January 1 saw the enactment of Tennessee House Bill 141, to the collective groan of consumers. In a nutshell, this new law prevents consumers from suing car dealers if they purchase a used vehicle with an open safety recall, as long as it was disclosed, and the customer signed off on that disclosure.
For many dealerships the law doesn’t appear to be a dramatic shift from what already takes place. So, what is different about it, causing it to draw the rage of consumer protection groups and organizations, fearing Tennessee will become the nation’s dumping ground for recalled vehicles?
While every other state in the nation has consumer protection laws that require recall safety disclosures upon the sale of an affected vehicle, Tennessee is the first state that will indemnify a dealer post-sale, IF, at the time of purchase, the consumer was notified of the existing safety recall.
While other states have tried to pass similar laws, all have failed ---- until now.
Lobbyists for the automotive industry are celebrating the law’s passage. However, in my opinion, there’s not much to cheer about. Let me explain: Certainly, as a car dealer, avoiding liability through the legal and democratic process is, understandably, a reason to cheer -- that I understand. Nobody wants to get sued. However, this bill was passed at the eleventh hour and attached to other legislation. As a result, consumer reaction so far is to feel tricked and slighted by state legislators, the automotive industry and lobbyists.
Sadly, this type of action just reinforces the old stereotype that car dealers can’t be trusted. There is also concern that dealers in the other 49 states will begin dumping used vehicles they can’t fix or resell to the state of Tennessee, because it’s now easier to sell them there without worry.
Personally, I don’t believe this legislation will stand. Based on reactions from the citizens of Tennessee, my bet is that politicians will quickly repeal this legislation and claim they are “listening” to their constituents. Once that occurs, the only ones left looking like “bad guys” will be car dealerships, since this legislation was originally pushed through by the dealer association.
Perhaps there is a middle ground?
What if the legislation went a little further than simply notifying consumers? What if it added that the dealer would provide a full report about all existing recalls along with instructions on where to go for the necessary repairs?
If we took this extra step and notified consumers about any open safety recalls AND also provided instructions and guidance on how to get those repairs completed, it would be difficult for a consumer to then come back and sue the dealer.
Adding this dimension to legislation is just a common-sense measure. It would illustrate that dealers are doing everything in their power to instruct the customer; and that the customer is aware. It would be difficult for a consumer who did NOT follow the instructions to then argue that they should be able to sue the dealer.
Consumer perception is a huge problem for dealers. This type of legislation only further feeds into that negative image dealerships and manufacturers have been working hard to overcome. Instead of introducing legislation that seemingly only protects dealers, why not find a middle ground where everyone wins?