The Federal Trade Commission yesterday announced a proposed settlement of a major consumer suit against General Motors Corp. that would permit motorists with engine and transmission problems to have their complaints heard by independent arbitrators.
GM would be required to carry out the findings of the arbitrators, selected by the Council of Better Business Bureaus, if the proposed settlement becomes final.
The commission will decide whether to make the order final after a 60-day public comment period. The commissioners voted 3 to 2 to approve the consent order, which would settle a 1980 FTC complaint charging GM with failing to notify customers of serious problems or defects involving three components in an estimated 21 million automobiles, including:
THM 200 automatic transmissions, used in 5 to 6 million GM rear-wheel-drive cars made since the 1976 model year. (The model THM 200 can be identified by the word "metric" stamped on the transmission oil pan.)
Premature camshaft wear involving 15 million 305- and 350-cubic-inch V-8 engines produced by the Chevrolet division used in several models manufactured beginning in 1974.
Fuel-injection pumps and fuel injectors in 500,000 350-cubic-inch diesel engines produced by the Oldsmobile division used in several models manufactured beginning in 1977.
GM said that only a "small percentage" of the 21 million cars actually had problems and that steps have been taken to solve those problems.
Meantime, the FTC estimated that it has received about 20,000 complaints from consumers about problems they have had with those GM cars.
Consumers who believe they qualify for arbitration should contact the FTC's Cleveland Regional Office, 118 St. Clair Ave., The Mall Building, Suite 500, Cleveland, Ohio 44114.
GM has agreed that any owner of a GM car is eligible for arbitration of any problem involving engine or transmission components, the FTC said.
Consumers who take their case to the Better Business Bureau arbitrators must produce documentation showing the amount of damage suffered from defective parts. Decisions by BBB volunteer arbitrators will be binding on GM but not on consumers.
The BBB, the FTC and GM would not disclose the estimated cost of complaints that have been arbitrated already or the projected cost of complaints that consumers are expected to bring to arbitration.
"GM has the numbers but doesn't choose to reveal them," said GM spokesman David Hudgens.
At a press conference, Carol T. Crawford, director of the FTC Bureau of Consumer Protection, hailed the proposed order as "the most meaningful consent agreement up to this time involving disclosure of automobile defects."
In a separate statement, GM said that the settlement "provides a much greater opportunity for immediate, long lasting and comprehensive consumer benefit than ever would have been achieved through litigation."
But Commissioner Michael Pertshuk, who, with Commissioner David A. Clanton, voted against the settlement, said that he doesn't believe that "individual case-by-case arbitration, where each consumer must prove a right to redress, provides a strong enough solution for the substantial injury suffered here by classes of commonly situated consumers."
Pertshuk said the FTC should have insisted on direct, automatic refunds to consumers.
The Center for Auto Safety, a Ralph Nader-inspired consumer organization, said that the settlement will save GM over $1 billion that could have been paid to GM owners had the FTC waged a successful lawsuit. Center Director Clarence M. Ditlow branded the proposed order as a "gross consumer abuse and sellout because it offers consumers nothing they would not obtain in any event."