Watchdog Slams GM Ad in FTC Complaint

Advocacy Group Says Car Maker Misled Public in Spot Touting Repayment of Bailout Loan

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NEW YORK (AdAge.com) -- A wave of criticism that started two weeks ago reached a crescendo this morning when Washington-based advocacy group Competitive Enterprise Institute filed a formal complaint with the Federal Trade Commission, charging General Motors with deceptive advertising.

CEI claims the Detroit car maker misled the public when it said in a national TV ad it has paid back its Troubled Assets Relief Program bailout loan from the government. The spot, which was created by McCann Erickson, Detroit, ended its run last week. A McCann spokeswoman referred calls to the automaker.

The commercial featured GM Chairman-CEO Ed Whitacre walking through an assembly plant and saying that "we have repaid our government loan in full, with interest, five years ahead of the original schedule."

Critics, however, argue that the ad is somewhat disingenuous, saying the repayment came from another government bailout account provided by TARP -- or as one TV pundit described it, "paying off your MasterCard with your Visa."

In the complaint filed with the FTC, CEI says the ad "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 10%. Moreover, GM apparently repaid its loan by using other federal funds."

"GM might argue that its ad is literally accurate, but the fact is it's completely misleading," said Hans Bader, senior attorney for CEI, which describes itself as a "public interest group dedicated to free enterprise and limited government."

A phone call seeking comment from GM was not returned at press time.

The ad has created something of a firestorm since it first aired two weeks ago. Republican members of Congress were among the first to jump on the scenario that the commercial was misleading. Sen. Charles Grassley, R-Iowa, said GM was engaged in "a TARP money shuffle."

In an April 29 letter to Mr. Whitacre, Reps. Darrell Issa, R-Calif., and Jim Jordan, R-Ohio, of the House Committee on Oversight and Government Reform, wrote that "your statements and the slick marketing campaign built around them constitute a lie to the American people, who have spent over $50 billion to bail out GM and currently own over 60% of the company. We are concerned that GM, under your leadership, has come dangerously close to committing fraud, and that you might have colluded with the United States Treasury to deceive the American public. ... GM's false advertisements are counterproductive and shameful, and they should stop."

GM said Monday that April sales were up 33% compared to April 2009, as overall sales in the industry increased 19.8% from April of last year.

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