Used car dealers didn’t want to fix deadly defects, so they wrote a law to avoid it
Carlos Solis never knew that he was driving with a "fragment bomb" in the steering wheel.
The 35-year-old father of two was waiting to turn left on a suburban street outside Houston when another car hit the front end of his Honda Accord and inflated its airbags.
Instead of protecting Solis, the defective airbags shot a piece of metal down his neck and severed his carotid artery, killing him within minutes.
Solis knew nothing of the danger: a used car dealer sold him the car without repairing the airbags or warning him that Honda had recalled the vehicle three years earlier, according to a lawsuit from his family.
When Solis was killed in 2015, similar accidents piled up across the country amid an unprecedented string of recalls for a range of dangerous defects - from fragmentation airbags to ignition switches that shut off engines.
For car dealers, the series of accidents was a warning sign of what was to come: a flurry of lawsuits against them for selling recalled used cars without repairing them first.
Car dealerships had a plan to avoid the problem.
They worked out so-called "model legislation" that would enable them to resell recalled used cars as long as they disclosed open recalls to customers in a pile of sales records somewhere. They then reached out to their lobbying army - more than 600 on call in 43 states - to pass the measure one by one.
The effort pays off.
About this report
This story was produced as part of a collaboration between USA TODAY, the Republic of Arizona and the Center for Public Integrity. Over 30 reporters across the country were involved in the two-year investigation, which found counterfeiting accounts in every state. The team used a unique data analysis engine based on hundreds of cloud computers to compare millions of laws served by LegiScan.
In the past five years, auto dealer counterfeit versions have been introduced in at least eleven states - California, Illinois, Maryland, Massachusetts, Missouri, New Jersey, New York, Oregon, Pennsylvania, Tennessee, and Virginia. So far, only Tennessee and Pennsylvania have adopted it, but action is still being considered in Massachusetts, Missouri, New Jersey and New York.
The success of the auto dealer's efforts is a case study of how special stakeholders with deep pockets of model laws go from state to state - copy-and-paste measures that can be passed to friendly lawmakers in each state - to get the guidelines they want, often with little public scrutiny and sometimes with tragic consequences.
During a two-year investigation, the Center for Public Integrity, USA TODAY, and the Republic of Arizona found thousands of similar laws and some of them were prosecuted to their roots. Many were written by companies or stakeholders that benefited directly. Some are classified as charitable activities.
However, their real intentions are often difficult, if not impossible, for the public to understand.
This is exactly what happened to the dealership's recall disclosure bill.
The legislature has touted the bill as a consumer safety measure. But it was written by the Automotive Trade Association Executives, an industry group in Washington, DC that represents more than 100 executives from regional auto dealer associations.
Consumer advocates say the bill is a cynical ploy: it requires a minimum of responsible behavior from car dealers in order to pass open recalls to customers while under no obligation to actually fix the shortcomings that led to the recalls .
Consumer advocates say the bill is a cynical ploy: it requires a minimum of responsible behavior from car dealers to pass open recalls to customers while under no obligation to fix the shortcomings that led to the recalls.
The bill also gives auto dealers a strong new legal argument when trying to fend off lawsuits by implying that with recall disclosure, it is legal to sell recalled used cars.
However, the bill has allowed lawmakers to say that it is dealing with a high profile issue.
In California, the bill was known as the Consumer Automotive Recall Safety Act. In a statement announcing its 2015 action, then-MP Rich Gordon, a Democrat, promoted it, “California already has the toughest laws in the country to protect car buyers, but we need to improve those laws to address those Improve information for consumers. ”
In the face of opposition, Gordon's bill was eventually amended and the final text that was passed does not deal with the sale of recalled used cars.
In Tennessee, the passed law replaced the Motor Vehicle Recall and Disclosure Act, a far more aggressive measure championed by Jay and Gerri Gass, who lost their daughter in an accident caused by a defective ignition switch. In place of "Lara's Law" honoring her daughter, the gases had something they believed they couldn't support - a law that only required disclosure of information, not a ban on sale.
Lara Gass died on Tuesday morning, March 18, 2014, in a car fire on Interstate 81 heading north following a chain reaction wreck in icy conditions.
"Legislators have been influenced more by lobbyists than citizens trying to do the right thing," said Jay Gass.
