General Motors LLC

Text (OCR of the scan at left; may contain errors)

GENERAL MOTORS LLC

Complaint

IN THE MATTER OF

GENERAL MOTORS LLC

CONSENT ORDER, ETC. IN REGARD TO ALLEGED VIOLATIONS OF SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket No. C-4596; File No. 152 3101 Complaint, December 8, 2016 – Decision, December 8, 2016

This consent order addresses General Motors, LLC’s failure to disclose issues with used motor vehicles. The complaint alleges that the respondent has represented that the used motor vehicles it markets and advertises have been subject to rigorous inspection, including for safety issues, but has failed to disclose that these used motor vehicles are subject to open recalls for safety issues. The complaint further alleges that when the respondent allegedly advertised Certified Pre Owned (“CPO”) vehicles that are subject to open recalls for safety issues, it provided no accompanying clear and conspicuous disclosure of this fact. The consent order requires the respondent to notify every consumer who purchased a CPO used motor vehicle from a GM dealership between July 1, 2013 and the date of entry of the Order, and whose vehicle has not had the open recall repaired, that (1) the consumer’s vehicle has been recalled for safety issues that have not been repaired, and (2) how to get the vehicle repaired.

Participants

For the Commission: Courtney Estep, Peter Lamberton, Michael White, and Evan Zullow.

For the Respondent: Lindsey Barns, Lawrence Lines, Lorelei Misajlovich, and James Williams, in-house counsel.

COMPLAINT

The Federal Trade Commission, having reason to believe that General Motors Company (“Respondent” or “GM”) has violated provisions of the Federal Trade Commission Act (“FTC Act”), and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent is a Delaware limited liability company with its principal office or place of business at 300 Renaissance Center,

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Detroit, MI 48265. Respondent has marketed and advertised for sale used GM motor vehicles.

2. The acts or practices of Respondent alleged in this complaint have been in or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

3. Since at least November 2014, Respondent has disseminated or has caused to be disseminated advertisements promoting the sale of “Certified Pre-Owned Vehicles.” Respondent establishes criteria for certifying pre-owned vehicles, which are then inspected and sold by Respondent’s local dealerships. Respondent provides consumers a 12-month/12,000-mile “bumper to bumper” warranty for each Certified Pre-Owned Vehicle.

4. Respondent’s advertisements for Certified Pre-Owned Vehicles include, but are not necessarily limited to, advertisements and marketing materials posted on the website www.gmcertified.com, excerpts of which are attached as Exhibits A through F. On this website, Respondent advertises Certified Pre-Owned Vehicles that are available at its affiliated local dealerships by, among other things, allowing consumers to search for individual cars and providing descriptions of these cars.

5. Respondent’s advertisements on its website have included the following claims regarding its Certified Pre-Owned Vehicles:

“We check it, so you don't have to.

172-Point Inspection and Reconditioning

Our detailed, 172-Point Vehicle Inspection and Reconditioning Process is one of the most comprehensive in the industry. Before any Chevy, Buick, or GMC used vehicle earns the title of Certified Pre-Owned, it must first meet all of our rigorous standards.

Our 172-Point Vehicle Inspection and Reconditioning Process is conducted only by highly trained technicians and adheres to strict,

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factory-set standards to ensure that every vehicle's engine, chassis, and body are in excellent condition. The technicians ensure that everything from the drivetrain to the windshield wipers is in good working order, or they recondition it to our exacting standards. The vehicles are road-tested, put up on a lift for a complete underbody and frame inspection, and then completely checked for any cosmetic flaws.

And we do check it all. From the engine block to the shocks, right down to the floor mats, no major system is overlooked. If it fails a single point, we completely recondition it - or it won't be Certified."

Exhibit A.

6. Respondent also provides on its website a checklist of all items that its local dealers review as part of Respondent's 172point inspection. This checklist includes "open recalls":

REVIEW THE VEHICLE'S HISTORY: PASS FAIL ...

Open Recalls □ □

Exhibit B.

7. Even though it has made the claims set forth in Paragraphs 5 and 6, until at least June 2015, Respondent has advertised on its website numerous Certified Pre-Owned vehicles available at its local dealerships with open recalls for safety issues.

8. In some instances, these open safety recalls have included recalls for defects that can cause serious injury. For example, Respondent has advertised Certified Pre-Owned vehicles that have an open safety recall for a key ignition switch defect, which can affect engine power, power steering, braking, and airbag deployment, thereby increasing the risk of a crash and occupant injury. Respondent also has advertised Certified Pre-Owned

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vehicles that have an open safety recall for a defect associated with the body control module connection system, which can result in a variety of issues with the brakes that may increase the risk of a crash. Respondent also has advertised Certified Pre-Owned vehicles that have an open safety recall for a defect associated with the chassis electronic module, which can cause engine stalls, thereby increasing the risk of a crash.

