"Certified" used-car programs are coming under increasing attack from consumer advocates and lawmakers amid allegations that buyers are sometimes being overcharged for vehicles that aren't significantly different from regular used cars.

Used-car programs like these, which typically promise warranty coverage as well as rigorous inspection programs, gained popularity in the 1990s as automakers looked for ways to resell the thousands of leased vehicles coming back to them. By certifying that their used cars had been checked and refurbished, dealers were able to get higher prices. Consumers received reassurance that they weren't buying a lemon. The formula has worked well: Last year, dealers sold about 1.58 million certified cars nationwide, up about 23 percent from two years earlier, according to Leedom & Associates, a research firm that studies the automotive market.

However, a wave of lawsuits is raising questions about used-car certification practices, which can vary significantly among brands and dealerships. Last month, a lawsuit was filed against Ford Motor Co. and a Southern California auto dealership, alleging misleading advertising and unfair pricing. The lawsuit, filed in California Superior Court, is seeking class action status. An earlier lawsuit centered on the fact that a vehicle with prior frame damage was sold as a certified preowned car, although that damage should have excluded the vehicle from the program.

A separate suit, filed late last year against DaimlerChrysler AG and a Chrysler dealership in California Superior Court, is also seeking class action status. That suit alleges consumers are being sold used rental cars through Chrysler's Five-Star Certified Pre-Owned certification program but that dealers don't always disclose the fact - an issue because rental cars typically command a lower resale value than normal used cars. The lawsuits are two among dozens of individual suits that have been filed over the past few years around the country, according to consumer advocates and lawyers.

Chrysler and Ford declined to comment on the specifics of the suits. Ford said that its vehicles undergo thorough inspections before they can be certified and that dealers must file the paperwork to the automaker.

State lawmakers are starting to pay attention. Earlier this year, a bill was introduced in the California Legislature that would tighten the definition of what can be advertised as "certified pre-owned." Among other things, it would make it illegal to sell any car with prior known frame damage as a certified used car.

The problem is the lack of an industrywide standard for what "certified" means, critics say. Dozens of automakers run programs that vary widely in warranty coverage, inspection quality and training for technicians.

On average this year, certified used cars are selling for about $951 more than a noncertified used car, according to data from Leedom & Associates.

Manufacturer-backed certification programs generally offer a warranty, along with some type of thorough inspection, but they vary widely in coverage and criteria for selecting cars. Toyota Motor Corp.'s Lexus requires that its certified cars be no older than five years, while Honda Motor Co.'s Acura looks for vehicles that are younger than six years and that have fewer than 80,000 miles. A few automakers, including General Motors Corp., sometimes allow dissatisfied customers to return used cars.

Consumers should look for programs that explicitly ban cars with frame or excessive panel damage or that are prior wrecks. Consumer advocates also say buyers shouldn't rely too heavily on car histories that often come with vehicles, because they can be incomplete. In addition, it's worth considering certification programs that are backed by factory warranties, because automakers have more resources at their disposal to repair vehicles than individual dealerships might.

An earlier lawsuit against a Ford dealership, filed in San Diego Superior Court and settled within the past year, shed light on the certification process at one dealership. The suit centered on a certified preowned Explorer sold by El Cajon Ford, near San Diego, to the Banaei family of San Diego.

A few weeks after the sale, the vehicle was involved in an accident that killed 17-year-old Naghmeh Banaei, and in the aftermath the family learned that the vehicle had prior frame damage, which should have excluded it from the certified preowned program.

Depositions taken in the case showed that technicians had to do little more than watch a 20-minute video and take a test online to qualify as an inspector for the program. A technician at the California dealership where the Banaeis bought the car testified in a deposition that a certified preowned car inspection often took an hour, the same amount of time spent on a typical used car.

Ford declined to comment on the case.

Dealers for manufacturer-backed programs say the stakes are too high to sell faulty cars under the "certified" label. With random audits from many manufacturers, they risk losing their rights to sell as franchise dealers, said Peter Welch, president of the California Motor Car Dealers Association.

Critics say there is little regulation to ensure that dealers comply with manufacturer standards. In most cases, manufacturers set the benchmarks while the dealers choose which cars to certify. In the Banaeis' case, a testimonial from Ford's "certified pre-owned" program manager showed that for the thousands of "certified" Ford cars sold annually, the company had seven representatives from another company who visited local technicians to review the process.

The bill being considered in California would not only make it illegal in that state to knowingly sell any car that has prior frame damage, but it would also prohibit certification of a vehicle if the odometer had been tampered with, among other factors. It's part of a broader "Car Buyer's Bill of Rights" that would give consumers the option to pay for a two-day grace period to return a car they're unsatisfied with. Backers of the bill say it would give the term "certified" a baseline definition without restricting the wide variety of inspections and warranties included in such programs.

Source: The Wall Street Journal