Jim Appleton, a New Jersey-based lobbyist who once presided over senior executives at the Automotive Trade Association, said there was no question whether auto dealers were pushing their way. The move, he said, merely clarifies that they should pass open recalls to customers while avoiding stricter requirements that could destroy their business by taking much of their inventory out of circulation for months until recalls repaired is.
"We think this is a good, positive move," said Appleton.
However, Rosemary Shahan, president of Consumers for Auto Reliability and Safety, a California-based consumer protection group, said car dealers are only interested in protecting their bottom line, not the safety of customers.
“If the merchants can get the bill, they can say the only duty they have is to disclose that there is a security recall that is hidden in a pile of documents and only presented to the consumer after it is presented I've already tested several cars, selected a car, negotiated the price, applied for a loan, and signed a purchase or lease agreement, ”said Shahan. "Too late to be effective or useful as a form of disclosure."
A framed picture of Lara Gass taken by her father Jay Gass in 2011 at a restaurant celebrating her brother's college graduation in Nashville, Tennessee, photographed on March 18, 2019 in Ponte Vedra Beach, Florida. Lara Gass died at the age of 27 on March 18, 2014 in a car accident from a defective ignition switch.
Protection of the used car gap
Federal law makes it illegal for car dealers to rent, borrow, or sell new cars with open recalls. However, this ban does not apply to most used cars, which did not scare dealers very much when they sold defective used cars under recall.
That began to change about five years ago when a series of recalls unlike anything the US had seen before sent shock waves through the auto industry.
First, General Motors recalled more than 2.7 million cars in 2014 for defective ignition switches that caused more than 120 deaths and 250 injuries nationwide.
The following year, Takata Corp. admitted that the pieces in his airbags could become deadly fragments - like the ones that killed Solis in Texas - and began the largest automatic recall in US history.
By the end of 2015, the pace of recalls was so rapid that it affected around 18% of cars on US roads, according to an estimate by Carfax, which produces vehicle history reports.
As the number of recalls increased, the car dealerships were examined more closely.
By the end of 2015, the pace of recalls was so rapid that it affected around 18% of cars on US roads, according to an estimate by Carfax, which produces vehicle history reports.
For example, the Federal Trade Commission began investigating auto dealers who were selling recalled used cars as "certified used cars" or who claimed the vehicles had passed a "rigorous" inspection.
In California, Bakersfield-based Tammy Gutierrez sued CarMax for selling her a recalled used car. The landmark case was originally dismissed by the court, but an appeals court retried it last year ruling Gutierrez had a valid claim under state law.
As the pressure increased, car dealers launched their lobbying campaign for the Recall Disclosure Bill.
The first bill surfaced in New Jersey in September 2014 when Congregation deputy spokesman Paul Moriarty introduced a measure that included a $ 20,000 fine for failing to disclose pending recalls to customers.
Moriarty, a Democrat who chairs the Consumer Affairs Committee, said his initial inclination was to propose a ban on the sale of recalled used cars - until he found that car dealers often face a long delay in recall repairs that are only from A manufacturer authorized facility.
The delay can sometimes be months or even years when critical parts are scarce or when manufacturers haven't found a solution to the errors.
"They could have a small dealer who has 20 cars on their property - there are a lot of these people - and they could have their entire property occupied by cars that are under safety recall," Moriarty said. "You couldn't sell them. And they would be out of business."
Behind the push for Moriarty's bill was Appleton, the lobbyist who heads the New Jersey Coalition of Automotive Retailers, an influential lobby group in Trenton whose political action committee has given more than $ 1.6 million to state legislative candidates since 2000 - including $ 14,400. Dollars to Moriarty - donated.
Appleton said a sales ban was "an exceptionally bad idea" as it would force dealerships to shoulder the financial burden of manufacturers' mistakes.
"If automakers would adequately compensate us for keeping recalled vehicles, we'd like to hold the vehicle and wait for the update to become available," Appleton said. "But the fact that they don't pay us means they are in no rush to find a solution. So the burden on dealers is wrong."
Striving for a state-to-state solution
As Moriarty's bill was going through the legislative process, Appleton was helping executives at the Automotive Trade Association make model laws.
What Appleton and his colleagues have come up with consists of two parts: one part where manufacturers have to adequately compensate car dealers for holding onto used cars waiting to be repaired; On the other hand, car dealers have to pass on open recalls to customers - but not fix the deficiencies that led to the recalls.
