Car Dealers Often Prohibited From Telling Customers of Known Defects | DENENA | POINTS

Car Dealers Often Prohibited From Telling Customers of Known Defects

In the record-breaking surge of auto defects in 2014, lawmakers and the general public are searching for answers on how widespread defects can go unreported to consumers.  Often, a simple repair or replacement of a part could mean the difference between life and death, as with the GM ignition switch defect which prevented airbags from deploying in accidents.  In that case, it is now public knowledge that GM intentionally hid the defect for 10 years, while to date it has caused at least 42 deaths.

The Car Dealer is Where Customers First Get Information

Most customers trust the dealer where they buy their vehicle to let them know if there are any problems or recalls that may affect the make and model that they own.  The repair shop at the local dealer will often be the first place that a defect may be noticed, and it should be standard policy to let vehicle owners know of safety issues.

However, automakers often instruct their franchise dealerships not to communicate problems with vehicle owners, unless there has been a publicly announced recall.  While this may seem hard to believe, dealers are actually coerced into silence about potential defects that could result in injury or death to drivers or passengers.  Automakers go as far as refusing to reimburse dealers for any repairs made to defects, if the dealer communicates with the customer or media about the potential problem. The dealer will have to absorb those costs called ‘chargebacks’ into their already slim margins.

Communication Bans on Service Problems Enforced Through Retaliation and Charge Backs

For example, if a dealer were to receive a service bulletin from its manufacturer, then unsolicited repairs can be made under the warranty, but other customers cannot be contacted to bring in their cars for inspection or repair.  Also, media outlets cannot be contacted with the contents of the service bulletin.  This in effect makes dealers into silent partners with automakers in concealing defects that could cause catastrophic injury or loss of life.  The threat of financial penalties shows how automakers are forcing dealers to comply, or pay the price.

While it is certain that many dealers communicate this information with customers in spite of the ban on sharing service bulletins, there is no reason to think that any customer ever has all of the information on the vehicle that they are driving.  Some states are considering legislation that would allow dealers to share these potential defects with customers, and would prohibit any retaliation by the automaker.

Given the fact that the car dealer is often the only point of contact by the customer with the company that makes their car, it is unjust that the dealer is forced into a role that prevents them from warning customers.  Car dealers and employees are often part of the same community as their customers, and it must be frustrating and demoralizing to see friends and neighbors injured when the dealer had the information to prevent an accident.