9. In numerous instances, until at least June 2015, when Respondent has advertised Certified Pre-Owned vehicles that are subject to open recalls for safety issues making the claims set forth in Paragraph 5 and 6, it has provided no accompanying clear and conspicuous disclosure of this fact.

10. When consumers search for particular categories of vehicles on Respondent's website, there is no disclosure of open safety recalls. An example of such search results includes the following:

CERTIFIED PRE-OWNED VEHICLE SEARCH DEALER LOCATOR CERTIFIED ADVANTAGE VEHICLE MODELS Search Results 63 listings match your search within 100 miles of 35405. VEHICLES PER PAGE 50 PAGE 1 GO of 2 YOUR SEARCH SORT BY: Distance (Near to Far) SELECT VEHICLES: Compare 35405 UPDATE Search All Makes Search All Models ADVANCED FILTER DISTANCE FROM 35405 100 miles YEAR to PRICE Any to Any MILEAGE Under 30,000 miles EXTERIOR COLOR All Colors BODY STYLE Car SUV/Crossover Truck Van SEAT CAPACITY All Seat Capacities FUEL TYPE All Fuel Types 2014 GMC TERRAIN SLT-2 $28,995 Mileage: 16,908 Color: Silver BARKLEY BUICK GMC CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS 2014 BUICK ENCLAVE LEATHER $34,995 Mileage: 22,709 Color: Red BARKLEY BUICK GMC CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS 2014 BUICK ENCLAVE LEATHER $37,995 Mileage: 25,890 Color: Black BARKLEY BUICK GMC CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS 2014 CHEVROLET EQUINOX 1LT $23,995 Mileage: 29,366 Color: White BARKLEY BUICK GMC CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS 2014 BUICK ENCLAVE LEATHER $36,995 Mileage: 18,946 BARKLEY BUICK GMC CADILLAC, INC Select to Compare MORE DETAILS

Exhibit C.

GENERAL MOTORS LLC

Complaint

11. When consumers have viewed specific vehicle listings on Respondent's website, there is no disclosure regarding open safety recalls. An example of a listing for a Certified Pre-Owned vehicle with an open safety recall includes the following:

< Back to Results Print Vehicle Details 2010 CHEVROLET IMPALA LT $15,991 Mileage: 17,275 Exterior Color: N/A Interior Color: N/A 12 months/12,000 miles additional Certified Pre-Owned Bumper-to-Bumper Limited Warranty¹ Info about how to get a free vehicle history report. Contact Dealer CERTIFIED PRE-OWNED CHEVROLET BUICK GMC PHOTO NOT AVAILABLE DRAPER CHEVROLET COMPANY (989) 790-0800 4200 BAY RD SAGINAW, MI 48603 View Inventory Contact Dealer Vehicle Features SPECIFICATIONS TECHNICAL ELECTRONIC SAFETY INTERIOR EXTERIOR BENEFITS Vehicle Specifications VIN 2G1WB5EK2A1209685 TRANSMISSION 4-Speed Automatic BODY 4 Door Sedan ENGINE 3.5L V6 12V MPFI OHV Flexible Fuel DOORS 4 DRIVETRAIN Front-Wheel Drive SEATING CAPACITY N/A PAYLOAD CAPACITY N/A WHEEL BASE 110.5 To get driving directions, please enter your address below. 48603 Get Directions 1.9% APR 1.9% APR for well-qualified buyers on Chevrolet Cruze, Buick LaCrosse and GMC Terrain. Information Contact Us FAQ YouTube Tools Trade-in Estimator Monthly Payment Calculator GM Sites Chevrolet.com Buick.com GMC.com More GM Sites Legal Copyright/Trademark Privacy Statement AdChoices © 2013 General Motors

Exhibit D.

12. Another example of a listing for a Certified Pre-Owned vehicle with an open safety recall appears as follows:

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< Back to Results Print Vehicle Details 2011 CHEVROLET CAMARO $27,654 Mileage: 24,260 Exterior Color: Silver Ice Metallic Interior Color: N/A LEN STOLER CHEVROLET- CADILLAC (410) 876-2233 363 BALTIMORE BLVD WESTMINSTER, MD 21157 View Inventory Contact Dealer 12 months/12,000 miles additional Certified Pre-Owned Bumper-to-Bumper Limited Warranty! CARFAX Vehicle History Report [illegible] Want to find out the history of this 2011 Chevrolet Camaro? [illegible] Like a Certified Pre-Owned car, truck, crossover or SUV in our dealer's inventory? Make sure its vehicle history report is flawless. Get a CARFAX Vehicle History Report and protect yourself against used vehicles with costly hidden problems. Here is a preview of this Certified Pre-Owned vehicle's history:

