Federal Trade Commission Investigating GM Used Car Sales

FTC wants to know if General Motors is selling certified pre-owned cars with known defects.

Federal Trade Commission Investigating GM Used Car Sales

Posted in Investigations

— General Motors has been the big red target for just about every owner and safety organization after the public learned the automaker hid deadly ignition switch defects for over 10 years. Welcome now the newest player to set its sights on GM: the Federal Trade Commission.

In regulatory filings with the Securities and Exchange Commission, GM says it's the focus of FTC investigators concerning the sale of used cars. The automaker said it learned of the FTC investigation on June 3, 2015, and GM is cooperating fully with all requests for information related to certified pre-owned sales.

The investigation was opened to look at GM's operation of selling so-called certified pre-owned vehicles, meaning the sale of used cars. The FTC wants to know if GM dealers have been selling these allegedly safe vehicles when recall repairs hadn't been made on the cars.

GM's own "certified" policy is that no certified used vehicle can be sold “unless the dealer first performs any needed recall repairs. GM has instructed its dealers to check for recalls and perform any needed repairs before listing any vehicle as a Certified Pre-Owned vehicle.”

It's not clear why the FTC is looking into GM because it's not illegal for dealers to sell used cars with open recalls that still need repaired. However, the FTC does fine companies for false and misleading advertising. The government might be approaching things from that angle based on GM's advertising claim that certified pre-owned cars are not sold with open recalls.

If investigators find evidence of wrongdoing, GM could be on the receiving end of fines, civil and criminal penalties or material damages.

General Motors might be in the middle of a hurricane but car buyers are making sure the automaker still stands on solid ground. GM reported a net income of $1.1 billion in the second quarter of 2015, with earnings before taxes and interest at $2.9 billion.