Ford Motor Co. agreed yesterday to tell car buyers about what the Federal Trade Commission called "secret warranties" on cars with potential major engine and transmission repair problems.
The "secret warranties," the FTC had charged, paid for repairs not covered by regular warranties but were offered only to consumers who complained loudly enough about problems with their car.
To settle an FTC complaint against the company, Ford agreed not only to let out the secret but also to launch an innovative program to tell car owners about mechanical problems with their Ford-made cars.
The settlement ends an FTC probe on Ford's handling of three serious mechanical problems affecting 6 million cars and light trucks. The problems involved "piston scuffing" -- scratching of pistons and cylinder walls because of poor lubrication -- premature wear of camshafts and rocker arms and cracked engine blocks.
In all three instances, the FTC said, Ford sometimes paid to fix the problems but did not tell car owners that the free fix was available.
An FTC complaint filed in 1978 charged that Ford sold cars it knew or should have known were potentially defective and also failed to disclose its "secret warranty."
Calling the FTC term of "secret warranties" and "inaccurate description," Ford said the practice was wide-spread in the auto industry. The company said it paid for repairs not normally covered by warranties more often than other car makers.
Ford already has notified owners of the cars of the potential repair problem and its policy of paying for repairs.
In addition the company agreed yesterday to buy ads in six national magazines describing the program. The ads will appear in Newsweek, Time, U.S. News & World Report, Sports Illustrated, People and Reader's Digest.
Ford also will send letters to all owners of 1979 and 1980 Ford vehicles alerting them to the repair program and the post-warranty reimbursement for repairs.
The company will make available to car owners the service bulletins it sends to Ford dealers involving repairs that cost $125 or more and will set up a toll-free number that owners can call for repair information.
Under the settlement, Ford agreed to send letters to the purchasers of any cars on which it offers new extended warranty repairs in the next eight years.
Ford will continue to fix cars that are less than three years old and have been driven less than 36,000 miles and show evidence of a cracked block, piston scuffing or cam and rocker wear.