Chrysler Corporation

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IN THE MATTER OF CHRYSLER CORPORATION CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 3033. Complaint, Aug. 12. 1980-Decision, Aug. 12, 1980 This consent order requires, among other things, a Highland Park, Mich. manufacturer of motor vehicles to cease failing to notify owners of 1976/1977 Aspens and Volares, purchased or driven in specified states and locales of the availability of replacement and reimbursement programs for premature rusting; remove and replace, without charge, the front fender(s) of vehicles that began to experience premature rusting within 36 months-in-service; and reimburse owners of affected vehicles for costs incurred in attempting to correct the premature rusting problem. The manufacturer is further required to notify dealers, in writing, of the existence of premature rusting; supply them with an adequate supply of replacement parts; and inform them of the firm s obligations under the terms of the order. Appearances For the Commission: Aaron H Bulioff, Richard H Gateley, David Montgomery, Noble F. Jones and David V. Plattner. For the respondent: Robert T. Talbot-Stern, Detroit, Mich. COMPLAINT Having reason to believe that Chrysler Corporation, a corporation has violated Section 5 of the Federal Trade Commission Act, and that a proceeding against it would be in the public interest, the Federal Trade Commission issues this complaint stating its charges. This complaint is issued pursuant to the provisions of and by virtue of the authority granted by the Federal Trade Commission Act. PARAGRAPH 1. Respondent Chrysler Corporation is a Delaware corporation. Respondent' s address is 12000 Lynn Townsend Drive, Highland Park, Michigan.

PAR. 2. Respondent is now, and has been, engaged in the manufacture, advertising, sale, and distribution of motor vehicles. PAR. 3. Respondent causes motor vehicles to be shipped to purchasers in various states, and therefore maintains, and at all times mentioned in this complaint has maintained, a substantial course of trade in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act.

PAR. 4. For the purpose of this complaint premature rusting CHRYSLER CORP. 1::5 134 Decision and Order shall mean rusting which may perforate the top rear portion of the front fenders of 1976 and 1977 model year Aspens and V olares. Rusting attributable to normal deterioration as a result of age is excluded.

PAR. 5. Aspen and Volare vehicles produced from 1975 through 1977 are subject to premature rusting.

PAR. 6. Notwithstanding its knowledge since 1977 of premature rusting, respondent has failed, and is failing, to disclose to owners of Aspen and Volare vehicles the possibility of premature rusting, and the nature and extent of repairs necessary to correct such rusting. Respondent' s failure to disclose this information to owners of vehicles subject to such rusting may cause owners substantial economic harm due to their inability to avoid or prevent premature rust. Such failure to disclose is an unfair or deceptive act or practice. complained of premature PAR. 7. In some cases, when owners have rusting, respondent has provided replacement fenders free of charge. In other cases, respondent has provided replacement fenders free of charge and has paid labor costs for installng replacement fenders. In most instances, however, owners are not compensated because they are unaware of respondent's actions with respect to providing replacement fenders free of charge or paying labor costs. PAR. 8. Respondent has failed, and is failng, to disclose to owners of Aspen and V olare vehicles its actions with respect to providing replacement fenders free of charge or paying labor costs. Respondent' s failure to disclose such actions to owners of affected vehicles may cause them substantial economic harm by denying them an opportunity to request compensation from respondent. Such failure to disclose is an unfair or deceptive act or practice. PAR. 9. Respondent's acts and practices, as alleged in this complaint, were and are all to the prejudice and injury of the public and constitute unfair or deceptive acts or practices in or affecting commerce, in violation of Section 5 of the Federal Trade Commission Act.

DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondent named in the caption hereof, and the respondent having been furnished thereafter with a copy of a draft of complaint which the Cleveland Regional Offce proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge respondent with violation of the Federal Trade Commission Act; and Decision and Order 96 F. The respondent, its counsel, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondent of all the jurisdictional facts set forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for settlement purposes only and does not constitute an admission by respondent that the law has been violated as alleged in such complaint, and waivers and other provisions as required by the Commission s Rules; and The Commission having thereafter considered the matter, and having determined that it had reason to believe that the respondent has violated the said Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of sixty (60) days, and having duly considered the comments fied thereafter by interested persons pursuant to Section 34 of its Rules, now in f'lrther conformity with the procedure prescribed in Section 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings and enters the fonowing Order:

1. Respondent Chrysler Corporation is a corporation organized existing and doing business under and by virtue of the laws of the State of Delaware, with its offce and principal place of business located at 12000 Lynn Townsend Drive, in the City of Highland Park State of Michigan.

2. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER For the purposes of this Order, the fonowing definitions shall apply:

1. "Motor vehicle(s)" shall mean aU 1976 and 1977 model year Aspens and V olares.