CARFAX 1-Owner Vehicle Qualifies for the CARFAX Buyback Guarantee No Total Loss Reported to CARFAX No Structural/Frame Damage Reported to CARFAX No Airbag Deployment Reported to CARFAX No Indication of an Odometer Rollback No Accidents / Damage Reported to CARFAX Get a Free CARFAX Vehicle History Report To get driving directions, please enter your address below:

21157 Get Directions 1.9% APR 1.9% APR for well-qualified buyers on Chevrolet Cruze, Buick LaCrosse and GMC Terrain.

CERTIFIED PRE-OWNED Vehicle Features SPECIFICATIONS TECHNICAL ELECTRONIC SAFETY INTERIOR EXTERIOR BENEFITS Vehicle Specifications VIN 2G1FT1EW4B9120181 TRANSMISSION N/A BODY 2 Door Coupe ENGINE 6.2L V8 16V MPFI OHV DOORS 2 DRIVETRAIN Rear-Wheel Drive with Limited-Slip SEATING CAPACITY 4 Differential WHEEL BASE 112.3 PAYLOAD CAPACITY N/A [illegible] Information Tools GM Sites Legal Contact Us Trade-in Estimator Chevrolet.com Copyright/Trademark FAQ Monthly Payment Calculator Buick.com Privacy Statement YouTube GMC.com AdChoices More GM Sites © 2013 General Motors

Exhibit E.

13. In some listings for Certified Pre-Owned vehicles, such as the example shown in Paragraph 12, there is a line that reads “CARFAX Vehicle History Report.” Underneath that line,

GENERAL MOTORS LLC

Complaint

Respondent provides a "preview" of the vehicle history report. If a consumer were to locate this information, understand that one could click on the line reading "Get a Free CARFAX Vehicle History Report" to access additional information, and click on the line, a vehicle history report potentially containing information about an open safety recall would appear.

14. In many instances in which a Certified Pre-Owned vehicle is subject to an open safety recall, such as the example shown in Paragraph 12, GM's preview of the vehicle history report has excluded that information.

15. In contrast, in many instances in which a Certified Pre- Owned vehicle has no open safety recall, GM's preview of the vehicle history report includes that information. An example of such a listing includes the following:

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SEATING CAPACITY 4 WHEEL BASE 112.3 DRIVE TRAIN Rear-Wheel Drive with Limited-Slip Differential PAYLOAD CAPACITY N/A [illegible] [illegible] [illegible] Information Contact Us FAQ YouTube Tools Trade-In Estimator Monthly Payment Calculator GM Sites Chevrolet.com Buick.com GMC.com More GM Sites Legal Copyright/Trademark Privacy Statement AdChoices © 2016 General Motors

Exhibit F.

VIOLATION OF THE FEDERAL TRADE COMMISSION ACT

Count I

16. In connection with the marketing or advertising of used GM motor vehicles, Respondent has represented, directly or indirectly, expressly or by implication, that used motor vehicles it advertises have been subject to rigorous inspection, including for safety issues.

17. In numerous instances in connection with the representation set forth in Paragraph 16, Respondent has failed to disclose, or disclose adequately, that used vehicles it advertises are subject to open recalls for safety issues.

18. Respondent's failure to disclose, or disclose adequately, the material information set forth in Paragraph 17 above, in light of the representation described in Paragraph 16, above, constitutes a deceptive act or practice in or affecting commerce in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).

THEREFORE, the Federal Trade Commission, this eighth day of December, 2016, has issued this complaint against Respondent.

By the Commission.

GENERAL MOTORS LLC

Complaint

Exhibit A

Car Inspection: 172-Point Inspection | GM Certified Pre-Owned http://www.gmcertified.com/certified-benefits/vehicle-car-inspection

OVERVIEW (/CERTIFIED-BENEFITS/) BUILT-IN VALUE (/CERTIFIED-BENEFITS/BUILT-IN-VALUE) TWO AUTO WARRANTIES (/CERTIFIED-BENEFITS/USED-CAR-WARRANTY) SCHEDULED MAINTENANCE (/CERTIFIED-BENEFITS/USED-CAR-MAINTENANCE-PLAN) 172-POINT INSPECTION (/CERTIFIED-BENEFITS/VEHICLE-CAR-INSPECTION) 3-DAY/150-MILE GUARANTEE (/CERTIFIED-BENEFITS/CUSTOMER-SATISFACTION-3-DAY-150-MILE) HISTORY REPORT (/CERTIFIED-BENEFITS/VEHICLE-HISTORY-REPORT) ONSTAR/SIRIUSXM TRIAL OFFERS (/CERTIFIED-BENEFITS/XM-RADIO-ONSTAR-TRIAL) VIDEOS (/CERTIFIED-BENEFITS/VIDEOS)

We check it, so you don't have to.