Jennifer Colman, President of Executives for the Automotive Trade Association, said model legislation is never meant to be a copy-and-paste exercise. The measure, she said, is better described as "suggested language".
In some states, architects of the Recall Disclosure Act have written their own language with the assistance of regional auto dealerships.
In Virginia, Anne Gambardella, chief attorney for the Virginia Automobile Dealers Association, said she was aware of model legislation but was working independently on billing the then Del. Greg Habeeb, a Republican who raised $ 30,000 from auto dealers in his seven years as a delegate.
"We draft our laws here," said Gambardella.
However, the Habeeb bill was closely aligned with the model legislation, including provisions on fair compensation as well as disclosure of recalls. The measure was eventually exempted from the recall disclosure requirement before the then government. Terry McAuliffe, a Democrat, signed it into law in 2016.
In other states, model legislation played a more important role.
The then representative was in Pennsylvania. James Santora worked closely with the Pennsylvania Automotive Association to compile his 2017 bill using the model legislation as a starting point. The measure was unanimously adopted by the Pennsylvania General Assembly the following year and signed into law by Democratic Governor Tom Wolf.
Tennessee in two steps
In May 2017, Tennessee became the first state to pass the Recall Disclosure Act.
The winding road that led to the bill's passage dates back to 2014, when 27-year-old Lara Gass died in an accident caused by a faulty ignition switch in her Saturn Ion, which GM had recalled only weeks earlier .
Gass's parents, Jay and Gerri, then embarked on a crusade for a law in Tennessee that would ban the sale of recalled used cars. They sat down with Mark Green, a Republican who was representing their district at the time, and persuaded him to introduce a bill on their behalf called Lara's Law.
However, it found that Green was consulting other stakeholders in drawing up his bill - including Bob Weaver, an influential Nashville lobbyist who heads the Tennessee Automotive Association. The result: Lara's law has been watered down to only require disclosure of recalls and no sales ban.
"To say the least, we were very upset," said Jay Gass. "We couldn't link our daughter's name to an invoice that contained a disclosure requirement."
Green, who has raised at least $ 56,000 in contributions from auto dealers, later withdrew the bill. He did not respond to requests for comment.
Jay and Gerri Gass pose for a portrait at their home in Ponte Vedra Beach, Florida on the fifth anniversary of their daughter's death on March 18, 2019. Lara Gass died in 2014 at the age of 27 in a car accident caused by a faulty ignition switch.
The next year Green reintroduced Lara's law, this time calling for a ban on sales. On the house side, Rep. Rick Staples, a new Democrat, has sponsored an identical bill.
But both bills stalled in Tennessee's business-friendly general assembly.
Then came a surprise: at the end of the legislature, the auto dealers, with the help of Staples, managed to add their bill as a last-minute change to an unrelated measure to regulate rickshaws. It was quickly passed and signed into law by Republican Governor Bill Haslam.
The Motor Vehicle Recall and Disclosure Act allows car dealers to continue selling used vehicles that have been recalled - unless they are subject to recalls or stop-sale orders, which in rare cases are issued due to serious safety deficiencies.
All car dealers need to do is pass pending recalls to customers and have them sign a form confirming that they have been notified.
Staples said he presented his bill because the only alternative was the status quo.
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"Nothing was in place to protect the consumers involved in these recalls," said Staples. "I didn't want to live with the fact that I didn't do anything to solve the problem."
In a statement, Weaver said feedback from a number of stakeholders had led to changes in the language of the law. Although stakeholders were not getting everything they wanted, he said, "There was widespread consensus that this bill was an important step forward for the benefit of Tennessee auto buyers."
For the gases, however, a law requiring only disclosure and not a ban on sales is a bitter disappointment. "This is absolutely the only thing we didn't want," said Gerri Gass. "I feel so sorry for the people of Tennessee."
Andy Spears of Tennessee Citizen Action, a consumer protection group, said the whole experience was a sobering reminder of how much influence car dealers, who have collectively donated more than $ 1.4 million to state lawmakers in Tennessee since 2000, have on lawmakers hold.
"They were more inclined to follow Weaver and protect unscrupulous dealers than to work to protect the lives of used car buyers in our state," Spears said.
A national ban?
For consumer advocates, one of the primary goals is to get a federal ban on the sale of recalled used cars - through Congress or government action. Either approach would neutralize the laws currently in force in Tennessee and Pennsylvania.
