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Attorney General Baker Announces $51.5 Million Settlement Agreement With Ford Motor Company

PRESS ADVISORY

Attorney General Baker Announces $51.5 Million Settlement Agreement With Ford Motor Company

December 20, 2002

Attorney General Thurbert Baker, along with the Attorneys General from all 49 other states, announced today a $51.5 million nationwide settlement with Ford Motor Company resolving allegations of deceptive trade practices relating to the sale and advertising of Ford sport utility vehicles. A consent judgment was filed this morning in Fulton County Superior Court, ending a two year fraud investigation into the advertising practices of Ford Motor Company.

Georgia and the other states contended that Ford had failed to disclose a known safety risk concerning tire failures with Firestone ATX and Wilderness AT tires which came as standard equipment on Ford SUVs. The states also alleged that Ford’s advertising misled consumers as to the safe use of Ford SUVs, particularly in regards to how the vehicles were capable of being driven and how much cargo could be safely stored in the vehicle before handling and safety were compromised. In addition, Attorney General Baker joined with the other Attorneys General in charging that replacement tires sold through Ford’s “Around the Wheel” program had been represented as being the same tires as those that had come standard on the vehicle, when in reality Ford was utilizing different aftermarket tires in their replacement tire program.

"I am pleased that we have been able to resolve these allegations of deceptive business practices against Ford Motor Company," said Attorney General Baker. “This investigation was all about problems with Ford’s advertising and consumer safety. Ford has agreed to significant changes in its advertising practices and taken responsibility for raising consumer awareness about SUV safety."

Attorney General Baker also applauded the work of John Smith and Anne Infinger in the Governor’s Office of Consumer Affairs. Baker stated that, “Without their tireless efforts working with our office on behalf of Georgia consumers, this settlement would not have been possible.” Baker cited their work in identifying problems with Ford’s replacement tire program in particular, stating that Smith and Infinger were “instrumental in bringing nationwide attention to significant problems with Ford’s replacement tire program.”

Baker also pointed out that “a vital component of this settlement” was that Georgia would join with the other states in using $30 million from Ford to mount a consumer education campaign on SUV safety. “That is a significant development,” Baker stated. “The focus of our investigation was that the public had been misled about how to safely steer and pack SUVs, and this public education campaign will reverse some of the misconceptions about SUV capabilities.” The states will use the remaining settlement funds to pay to strengthen consumer protection programs as well as to pay for the costs of the multi-state investigation into Ford Motor Company.

The joint settlement agreement comes a year after the states entered into a nationwide settlement with Bridgestone/Firestone, Inc., which ultimately reached $43.5 million in payments and restitution, related to the advertising and sale of tires that had high rates of tread separations. Bridgestone/Firestone manufactured the tires specifically for use as original equipment on Ford Explorers and Mercury Mountaineers.

The states alleged that Ford advertising exaggerated the safe loading capacity and maneuverability of Ford SUVs. In addition, Attorney General Baker joined with his fellow Attorneys General in charging that Ford had deceptively advertised aftermarket tires as original equipment tires.

Besides providing funding for a national SUV safety campaign, the agreement contains a number of important provisions designed to enhance consumer safety:

• Prohibits Ford from making misrepresentations about the cargo capacity, safety and handling characteristics of their SUVs.

• Precludes Ford from misleading the public about the purpose of or reason behind any recall or recommended inspection of Ford vehicles.

• Prohibits Ford from using the term "car-like" in advertising with respect to the steering and handling of its SUVs.

• Requires Ford to have reliable scientific evidence to substantiate any representations about vehicle safety, performance or durability made about Ford vehicles.

• Requires Ford to provide safety information about cargo loading and vehicle handling to each consumer who buys a Ford SUV and to provide Spanish language owners’ guides upon request.

In the agreement, Ford spelled out a number of consumer education initiatives that it will launch in the coming year. Ford also agreed to abide by all state and federal laws governing SUV safety, including a federal regulation that requires manufacturers of SUVs with a wheelbase under 110 inches to alert purchasers that those vehicles have a higher possibility of rollover than other vehicle types. Ford also will advise consumers of steps they can take to reduce the potential for rollover or rollover-related injuries.

Today’s settlement preserves the rights of Georgia citizens to assert their own individual legal claims against Ford Motor Company.