172-Point Inspection and Reconditioning

Our detailed, 172-Point Vehicle Inspection and Reconditioning Process is one of the most comprehensive in the industry. Before any Chevy, Buick, or GMC used vehicle earns the title of Certified Pre-Owned, it must first meet all of our rigorous standards. Our 172-Point Vehicle Inspection and Reconditioning Process is conducted only by highly trained technicians and adheres to strict, factory-set standards to ensure that every vehicle's engine, chassis, and body are in excellent condition. The technicians ensure that everything from the windshield to the windshield wipers is in good working order, or they recondition it to our exacting standards. The vehicles are road-tested, put up on a lift for a complete underbody and frame inspection, and then completely checked for any cosmetic flaws. And we do check it all. From the engine block to the shocks, right down to the floor mats, no major system is overlooked. If it fails a single point, we completely recondition it—or it won't be Certified. View the points of our inspection below. Download a copy of the 172-point Vehicle Inspection and Reconditioning Process (/Content/pdf/Certified-advantage/CPO_172-PointInspectionChecklist101913.pdf)

Find Vehicles Start your Search Now Zip Code (Required) Search All Makes Search All Models SEARCH NOW

ZERO% EVENT 0% APR for well-qualified buyers on Chevrolet Cruze, Equinox, Impala, and Malibu; Buick LaCrosse and Verano; and GMC Terrain. APR Details (/offers/apr-specials)

Information Contact Us (/contact-us) FAQ (/frequently-asked-questions) YouTube (http://www.youtube.com /user/gmcertified)

Tools Trade-In Estimator (/vehicle-trade-in-estimator) Monthly Payment Calculator (/monthly-vehicle-payment-calculator)

GM Sites Chevrolet.com (http://www.chevrolet.com/) Buick.com (http://www.buick.com/) GMC.com (http://www.gmc.com/) More GM Sites (/gm-sites)

Legal Copyright/Trademark (http://www.gm.com /copyright-trademark) Privacy Statement (http://www.gm.com /toolbar/privacyStatement.html) AdChoices

© 2014 General Motors

Exhibit A, Page 1

1 of 1 12/15/2014 11:35 PM

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Exhibit B

CERTIFIED PRE-OWNED CHEVROLET BUICK GMC 172-POINT VEHICLE INSPECTION AND RECONDITIONING

SAMPLE

[illegible]

GENERAL MOTORS LLC

Complaint

Exhibit C

http://www.gmcertified.com/vehicle/list#_J [illegible] Locate Used Cars, Trucks &... X CERTIFIED PRE-OWNED VEHICLE SEARCH DEALER LOCATOR CERTIFIED ADVANTAGE VEHICLE MODELS

Search Results 63 listings match your search within 100 miles of 35405 VEHICLES PER PAGE: 30 PAGE: 1 GO of 2

YOUR SEARCH SORT BY: Distance (Near to Far) SELECT VEHICLES: Compare

35405 UPDATE Search All Makes Search All Models ADVANCED FILTER DISTANCE FROM 35405 100 Miles YEAR to PRICE Any to Any MILEAGE Under 30,000 miles EXTERIOR COLOR All Colors BODY STYLE Car SUV/Crossover Truck Van SEAT CAPACITY All Seat Capacities FUEL TYPE All Fuel Types

2014 GMC TERRAIN SLT-2 $28,995 Mileage: 16,908 BARKLEY BUICK GMC Color: Silver CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS →

2014 BUICK ENCLAVE LEATHER $34,995 Mileage: 22,709 BARKLEY BUICK GMC Color: Red CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS →

2014 BUICK ENCLAVE LEATHER $37,995 Mileage: 25,890 BARKLEY BUICK GMC Color: Black CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS →

2014 CHEVROLET EQUINOX 1LT $23,995 Mileage: 29,366 BARKLEY BUICK GMC Color: White CADILLAC, INC 2.19 miles from 35405 Select to Compare MORE DETAILS →

2014 BUICK ENCLAVE LEATHER $36,995 Mileage: 18,945 BARKLEY BUICK GMC Select to Compare MORE DETAILS →

Exhibit C, Page 1 50

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Exhibit D

< Back to Results Print Vehicle Details

CERTIFIED PRE-OWNED CHEVROLET BUICK GMC PHOTO NOT AVAILABLE

2010 CHEVROLET IMPALA LT $15,991 Market-Based Price* Mileage: 17,275 Exterior Color: N/A Interior Color: N/A

12 months/12,000 miles additional Certified Pre-Owned Bumper-to-Bumper Limited Warranty¹

Info about how to get a free vehicle history report.