2. "Premature rusting" shall mean the presence of holes, blisters or bubbles in exterior paint caused by rust in the top rear portion of the front fender(s) of motor vehicles within two feet of the rear edge of such fender(s).

3. "Dealer(s)" shall mean any person(s), partnership(s), firm(s), or corporation(s) which, pursuant to a sales and service agreement with respondent receives on consignment or purchases motor vehicles from respondent for resale or lease to the public, including CHRYSLER CORP. 137 134 Decision and Order any person(s), partnership(s), firm(s), or corporation(s) owned or operated by respondent.

4. "Owner" shall mean any person, partnership, firm, or corporation having custody and/or possession of a motor vehicle, including those vehicles held for resale.

5. "Remove and replace" shall mean removing any front fender affected by premature rusting and replacing it with a neVi, one-side galvanized front fender; provided that if such replacement fender is not available due to circumstances beyond respondent's control, respondent may substitute a zincrometal front fender. Also included in this term is the labor necessary to hang and paint the replacement front fender and to affx trim and accessory items, including splash shields.

6. "Months-in-service" shall be calculated as beginning on the date on which Chrysler began warranty coverage on the motor vehicle. If the date on which warranty coverage began ("in-service date) cannot be established by Chrysler, then such date shall be calculated as beginning on:

October 1, 1976, for any 1976 model year motor vehicle; October 1 1977, for any 1977 model year motor vehicle. It is ordered, That respondent Chrysler Corporation, a corporation its successors and assigns, and its officers, agents, representatives, and employees, directly or indirectly or through any corporation, subsidiary, division, or other device, in connection with the manufacture, advertising, offering for sale, sale or distribution of vehicles in or affecting commerce, as "commerce" is defined in the Federal Trade Commission Act, as amended, do forthwith cease and desist from:

A. Failing to send by first-class mail, within sixty (60) days after the date of service of this Order, a copy of the letter attached to this Order as Attachment A, incorporated herein by reference, a form approved by the Federal Trade Commission, and a self-addressed postage-paid envelope. This material shall be sent in one envelope similar in all material respects to Attachment B of this Order, incorporated herein by reference. The letter, form, and self-addressed, postage-paid envelope shall be mailed to each owner of a motor vehicle registered in any of the following states or localities and to each owner of a motor vehicle purchased in any of the said Decision and Order 96 F. states or localities, even though the vehicle is no longer registered in that state or locality.

All counties within the states of:

Connecticut New Hampshire Delaware New Jersey Ilinois New York Indiana Ohio Iowa Pennsylvania Maine Rhode Island Massachusetts Vermont Michigan Wisconsin The following counties in Maryland, Minnesota and West Virginia: Maryland Allegheny Garrett Minnesota Anoka Mower Blue Earth N icollet Carl ton Olmsted Carver Pine Chisago Ramsey Dakota Rice Dodge Scott Faribault Sherburne Filmore Sibley Freeborn Steele Goodhue Wabasha Hennepin Waseca Houston Washington Isanti Winona LeSueur Wright McLeod West Virginia Brooke Monongalia Hancock Ohio Marion Preston Marshall Wetzel 134 Decision and Order B. Failing to remove and replace the front fender(s) of any motor vehicle at no cost to the owner within one hundred twenty (120) days after the owner initially contacts respondent or a dealer provided that respondent may require any owner to sign a statement approved by the Federal Trade Commission, that the vehicle began to experience premature rusting within thirty-six (36) months-inservice.

C. Failing to reimburse any owner of a motor vehicle for the actual or the usual and customary charges in the owner s trade area whichever is lower, for parts and labor for front fender repairs or replacements made at the owner s expense which eliminated, or were made in an attempt to eliminate, premature rusting, provided that respondent may require any owner to sign a statement, approved by the Federal Trade Commission, that the vehicle experienced premature rusting within thirty-six (36) months-inservice and to furnish reasonable evidence of repair or replacement. Such reimbursement shall be made within sixty (60) days after the owner initially contacts respondent or a dealer. For owners who were sent the letter and form pursuant to paragraph A of part I of this Order, such repairs or replacements must have been made prior to an owner s receipt of the letter and form. D. Failing to provide all dealers with adequate supplies of front fenders and any other items necessary to effectuate removal and replacement.

E. Failing to provide all dealers with adequate supplies of unsigned statements referenced in paragraphs Band C of part I of this Order.

F. Failng to notify all dealers in writing within ten (10) days after the date of service of this Order of the existence of premature rusting, of the necessity for using galvanized front fenders or zincrometal front fenders and of the terms and conditions of respondent' s obligations under this Order. It is further ordered. That respondent's obligations under paragraphs Band C of part I of this Order shall not extend to those owners who initially contact respondent or a dealer after November , 1980, or after 42 months-in-service, whichever date is later. It is further ordered. That respondent maintain documents demonstrating compliance with this Order for a period not less than three Decision and Order 96 F.T. (3) years. Such documents shall be made available to the Commission andor its staff for inspection and copying upon reasonable request, shall include, but are not necessarily limited to, those revealing: A. The name and last known address of each owner who was sent the disclosures required by paragraph A of part I of this Order. B. The name and last known address of each owner who requested repairs or reimbursement for repairs for premature rusting.

