GM faces FTC investigation

Melissa Burden
The Detroit News

General Motors Co. now faces an investigation by the Federal Trade Commission, adding to a list of several authorities and agencies looking into the automaker’s conduct after its delayed ignition switch recall last year.

The automaker disclosed the investigation in a regulatory filing Thursday. It was unclear if GM or its dealers are the target, however.

GM said it was notified June 3 of the investigation by the FTC that concerned “certified pre-owned vehicle advertising where dealers had certified vehicles allegedly needing recall repairs.”

The company said it was cooperating but a GM spokesman declined to comment on the investigation beyond what was said in the regulatory filing. An FTC spokesman on Thursday confirmed the investigation, but declined further comment.

FTC has investigated dealers in the past for deceptive advertising. In 2014, Nissan Motor Co. and its advertising agency agreed to settle an FTC complaint about a 30-second TV advertisement for the Frontier pickup that FTC said was deceptive.

Dealers, who run independent businesses from GM, by law must fix new vehicles that are recalled before selling them. But there are no such laws for used cars.

GM says its certified pre-owned cars go through “strict evaluation” and must pass a 172-point vehicle inspection. They then get a warranty. GM runs the certified pre-owned program and dealers can participate.

Last year, GM recalled more than 30 million vehicles including 2.59 million older Chevrolet Cobalts, Saturn Ions and other small cars for faulty ignition switches that can turn off while driving, disabling air bags. The company initially tied the defect to 13 deaths, but an independent ignition switch compensation fund administrator has approved 124 death claims tied to the defect.

The automaker faces investigations by the Department of Justice, 50 state attorneys general, Transport Canada and the U.S. Securities and Exchange Commission.

GM could face criminal penalities tied to the Justice Department investigation. The automaker also could face a sizable fine.

GM also has been sued in 100 U.S. class action lawsuits and 21 in Canada for economic harm allegedly caused by recalls of vehicles, plus 172 federal/state lawsuits in the U.S. and nine in Canada alleging injury or deaths related to recalls, according to the filing.

“Such lawsuits and investigations could in the future result in the imposition of damages, substantial fines, civil lawsuits and criminal penalties, interruptions of business, modification of business practices, equitable remedies and other sanctions against us or our personnel as well as significant legal and other costs,” GM said in its quarterly earnings filing with the SEC.

The automaker says it does not have an estimate for the potential impact of the lawsuits or investigations it faces.

Staff Writer David Shepardson contributed.