Contact Dealer

DRAPER CHEVROLET COMPANY (989) 790-0600 Visit Dealer Site 4200 BAY RD SAGINAW, MI 48603

View Inventory Contact Dealer

To get driving directions, please enter your address below.

46603

Get Directions

Vehicle Features SPECIFICATIONS TECHNICAL ELECTRONIC SAFETY INTERIOR EXTERIOR BENEFITS

Vehicle Specifications

VIN 2G1WB5EK2A1209685 TRANSMISSION 4-Speed Automatic BODY 4 Door Sedan ENGINE 3.5L V6 12V MPFI OHV Flexible Fuel DOORS 4 DRIVETRAIN Front-Wheel Drive SEATING CAPACITY N/A PAYLOAD CAPACITY N/A WHEEL BASE 110.5

1.9% APR 1.9% APR for well-qualified buyers on Chevrolet Cruze, Buick LaCrosse and GMC Terrain.

CERTIFIED PRE-OWNED APR Details ->

*Dealer sets price. Tax, title, license, dealer fees, and other optional equipment extra. ¹Whichever comes first, from date of purchase. See participating dealer for limited warranty details. ²Coverage example is based on current available data. Contact your dealer for actual coverage amounts and full limited warranty details.

Information Tools GM Sites Legal Contact Us Trade-In Estimator Chevrolet.com Copyright/Trademark FAQ Monthly Payment Calculator Buick.com Privacy Statement YouTube GMC.com AdChoices More GM Sites

© 2013 General Motors

Exhibit D, Page 1

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Exhibit E

< Back to Results Print Vehicle Details 2011 CHEVROLET CAMARO $27,654 Mileage: 24,260 Exterior Color: Silver Ice Metallic Interior Color: N/A LEN STOLER CHEVROLET- CADILLAC (410) 876-2233 343 BALTIMORE BLVD WESTMINSTER, MD 21157 View Inventory Contact Dealer 12 months/12,000 miles additional Certified Pre-Owned Bumper-to-Bumper Limited Warranty¹ CARFAX® Vehicle History Report Want to find out the history of this 2011 Chevrolet Camaro? CARFAX 1-Owner No Total Loss Reported to CARFAX No Airbag Deployment Reported to CARFAX No Accidents / Damage Reported to CARFAX Vehicle Qualifies for the CARFAX Buyback Guarantee No Structural-Frame Damage Reported to CARFAX No Indication of an Odometer Rollback Get a Free CARFAX Vehicle History Report To get driving directions, please enter your address below. 21157 Get Directions 1.9% APR 1.9% APR for well-qualified buyers on Chevrolet Cruze, Buick LaCrosse and GMC Terrain. Vehicle Features SPECIFICATIONS TECHNICAL ELECTRONIC SAFETY INTERIOR EXTERIOR BENEFITS Vehicle Specifications VIN 2G1FT1EW6B9120181 TRANSMISSION N/A BODY 2 Door Coupe ENGINE 6.2L V8 16V MPFI OHV DOORS 2 DRIVETRAIN Rear-Wheel Drive with Limited-Slip Differential SEATING CAPACITY 4 WHEELBASE 112.3 PAYLOAD CAPACITY N/A

Exhibit E, Page 1

GENERAL MOTORS LLC

Complaint

Exhibit F

CERTIFIED PRE-OWNED VEHICLE SEARCH DEALER LOCATOR CERTIFIED ADVANTAGE VEHICLE MODELS < Back to Results Print Vehicle Details 2012 CHEVROLET CAMARO 2SS $27,950 Mileage: 16,985 Exterior Color: Ashen Gray Metallic Interior Color: N/A HENDRICK CHEVROLET SHAWNEE MISSION (877) 717-5788 8300 SHAWNEE MISSION PKY SHAWNEE MISSION, KS 66202 View Inventory Contact Dealer Certified Pre-Owned Warranty 15 months/31,111 miles* 3 months/19,111 miles remaining in the factory warranty 12 months/12,000 miles additional Certified Pre-Owned Bumper-to-Bumper Limited Warranty CARFAX Vehicle History Report 1.9% APR 1.9% APR for well-qualified buyers on Chevrolet Cruze, Buick LaCrosse and GMC Terrain. Vehicle Features SPECIFICATIONS TECHNICAL ELECTRONIC SAFETY INTERIOR EXTERIOR BENEFITS Vehicle Specifications VIN 2G1FK1EJ1C9162721 TRANSMISSION 6-Speed Automatic BODY 2 Door Coupe ENGINE 6.2L V8 16V MPFI OHV DOORS 2

Exhibit F, Page 1

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SEATING CAPACITY 4 WHEEL BASE 112.3 DRIVE TRAIN Rear Wheel Drive with Limited-Slip Differential PAYLOAD CAPACITY N/A

