California Lemon Law Lawyer Blog

GM is running ads touting awards on 15 of its cars from Consumers Digest (not to be confused with Consumers Reports). What GM fails to disclose is that it paid Consumers Digest for the right to mention the awards in the ads. Don't you think the financial incentive had something to do with the awards in the first place?

According to the Wall Street Journal Consumers Digest typically asks auto makers $35,000 for the first award and $25,000 for each subsequent award.

J.D. Power & Associates announces quality awards based on surveys of thousands of new-car owners and auto makers pay as much as $300,000 for copies of a survey and the same amount to use the awards in ads. J.D. Power makes up enough awards in narrow categories (like best quality in first 30 days of ownership) so every auto maker gets awards thus maximizing income. The company's financial ties to the industry mean its reports are as meaningless as those of Consumers Digest.

Clarence Ditlow, director of the Center for Auto Safety said "When they start taking money from car companies, there is a conflict of interest,"

The Senate is debating financial reform bill and the car dealers want no part of it. The proposal, backed by the Obama administration, provides for a new consumer protection agency that would have jurisdiction over banks and other lenders. The car dealers, who arrange financing on most car purchases, are lenders.

Republican Sen Brownback has an amendment to exempt the car dealers. In opposing the amendment, consumer advocates point out that car dealers often take advantage of consumers in setting the terms of leases and purchases. Dealers, for example, sell cars only to later demand an additional down payment to complete the deal.

The Pentagon supports the bill because low-income military people are often victimized by shady car dealers that set up shop just outside many bases.

Continue reading " Car Dealers Afraid of New Federal Regulator " »

It usually takes a crisis to get Congress to act on important problems. Toyota created a crisis by failing to disclose its vehicles have a tendency to suddenly accelerate.

Key congressional committees are working on new laws that would strengthen auto safety. Under the bills being considered, all new cars must have brake override mechanisms to stop the cars even when the accelerator is engaged and the cars must have black boxes to record data just before and after a crash.

The federal safety agency administrator is proposing that Congress give the agency the ability to order immediate recalls if consumers are in danger. Currently, a federally required recall is a lengthy and cumbersome process, meaning virtually all recalls are voluntary actions by the carmakers.

Concurrently, Sen Barbara Boxer has introduced a bill that would bar federal safety agency employees who go to work for auto manufacturers from lobbying the agency for at least three years. Late last year, Toyota employees, who recently worked for the agency, successfully lobbied the agency to narrow the scope of a recall.

The NY TImes does its usual fine job of covering these developments: http://www.nytimes.com/2010/05/07/business/07auto.html?pagewanted=1&hp