The Federal Trade Commission (FTC) is now investigating General Motors Co. (GM) over allegations that its dealerships listed used vehicles that still needed recall repairs as certified. The automaker revealed this in its quarterly filing with the Securities and Exchange Commission (SEC) last month. The FTC sent notice of the probe “concerning certified pre-owned vehicle advertising” on June 3, GM said in its SEC filing. The automaker cautioned in the filing that the investigation, along with probes and inquiries by state attorneys general, Congress, the SEC and others, could result in monetary penalties.
On GM’s “pre-owned” vehicles website, the company explains how dealers certify those cars for sale. Those subject to a recall are generally not certified until the dealer makes the needed repairs, but “because of timing issues, or because of dealer error,” some cars listed as certified may still be in need of recall repairs, the company said. The automaker said in its filing that it is facing 172 suits in state and federal court over injuries and deaths allegedly linked to defects for which GM issued recalls in 2014, as well as nine in Canada. GM is also facing 100 proposed class actions in the U.S. and 21 in Canada by drivers who say the vehicles they leased or bought lost value because of the recalls, according to the automaker. As we have written, the Second Circuit Court of Appeals is reviewing a bankruptcy judge’s decision that barred economic loss claims based on the automaker’s pre-bankruptcy conduct as well as lawsuits over accidents that occurred before “Old GM” sold its assets to “New GM” but kept the liabilities. Thus far the appeals court has not ruled.
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