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General Motors Deceptive Advertising Challenged by Watchdog Group in FTC Filing

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General Motors Deceptive Advertising Challenged by Watchdog Group in FTC Filing

GM Ad Falsely Claimed Taxpayer Bailout Loans Were Repaid

Washington, D.C., May 4, 2010 –The Competitive Enterprise Institute today filed a formal complaint with the Federal Trade Commission, arguing that General Motors misleadingly claimed in a national TV ad that the company has paid back taxpayer bailout loans.

In the complaint, CEI urges the FTC to investigate the GM ad campaign entitled "GM Repaid Government Loan Ahead of Schedule.”  The ad features GM’s Chairman and CEO, Ed Whitacre, who declares that “we have repaid our government loan in full, with interest, five years ahead of the original schedule."

That claim, CEI explains in the complaint, “gives the false impression that GM has used its own funds to pay back all the bailout money that it received from the federal government.  In fact, GM has only repaid a fraction of those funds—barely ten percent.  Moreover, GM apparently repaid its loan by using other federal funds.”

To add insult to injury, GM’s misleading ad could unfairly dupe consumers into a false, renewed confidence in the company, the complaint explains. “Consumer purchasing decisions can easily be affected by such considerations, as the FTC has long recognized in prohibiting false claims that products are ‘Made in the U.S.A.’”

Sam Kazman, CEI General Counsel, points out the real-world absurdity of GM’s claim.  "If I applied for a car loan using GM's financially misleading approach, I’d be tossed out of the dealership on my ear."

“GM might argue that its ad is literally accurate, but the fact is it’s completely misleading,” said Hans Bader, CEI counsel.

CEI urges the FTC to promptly investigate, to “serve the American public on this issue of major consumer and taxpayer importance [and] “discourage other beneficiaries of government bailouts from falsely misrepresenting their status.”

> View the CEI Complaint of Deceptive Advertising by General Motors Company

> View the GM ad on YouTube

> Read more on the $4.7 billion GM bailout and related issues at Openmarket.org