General Motors Corp. has paid an estimated $30 million to about 100,000 customers as a result of private mediation and arbitration of complaints about product defects, the Federal Trade Commission said yesterday.
FTC Chairman James C. Miller III said he was "extremely pleased" with the first results of the mediation program, which was developed to settle an FTC lawsuit against GM. The FTC already has used the GM program as a model for settling two other cases involving housing defects.
The Center for Auto Safety, a nonprofit consumer group, said yesterday that the FTC's figures show the program is reaching too few and awarding too little. "It's not working well at all," said Evan Johnson, a staff attorney with the center. "It's clear they are going to let GM delay and deny people arbitration."
The center claims that the FTC's sample ignores the consumers who give up because of delays by GM. The center also believes that 100,000 settlements is only a small fraction of the millions of consumers affected, Johnson said.
The mediation program is administered by local affiliates of the national Council of Better Business Bureaus in 150 geographic areas. Data from five of those areas were released by the FTC yesterday.
Through mediation or arbitration of complaints covered by the settlement, GM paid about $3.3 million to 9,529 car owners in Milwaukee, Cleveland, Dallas, Atlanta and Salt Lake City during the first 10 months of the program, which began in January 1984.
This sample represents about one-tenth of the total number of consumers who sought relief through the program, FTC officials said.
Miller said the numbers underrepresent the benefits of the program because they do not include those consumers who received refunds directly from GM and therefore did not need to seek mediation or arbitration. The sample also omits consumers who obtained refunds for defects other than those specified by the program, he said. The average complaint was resolved within 40 days, the FTC said.
"The data shows we were successful in getting money directly into the hands of consumers in a short period of time," Miller said.
The program arose out of an FTC complaint, filed in 1980, charging that GM "failed to disclose to consumers serious problems or defects that GM knew or should have known existed," said Carol T. Crawford, director of the FTC's bureau of consumer protection. The complaint cited as examples three specific components that were common in a variety of makes in various model years: the THM 200 transmission, used in more than 5 million cars since the 1976 model year; camshafts or lifters in 15 million Chevrolet V-8 engines since 1974, and diesel fuel pumps and fuel injectors in 500,000 Oldsmobile diesel engines produced since 1977.
GM agreed to settle the case by allowing GM car owners to seek refunds for defective engines or transmissions through a third-party mediator or arbitrator. The settlement affects owners of all GM cars from model years 1974 to 1991 and covers any engine or transmission problem.
The program first requires consumers to contact GM with a complaint. If unsatisfied with GM's response, the car owner can ask the local Better Business Bureau to act as a mediator. If that approach fails to resolve the dispute to the consumer's satisfaction, an independent arbitrator is appointed to settle it.
Crawford calls the system an "innovative" alternative to protracted litigation in response to individual consumer problems.