Federal Trade Organizations Opens Investigations Into General Motors Company (NYSE:GM) Ignition Switch Debacle


Dallas, Texas 07/27/2015 (Financialstrend) – The Federal Trade Commission is the latest agency to look into how General Motors Company (NYSE:GM) carried itself in the wake of the ignition switch debacle.  The automaker has already been notified about the investigation, as questions continue to be asked on whether dealers will also be targeted.

Deceptive Advertisements

 The investigation centers around pre-owned vehicle advertising where dealers are reported to have carried out sales on vehicles still needing some repairs. General Motors Company (NYSE:GM) has already said it is co-operating with the agency, some dealers having been investigated in the past over deceptive advertising strategies. However, the automaker does not have an estimate of the potential impact of the ongoing investigations.

According to the law, car dealers running an independent business from General Motors Company (NYSE:GM) are required to fix new cars before shipping them. However, the sale law does not apply for used cars.  The FTC has carried out a string of investigations on advertisements carried out by automakers. Last year, Nissan was charged for running a 20 second TV commercial about the Frontier pickup that still had issues.

Recall Lawsuit Costs

 Over the last one year, General Motors Company (NYSE:GM) has recalled more than 30 million cars made of 2.59 million older Chevrolet Cobalt because of faulty ignition switch concern.  The automaker is also being investigated by the Department of Justice, state attorneys, Transport Canada and the SEC. The company could be handed a sizable amount of fine from the Justice Department if found liable to criminal penalties under investigations

General Motors Company (NYSE:GM) plans to spend $625 million in compensating the victims of crashes as a result of the faulty ignition switch. As of July 17, 2015, the automaker had already paid $280 million as compensation to the crash victims. Compensation expert Kenneth Feinberg has already ascertained that 124 number of deaths are eligible for compensation as well as 269 people who suffered injuries as a result.