[illegible]

Information Contact Us FAQ YouTube

Tools Trade-In Estimator Monthly Payment Calculator

GM Sites Chevrolet.com Buick.com GMC.com [illegible]

Legal Copyright/Trademark Privacy Statement AdChoices

© 2013 General Motors

Exhibit F, Page 2

GENERAL MOTORS LLC 1115

Decision and Order

DECISION

The Federal Trade Commission (“Commission”) initiated an investigation of certain acts and practices of the Respondent named in the caption. The Commission’s Bureau of Consumer Protection (“BCP”) prepared and furnished to Respondent a draft Complaint. BCP proposed to present the draft Complaint to the Commission for its consideration. If issued by the Commission, the draft Complaint would charge the Respondent with violation of the Federal Trade Commission Act.

Respondent and BCP thereafter executed an Agreement Containing Consent Order (“Consent Agreement”). The Consent Agreement includes: 1) statements by Respondent that it neither admits nor denies any of the allegations in the Complaint, except as specifically stated in this Decision and Order, and that only for purposes of this action, it admits the facts necessary to establish jurisdiction; and 2) waivers and other provisions as required by the Commission’s Rules.

The Commission considered the matter and determined that it had reason to believe that Respondent has violated the Federal Trade Commission Act, and that a Complaint should issue stating its charges in that respect. The Commission accepted the executed Consent Agreement and placed it on the public record for a period of 30 days for the receipt and consideration of public comments. The Commission duly considered the comments received from interested persons pursuant to Commission Rule 2.34, 16 C.F.R. § 2.34. Now, in further conformity with the procedure prescribed in Rule 2.34, the Commission issues its Complaint, makes the following Findings, and issues the following Order:

Findings

1. Respondent General Motors LLC is a Delaware limited liability company with its principal office or place of business at 300 Renaissance Center, Detroit, MI 48265.

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2. The Commission has jurisdiction over the subject matter of this proceeding and over the Respondent, and the proceeding is in the public interest.

ORDER

DEFINITIONS

For the purposes of this order, the following definitions shall apply:

A. Unless otherwise specified, “Respondent” or “GM” shall mean General Motors LLC, and its successors and assigns. The term “Respondent” shall not include a GM dealer if the dealer is not an agent or legal representative of Respondent for purposes of used vehicle advertising.

B. “Advertisement” or “Advertising” shall mean a commercial message in any medium that directly or indirectly promotes a consumer transaction.

C. “Clearly and conspicuously” means that a required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers, including in all of the following ways:

1. In any communication that is solely visual or solely audible, the disclosure must be made through the same means through which the communication is presented. In any communication made through both visual and audible means, such as a television advertisement, the disclosure must be made through the same means through which the representation requiring the disclosure is presented.

2. A visual disclosure, by its size, contrast, location, the length of time it appears, and other characteristics, must stand out from any

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accompanying text or other visual elements so that it is easily noticed, read, and understood.

3. An audible disclosure, including by telephone or streaming video, must be delivered in a volume, speed, and cadence sufficient for ordinary consumers to easily hear and understand it.

4. In any communication using an interactive electronic medium, such as the Internet or software, the disclosure must be unavoidable.

5. The disclosure must use diction and syntax understandable to ordinary consumers and must appear in each language in which the representation that requires the disclosure appears.

6. The disclosure must comply with these requirements in each medium through which it is received, including all electronic devices and faceto-face communications.

7. The disclosure must not be contradicted or mitigated by, or inconsistent with, anything else in the communication.

D. “Material” shall mean likely to affect a person’s choice of, or conduct regarding, goods or services.

E. “Motor vehicle” shall mean:

1. Any self-propelled vehicle designed for transporting persons or property on a street, highway, or other road;

2. Recreational boats and marine equipment;

3. Motorcycles;

4. Motor homes, recreational vehicle trailers, and slide-in campers; and

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5. Other vehicles that are titled and sold through dealers

I.

IT IS HEREBY ORDERED that Respondent and its officers, agents, representatives, and employees, directly or indirectly, in connection with the marketing or advertising of used motor vehicles shall not, in any manner, expressly or by implication:

A. Represent that used motor vehicles that Respondent advertises are safe, have been repaired for safety issues, or have been subject to a rigorous inspection, unless:

1. The used motor vehicles are not subject to any open recalls relating to safety, and the representation is otherwise not misleading, or

2. Respondent discloses, clearly and conspicuously, and in close proximity to such representation, any qualifying information related to open recalls, including but not limited to:

a. the fact that used motor vehicles that it advertises may be subject to recalls for safety issues that have not been repaired, and

b. how consumers can determine whether an individual used motor vehicle has been subject to a recall for safety issues that has not been repaired,

and the representation is otherwise not misleading.

