CarMax Lawsuit: Undisclosed Safety Recalls on Used Cars

The Core Issue

The complaints against CarMax center on a mismatch between its marketing and its cars: the company advertised a rigorous inspection process, but regulators found it sold used vehicles with open, unrepaired safety recalls — for defects involving airbags, brakes, fuel pumps and other critical parts — without adequately disclosing them. One review found more than a quarter of CarMax cars offered in several states had at least one unrepaired recall.

An open recall means a manufacturer has identified a safety defect and offers a free fix; selling such a car as “inspected” without disclosure is the heart of the allegations.

The Settlements

The Federal Trade Commission acted against CarMax in 2016 over touting inspections while failing to disclose unrepaired recalls. Later, in 2022, CarMax reached a roughly $1 million settlement with 36 state attorneys general, agreeing to disclose open unrepaired recalls to buyers before purchase. These are regulatory resolutions; CarMax addressed the practices without a court finding of liability.

The practical result is a disclosure obligation — buyers should be told about open recalls before they sign.

What Buyers Should Know

Before buying any used car, check its VIN against the free federal recall lookup to see if it has an open recall, and get any recall repair done at a franchised dealer at no cost. A dealer’s “inspection” claim does not necessarily mean recalls have been addressed — the VIN check is the reliable step.