An advocacy group has filed a complaint with the Federal Trade Commission (FTC) to launch an investigation of General Motors for fraudulent advertising. In question is a recent GM ad in which CEO Ed Whitacre claims the automaker had repaid its government loans "in full, with interest, five years ahead of schedule.”
The advocacy group Competitive Enterprise Institute filed the complaint, stating that since “GM used taxpayer money to make the repayment – specifically, government bailout money from the Troubled Asset Relief Program” and that the repayment “amounted only a little over 10 percent” of the money put into GM by the government, the automaker’s ads are deceptive “because they leave a misleading impression with consumers.”
This constitutes fraudulent advertising, CEI contends to the FTC, because the ad may lead consumers to choose to purchase a GM vehicle over another brand due to their being under the impression that GM is much more financially stable than it actually is. The complaint alleges that GM was losing money at the time of the ad and has an additional $48 billion in financing still outstanding.
CEI says that this omission matters because “a profitable automaker, unlike an automaker that goes out of business, can provide replacement parts for an automobile that a consumer purchased. And unlike a bankrupt automaker, it can be counted on to make good on its warranties.”
Ads of Emerging Infamy
The specific ad at issue, a television spot, features GM CEO Ed Whitacre walking through a factory and touting the automaker’s recent success. CEI has focused on this television commercial as false advertising, but GM has also run similar ads on the radio.
CEI recognized the fact that the ads are literally accurate, given that GM will repay the rest of their government bailout money when the company’s stock goes public and that GM did in fact pay back leftover loans, regardless of where the money came from. Looking at it this way, GM can stand on its statement.
The advocacy group, however, maintains that regardless of literal accuracy, this was a misleading practice because the ads were an effort to defuse “taxpayer anger over the bailout,” and, no matter how you look at it, the bailout presently “continues in nearly full force.”