Spitzer Obtains Refunds For Consumers Denied Cash Incentives For Car Purchases

Attorney General Spitzer today announced an agreement with General Motors Corporation in which the auto maker will make good to consumers who were denied promised rebates for using the company's credit card.

"Corporate citizens must be held accountable for their promises and not be allowed to walk away from an offer by means of false advertising or misleading business practices," Spitzer said.

The agreement stems from a national incentive flyer that was mailed to nearly 4.2 million holders of "The GM Card" during the summer of 1999. Consumers who use GM's credit card to purchase merchandise and services accumulate GM Earnings which may be redeemed, on a dollar-for-dollar basis, toward the purchase or lease of new GM vehicles. The flyer promised an additional incentive to cardholders who were eligible for special cash incentives ranging from $500 to $4,000 on selected vehicles.

Spitzer's office began an investigation after receiving complaints from GM cardholders who claimed they purchased or leased eligible vehicles after receiving the flyer but were denied the promised cash incentives. Although Spitzer's office obtained rebates for some consumers through mediation, the auto maker refused to pay incentives to other eligible consumers.

The Attorney General charged that GM engaged in deceptive business practices and false advertising by denying incentives to eligible consumers who purchased or leased new GM vehicles during the promotion period. For example, GM claimed that the incentive offer only applied to 1999 model vehicles. Its flyer, however, did not restrict the offer to any particular model year. In fact, GM dealers were selling both 1999 and 2000 model-year vehicles at the time of the promotion.

In addition, GM paid incentives to some consumers who purchased or leased 2000 model vehicles while denying rebates to other consumers who had also purchased or leased 2000 model-year cars. The company also refused to pay some incentives because, it claimed, dealers had already reduced the price of the vehicle. However, dealer incentives frequently were not disclosed to consumers, were not equivalent in amount to the incentives offered by GM, and were not excluded from the offer.

General Motors Corporation settled the investigation by agreeing to pay a total of more than $29,000 to 17 GM credit cardholders who purchased or leased new GM vehicles, but were denied promised rebates.

Seven of the consumers are from the greater Buffalo area and the other ten are scattered across the state.

Restitution payments for the 17 consumers range from $750 to $2,500.

The company will pay $13,500 in costs and penalties, in addition to restitution to consumers. The agreement also requires GM to clearly set forth any restrictions or limitation in all future offers.

The case was handled by Assistant Attorney General Matthew J. Barbaro of the Consumer Frauds and Protection Bureau.