B. Misrepresent the following:

1. Whether there is or is not an open recall for safety issues on any used motor vehicle;

GENERAL MOTORS LLC

Decision and Order

2. Whether Respondent or GM dealers have repaired used motor vehicles for open safety recalls; and

3. Any other material fact about the safety of the used motor vehicles it advertises for sale.

II.

IT IS FURTHER ORDERED that Respondent, no later than February 6, 2017, must provide, by first class mail to the last known address of every consumer who purchased a Certified Pre- Owned motor vehicle with an open recall for a safety issue from a GM dealership between July 1, 2013 and December 8, 2016, and whose vehicle has not had the open recall repaired, a notice bearing Respondent's name and corporate logo that clearly and conspicuously notifies the consumer (i) that the consumer's vehicle has been recalled for safety issues that have not been repaired and (ii) how to get the vehicle repaired.

Respondent shall not include any advertising, marketing, or other promotional information in the notice. Moreover, the mailing shall not include any other documents.

If Respondent has sent such a notice after August 1, 2015, it shall be deemed to meet the requirements of this proviso.

III.

IT IS FURTHER ORDERED that Respondent shall, for five (5) years after the last date of dissemination of any representation covered by this order, maintain and upon request make available to the Commission for inspection and copying:

A. Each advertisement or other marketing material that makes any representation covered by the order unless, in comparison to an advertisement or other marketing material already maintained by Respondent pursuant to this Section, the advertisement or marketing material: (i) is a duplicate, or (ii) differs only in the description of the vehicle or other ways not related to any representations covered by this order, including a

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website which differs only with respect to individual vehicle details displayed in inventory or search page(s) of the site;

B. All materials that were relied upon in disseminating the representation;

C. All evidence in its possession or control that relates to used vehicle advertising and that contradicts, qualifies, or calls into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations; and

D. Any documents reasonably necessary to demonstrate full compliance with each provision of this order, including but not limited to all documents obtained, created, generated, or that in any way relate to the requirements, provisions, or terms of this order, and all reports submitted to the Commission pursuant to this order.

IV.

IT IS FURTHER ORDERED that Respondent shall deliver a copy of this order to all current and future principals, corporate directors, Chief Executive Officer - General Motors, President - General Motors, Executive Vice President and President- North America, Executive Vice President - Global Manufacturing, Executive Vice President and General Counsel, Executive Vice President - Global Product Development and Purchasing, Executive Vice President and Chief Financial Officer, Senior Vice President - Human Resources, Executive Vice President and President - Cadillac, Vice President - Controller and Chief Accounting Officer, Executive Vice President and President - South America, Executive Vice President and President - Europe, Executive Vice President and President - GM China, and Executive Vice President and President - GM International Operations, and to all current and future managers, employees, agents, and representatives having supervisory responsibilities

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Decision and Order

with respect to the subject matter of this order, and shall secure from each such person a signed and dated statement acknowledging receipt of the order, with any electronic signatures complying with the requirements of the E-Sign Act, 15 U.S.C. § 7001 et seq. Respondent shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.

V.

IT IS FURTHER ORDERED that Respondent shall notify the Commission at least thirty (30) days prior to any change in the corporation(s) that may affect compliance obligations arising under this order, including but not limited to a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which Respondent learns less than thirty (30) days prior to the date such action is to take place, Respondent shall notify the Commission as soon as is practicable after obtaining such knowledge. Unless otherwise directed by a representative of the Commission in writing, all notices required by this Part shall be emailed to [email protected] or sent by overnight courier (not U.S. Postal Service) to: Associate Director for Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580. The subject line must begin: In re General Motors LLC.

VI.

IT IS FURTHER ORDERED that Respondent, within sixty (60) days after the date of service of this order, shall file with the Commission a true and accurate report, in writing, setting forth in detail the manner and form of its own compliance with this order. Within ten (10) days of receipt of written notice from a representative of the Commission, it shall submit additional true and accurate written reports.

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Analysis to Aid Public Comment

VII.

This order will terminate on December 8, 2036, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of this order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of:

A. Any Part in this order that terminates in less than twenty (20) years;

B. This order's application to any Respondent that is not named as a defendant in such complaint; and

C. This order if such complaint is filed after the order has terminated pursuant to this Part.

Provided, further, that if such complaint is dismissed or a federal court rules that Respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal.

By the Commission.

ANALYSIS OF CONSENT ORDER TO AID PUBLIC COMMENT

The Federal Trade Commission ("FTC" or "Commission") has accepted, subject to final approval, an agreement containing a consent order from General Motors, LLC. The proposed consent order has been placed on the public record for thirty (30) days for

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Analysis to Aid Public Comment

receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the FTC will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement's proposed order.

