FTC Urged to Require Liability Warnings on Chryslers

Rep. André Carson would make carmakers buy insurance.
Rep. André Carson would make carmakers buy insurance. (Aj Mast - Associated Press)
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By Kendra Marr
Washington Post Staff Writer
Friday, July 3, 2009

Consumer groups petitioned the Federal Trade Commission yesterday to require that Chrysler vehicles display stickers warning prospective buyers of liability risks.

The request comes after Chrysler successfully shed its obligation for past and future product liability claims on vehicles manufactured before May 30, when most of the company's assets were sold to a new company run by Italian automaker Fiat.

While consumers can still file claims if their vehicles were made by the "old" Chrysler, that entity remains in bankruptcy and consumers are likely to recover little, if anything.

Consumer Action, the Center for Auto Safety, the Center for Justice and Democracy, Consumers for Auto Reliability and Safety, and the National Consumers League asked the commission to make an emergency amendment to the "used car rule," which mandates window stickers that disclose purchasing and warranty information.

The groups propose adding a warning that reads: "This vehicle was produced prior to the date when the Chrysler bankruptcy was approved. If you buy this vehicle and are injured or killed, even if your injuries were caused by the manufacturer, you or your survivors will not be able to recover your losses by taking action against the manufacturer. If your passengers are injured or killed, even if their injuries were caused by the manufacturer, they and their survivors will not be able to recover their losses by taking action against the manufacturer."

Steven Baker, director of the commission's Midwest region, said "the FTC received this petition. We take all these petitions very seriously and will be giving it a hard look."

Chrysler opposes the petition, saying the consumer groups had failed to uncover a "systemic defect that requires disclosure."

"Freeing a company from vexatious litigation is part of the bankruptcy process and a means of assuring the company's viability going forward," Chrysler spokesman Michael Palese said.

General Motors, which is operating under bankruptcy protection, originally sought the same protections as Chrysler. But last week it made a concession. Under a deal reached with the Obama administration and several state attorneys general, GM agreed to consider claims related to cars manufactured before the company is sold to a new entity, so long as the accident happens after the sale is completed. Claims related to accidents that occurred before the sale will remain with the "old" GM, and, as with Chrysler, plaintiffs would recover very little, if anything.

GM spokesman Tom Wilkinson declined to comment. The automaker recently asked Comcast to pull a television ad, paid for by consumer groups, which alleged that GM is endangering consumers.

Since GM and Chrysler entered bankruptcy, a number of groups have aggressively lobbied Congress and the Obama administration to force the two automakers to accept all product liability claims. Rep. André Carson (D-Ind.) has proposed legislation that would require all automakers to purchase liability insurance if they are majority-owned by the federal government or if they have federal loans.

Rosemary Shahan, president of Consumers for Auto Reliability and Safety, said there should be some consistency in how GM and Chrysler consumers are treated.

"Right now, it's so frighteningly arbitrary," Shahan said.

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