehicles’ prior use as short-term rental vehicles…” say the plaintiffs in this suit filed in  Maryland County Circuit Court. A spokesperson for CarMax, Trina Lee, replied: “CarMax provides information about vehicle history, including prior rental history, to its customers nationwide.” 

According to Maryland laws, “vehicles formerly used for a purpose other than a consumer good shall be clearly and conspicuously identified as to their former use.”  Former use, in this case, meaning that the car was used by rental car companies as part of their service fleet. Ms. Lee, the CarMax spokesperson, said that their procuderes include placing a note on the window sticker where prior use “includes the word rental where applicable.”  She continued, noting that the company will file a counter-motion asking the judge to dismiss the petition.

A rental vehicle is typically priced lower than a privately-owned used vehicle because their full maintenance and driving habits of the renters are not known. Clarence Ditlow, the Executive Director for the Center for Auto Safety, wrote “States like California and Maryland require disclosure of prior daily rental to avoid consumers paying too much.”

Notably, this class-action lawsuit covers only the state of Maryland. One of the terms of the settlement however, is non-disclosure.  As such, lawyers for the plaintiffs are not able to clarify their points with reporters, nor can they issue a press release with more details.  However, from studying the papers filed with the court, it seems clear that the plaintiffs believe that the terms of the settlement have been violated. Specifically, they claim that the rental-service status is “camouflaged and deceptive” and while they can sometimes be found on the order itself they are not consistently on the financing agreement. They go on to claim that CarMax uses “gratuitous and ambiguous terms” to distract consumers, with potentially misleading words like  “fleet, business use, executive vehicle” that don’t specifically call out use in a rental fleet.

The court is being asked to compell CarMax to fully comply with the terms of the 2008 settlement,  to additionally appoint a third party to monitor CarMax compliance and finally, to  provide legal recourse and compensation for anyone who bought a rental-use car without knowing they had done so.

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