The Federal Trade Commision yesterday accused Ford Motor Co. of violating the law by failing to inform buyers of almost 2.7 million cars of a design flaw that could cause major engine damage.
The alleged defect exists in four and six-cylinder engines installed in Maverick, Comet, Grenada, Monarch, Pinto, Bobcat and Mustang cars in 1974, 1975, 1976 and 1977 models.
The agency's complaint, which Ford called "regreattable," charged that the nation's second largest auto maker knew of the defect at least since February 1976 but failed to warn prospective buyers about the problem or the costly repairs that might be necessary to correct it.
In addition, Ford initiated an adjustment program to repair or compensate for the defects but failed to notify buyers or current owners of the cars about the program, the FTC alleged. Although Ford dealers were notified, the FTC alleged that many buyers are not compensated because they don't know about the program, because compensation does not extend to cars beyond a certain mileage or model year, or because some dealers do not abide by the program.
The agency said failure to disclose to consumers information about the defect and the compensation program constitutes deceptive and unfair practices in violation of the FTC Act. The commission also alleged that Ford has falsely advertised its cars as durable and reliable since some models may allegedly suffer from the defect which may substantially affect performance.
The commission, which issues a complaint when it has "reason to believe" the law has been violated, said it may seek, among other things, to require Ford to compensate those whose cars are affected by the defect, or to disclose to each buyer the existence of the defect and the adjustment program to repair it.
C.V. Barion, General Manager of Ford Parts and Service Division, said yesterday the defect affects "only about 2 per cent" of the 1974-77 small engines, an estimated 55,000 cars, and "usually manifests itself in extremely cold weather.
"Moreover, it is not clear how much of the problem is due to faulty maintenance procedure or improper vehicle operation," he said.
The defect, called "piston scuffing," results from the scraping of metal surfaces of the pistons and the cylinder walls when enough oil doesn't reach the walls while the engine is warming up. The engines of the 1978 models were altered to correct the problem.
Ford has estimated the cost of repairs at between $190 to $250 a car.
In announcing the complaint, Tracy A. Westen, deputy director of the FTC's Bureau of Consumer Protection, said the FTC staff believes the case "seeks to establish basic principles of fair dealing by large automobile manufactureres toward the consuming public . . .
"Automobiles with substantial hidden defects should not be sold to unsuspecting consumers without frank and candid disclosure of those defects," he said. He added tht automakers discovering a significant defect have an obligation to notify consumers who have already bought the affected cars.
Ford's Barion said that Ford had been talking with the FTC staff about their adjustment program and thought they had an agreement on expanded handling of it. He said Ford was making adjustments on vehicles outside the time and mileage limitations depending on the maintenance history and the car's amount and type.