GM’s Ads Claiming Early Payback of Bailout Money Spark Complaint to FTC

Published May 24, 2010

The Competitive Enterprise Institute has filed a formal complaint with the Federal Trade Commission arguing General Motors misleadingly claimed in a national TV ad the company has paid back taxpayer-provided 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 began appearing in April and features GM Chairman and CEO Ed Whitacre declaring, “We have repaid our government loan in full, with interest, five years ahead of the original schedule.”

That claim, CEI says 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.”

Some federal lawmakers and the inspector general for the bailout fund have also complained that GM’s claims are misleading. GM’s ad could dupe consumers into a false, renewed confidence in the company, the CEI 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.,'” the complaint states.

CEI General Counsel Sam Kazman said GM’s claim is absurd: “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 CEI counsel Hans Bader.

CEI urged the FTC to investigate promptly, 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.”

Christine Hall ([email protected]) is director of communications at the Competitive Enterprise Institute.