But there seems to be a long way to go. Case in point: In 2017, a coalition of six stakeholders filed a lawsuit against the FTC after reaching settlements with CarMax, GM, and its franchisees that allow them to resell recalled used cars as long as they pass open recalls to customers.
The case is pending in the US District Court for the District of Columbia, which held an oral hearing in September.
More in this series
Copy, Paste, Legislation: A Visual Introduction You Chose to Create New Laws. Instead, they let companies do it. Used car dealers didn't want to fix any fatal defects, so they wrote a law to avoid it. Hold On, Right To Work And Bathroom Bills: 5 Mock-ups That Are Creating Controversy What is ALEC? "The Most Effective Organization" for Conservatives, Says Newt Gingrich. How We Revealed 10,000 Times That Legislature Introduced Copycat Modeling - And Why It Matters What Is The Modeling Solution? Show Who Wrote It, Critics Say For Anti-Abortion Activists, The Success Of "Heartbeat" Laws Was 10 Years In Developing A Progressive Lending Strategy Of Anti-Abortion Groups: Copycat Legislation Using These Copycat Laws On Sharia Law And to terrorism have no impact. Why do states keep happening? The Catholic Church and the Boy Scouts campaign against child abuse laws. This is their playbook Puppies, Phones, and Porn: How Model Laws Affect Consumers' Lives They copied company bills. These lawmakers say that's okay.
In the meantime, US Senator Richard Blumenthal, D-Conn., Co-sponsored a bill in 2017 to propose a ban on sales. Consumers should be protected "from the ticking of a ticking time bomb from the property onto our streets".
However, the Blumenthal bill soon encountered opposition from the National Automobile Dealers Association, which represents about 16,000 car dealers, and stood still without a single hearing.
Jason Levine, executive director of the Center for Auto Safety, a Washington, DC-based consumer protection organization, said it was disheartening to get Congress to respond to a sales ban.
"One would hope that more education of policymakers about the dangers would be enough," said Levine. "It is feared that further deaths and serious injuries will be necessary."
Contributor: Joe Yerardi
The Center for Public Integrity is a nonprofit investigative journalism based in Washington, D.C.
The team behind this investigation
REPORTING AND ANALYSIS: Natalie Allison, Chris Amico, Daniel Bice, Giacomo Bologna, Ben Botkin, David Boucher, Jon Campbell, Amy DiPierro, Paul Egan, Dustin Gardiner, Ronald J. Hansen, Greg Hilburn, Greg Holman, Joe Hong, Lisa Kaczke Keegan Kyle, Kaitlin Lange, Pamela Ren Larson, Aamer Madhani, Patrick Marley, Kelsey Mo, Dan Nowicki, Rob O'Dell, Geoff Pender, Nick Penzenstadler, Agnel Philip, Justin Price, Nick Pugliese, Yvonne Wingett Sanchez, Jeff Schwaner, Chris Sikich, Michael Squires, and Matt Wynn
FROM THE PUBLIC INTEGRITY CENTER: Jared Bennett, Kristian Hernandez, Sameea Kamal, Rui Kaneya, Mark Olalde, Pratheek Rebala, Peter Smith and Liz Essley Whyte
EDITING: Chris Davis, John Kelly, Amy Pyle, Michael Squires, Kytja Weir (CPI), Gordon Witkin (CPI)
GRAPHICS AND ILLUSTRATIONS: Andrea Brunty, Veronica Bravo, Lauren Lapid, Pim Linders, Ramon Padilla, Jim Sergent, Shawn Sullivan, and Mitchell Thorson
PHOTOGRAPHY AND VIDEOGRAPHY: Patrick Breen, Chris Powers, Pat Shannahan
DIGITAL PRODUCTION AND DEVELOPMENT: Robert Barnes, Christian Baucom, Andrea Brunty, Tom Foster, Tyler Hawkins, Spencer Holladay, Ryan Marx, Annette Meade, Josh Miller, Michael Varano, Stan Wilson
SOCIAL MEDIA, ENGAGEMENT, AND PROMOTION: Mary Bowerman, Fr. Kim Bui, Anne Godlasky, Danielle Woodward
This article originally appeared in the US TODAY: Takata Airbag, GM Ignition Recalls: Auto Dealers Will Not Fix Serious Defects
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