The respondent is an automobile manufacturer that sells the cars it manufactures through local franchise dealerships. According to the FTC complaint, the respondent has represented that the used motor vehicles it markets and advertises have been subject to rigorous inspection, including for safety issues, but has failed to disclose that these used motor vehicles are subject to open recalls for safety issues.

For instance, the respondent has posted advertisements on its website that make the following representations about vehicles that purportedly undergo a rigorous 172-point inspection:

We check it, so you don't have to.

172-Point Inspection and Reconditioning *** Our 172-Point Vehicle Inspection and Reconditioning Process is conducted only by highly trained technicians and adheres to strict, factory-set standards to ensure that every vehicle's engine, chassis, and body are in excellent condition. The technicians ensure that everything from the drivetrain to the windshield wipers is in good working order, or they recondition it to our exacting standards. The vehicles are road-tested, put up on a lift for a complete underbody and frame inspection, and then completely checked for any cosmetic flaws. And we do check it all. From the engine block to the shocks, right down to the floor mats, no major system is overlooked. If it fails a single point, we completely recondition it – or it won't be Certified.

Even though it makes such claims, the respondent has allegedly advertised on its website numerous Certified Pre Owned

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Analysis to Aid Public Comment

(“CPO”) vehicles that were subject to open recalls for safety issues. In numerous instances, when the respondent allegedly advertised CPO vehicles that are subject to open recalls for safety issues, it provided no accompanying clear and conspicuous disclosure of this fact. The proposed complaint alleges that this failure to disclose constitutes a deceptive act or practice under Section 5 of the FTC Act.

The proposed order is designed to prevent the respondent from engaging in similar deceptive practices in the future. Part I prohibits the respondent from representing that used motor vehicles it markets or advertises are safe, have been repaired for safety issues, or have been subject to a rigorous inspection unless the used motor vehicles are not subject to any open recalls for safety issues or the respondent discloses, clearly and conspicuously, in close proximity to such representation, any material qualifying information related to open recalls for safety issues. Part II is a provision that orders the respondent to notify every consumer who purchased a CPO used motor vehicle from a GM dealership between July 1, 2013 and the date of entry of the Order, and whose vehicle has not had the open recall repaired, that (1) the consumer’s vehicle has been recalled for safety issues that have not been repaired, and (2) how to get the vehicle repaired.

Parts III through VII of the proposed order are reporting and compliance provisions. Part III requires the respondent to maintain for five years, and produce to the Commission upon demand, any relevant ads and associated documentary material. Part IV is an order distribution provision that requires the respondent to provide the Order to certain current and future principals, officers, and directors, and to all current employees, agents, and representatives having responsibilities with respect to the subject matter of the Order. Part V requires the respondent to notify the Commission of corporate changes that may affect compliance obligations. Part VI requires the respondent to submit a compliance report to the Commission 60 days after entry of the order, and also additional compliance reports within 10 business days of a written request by the Commission. Part VII “sunsets” the order after twenty years, with certain exceptions.

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Analysis to Aid Public Comment

The purpose of this analysis is to aid public comment on the proposed order. It is not intended to constitute an official interpretation of the complaint or proposed order, or to modify in any way the proposed order's terms.

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Complaint

IN THE MATTER OF

LITHIA MOTORS, INC.

CONSENT ORDER, ETC. IN REGARD TO ALLEGED VIOLATIONS OF SECTION 5 OF THE FEDERAL TRADE COMMISSION ACT

Docket No. C-4597; File No. 152 3102 Complaint, December 8, 2016 – Decision, December 8, 2016

This consent order addresses Lithia Motors, Inc.’s failure to disclose open recalls for safety issues. The complaint alleges that respondent has represented that the used motor vehicles it sells have been subject to rigorous inspection, including for safety issues, but has failed to disclose that the used motor vehicles it sells are subject to open recalls for safety issues. The consent order prohibits the respondent from representing that used motor vehicles it offers for sale are safe, have been repaired for safety issues, or have been subject to an inspection for issues related to safety unless the used motor vehicles are not subject to any open recalls for safety issues or the respondent discloses, clearly and conspicuously, in close proximity to such representation, any material qualifying information related to open recalls for safety issues.

Participants

For the Commission: Courtney Estep, Peter Lamberton, Michael White, and Evan Zullow.

For the Respondents: Mike Goodman, Lucy Morris, and Joel Winston, Hudson Cook LLP.

COMPLAINT

The Federal Trade Commission, having reason to believe that Lithia Motors, Inc., a corporation (“Respondent”), has violated provisions of the Federal Trade Commission Act (“FTC Act”), and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondent is an Oregon corporation with its principal office or place of business at 150 North Bartlett Street, Medford OR 97591. Respondent has marketed, advertised, offered for sale, and sold used motor vehicles.