WASHINGTON -- General Motors Corp., under a proposed consent order reached Tuesday with a divided Federal Trade Commission, agreed to set up an arbitration program to resolve what could be millions of customer complaints.
By a 3-2 vote, the commission accepted the proposal that would resolve a 1980 FTC complaint accusing GM of failing to disclose alleged problems or defects in recent model year cars.
The proposed order is now open for 60 days of public comment, after which the commission will decide whether to impose the measure as is or with modifications.
As now outlined, GM would conducta multimillion-dollar advertising campaign to inform customers of the nationwide arbitration program that would be conducted by the Better Business Bureau.
Under the program, the company would be required to adhere to the ruling of a volunteer arbritrator. Customers could accept the decision or take their case to court.
FTC Chairman James Miller called the proposed order 'an amicable settlement' that will 'provide customers with an effective and appropriate remedy for the problems they encountered with GM vehicles.'
But Commissioner Michael Pertschuk, in a dissenting statement, said he does 'not believe that individual case-by-case arbitration, where each consumer must prove a right to redress, provides a strong enough solution.'
'Only direct, automatic refunds to consumers, which is the redress remedy the commission has always used before in its cases involving systematic car defects, can do that,' Pertschuk said.
In Detroit, GM spokesman Harold Jackson said the proposal 'provides a much greater opportunity for immediate, long-lasting and comprehensive consumer benefit than ever would have been achieved through litigation.
Under the consent order, negotiated by the commission's regional office in Cleveland, GM does not admit there are any defects with the affected automobiles.
The FTC, in filing its complaint three years ago, cited three examples of 'serious problems or defects which GM failed to disclose.'
-Problem-plagued THM 200 transmissions in 5 million to 6 million GM cars made since 1976 and covering most of the company's product lines.
-Premature wear with camshafts used in about 15 million 305-cubic and 350-cubic inch V-8 engines produced by GM's Chevrolet division and used in several models since 1974.
-Troubled fuel-injection pumps and fuel injectors in about 500,000 350-cubic-inch diesel engines produced by GM's Oldsmobile division and used in several models since 1977.
The failure rate of the components have been disputed by the FTC and GM. The FTC, in announcing the proposed settlement, declined to predict how many of the more than 20 million cars would be subjects of arbitration cases.
It noted, however, that the cost of repairing the GM transmissions and camshafts have averaged from $400 to $600 while customer bills for the fuel-injection pumps and fuel injectors have ranged from $350 to $500.
Since last fall, GM has run a voluntary arbritration program with the Better Business Bureau, which has provided the service since 1971.