C. The name and last known address of each owner whose motor vehicle was repaired or who was reimbursed for repairs as required by paragraphs Band C of part I of this Order. D. Communications with respondent concerning repairs or reimbursements for repairs made to motor vehicles affected by premature rusting.

E. Each instance arising under paragraph C of part I of this Order where Chrysler reimbursed an owner of a motor vehicle for less than one hundred percent (100%) of the actual charges for parts and labor, and those documen revealing the underlying basis for determining the usual and customary charges in each such instance. F. Each instance arising under paragraphs B or C of part I of this Order involving a dispute over months-in-service, unless Chrysler determined to remove or replace front fenders or reimburse an owner in accordance with said paragraphs, notwithstanding the fact that the vehicle allegedly exceeded thirty-six (36) months-in-service. G. Each instance arising under paragraph B of part I of this Order when Chrysler failed to remove and replace the front fenders of any motor vehicle, and each instance arising under paragraph C of part I of this Order when Chrysler failed to reimburse any owner of a motor vehicle, and those documents revealing the underlying basis for such failures.

It is further ordered, That respondent shall, within sixty (60) days after the date of service of this Order, and at one year intervals in thereafter through 1982, file with the Commission a report, writing, signed by respondent, setting forth in detail the manner and form in which it has complied with this Order. It is further ordered, That respondent notify the Commission at least thirty (30) days prior to any proposed change in the corporate CHRYSLER CORP. 141 134 Decision and Order respondent, such as dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, or any other change in the corporation which may affect compliance obligations arising out of this Order. ::,.. :::(.): :: ;; Decision and Order 96 F. ATIACHMET A SERVlr:E 8. PARTS DIVISION 'i"' CHRYSLER : CORPORATION Dear Aspen or Volare owner:

Clu' yaler Corporation has :J continuing intl:rest In the quality of it5 CBrll. I;,' h,iV become aware of a condition in some 1976 ilnd 1977 ,\spens and Vola res which you sh"'lld kno\ about. This condition may C;1use the front fenders of your Aspen or Vula!.!! to rust pret1curely. In areas where roads are heavily salted, the condition Is I!fu;rav:\ccd, Rerlaclng (front fenders is concly. By a re('nlent \11th the federal Trade! Commission, Clu:ysler will repLocl' your front fende,(s) ere. or repay you Cor past repulrs 1f:

J'O'H front fender(s) is rusted in the affected area, 8S de'"cribed ""low; and (hj thit! rUMC lIppean:;(ed) within the car a first 36 months- in-aervicei and (0) you contact Chrysler or your dealer: b fore Novembec I , 1980 , or before 42 months-in-service, whichever is later. CHRYSLER' S REPLACE !ENT/REPAY I'ROGII\J1 \-,,...rif1tiv:1 Of The Front l'o:nder Rust Conditioll The rust problem occurs on the top horizvntal part f thl! fcnder, within :-'!tel:' t\o'O fet. t "f lhe windshield. The fenuer s deslgn sClr.etimes hinoJered J ir. this ;.rca lit the factory, rh.. rust starts on the franc fender unden.ide. It arpears first as bu!'bles or blisters in the paint. Soon, holes appear. The drl1Wi!1g at the e!1d of this letter shows the problem area, \,1103 t is " !on t hs- ln-Scrv ice " 1 Tbe " 36 months- iri-"ervice " limitation and the "42 months-in-senice " claill Ilmitation start the d;1y Chrysler besan warranty coverage on your car. This In-service " date appears on the. attached form. ;:.a: Y CJ L)J :: ') I ,e :I' \:'.".:I.S Ci1;" 1"e:\o.('r ;. ('J lJ.ne 1 r th rust is :::1 he. lroat f",\\(Jl.r area described in para- "'j'i\ 1, ,\10;0 det rrr.ine if ti ;:; c ai' pea red dur in!: )' our car ' 5 (i )6 r..;)nths-in-:;ervice.

(0) Jf su . ctiLi ;liy IJ\IJI: , Plymouth ur Ulrysler new car dealer lv rcqu (n..-= (eLid c replacement.

(0) Iohel1 an apl,"'lntmcnt h;IS been arr;J\!i:.'J, hrine thl! enclosed form to the 1J. ;llcr. ""Hlr c;lr s rcnJer!l will Ih.' In"pcctcJ. You ..lll asked to sll;L\ the statement on lhe rt"pal r )I:Hl uf lhe fOfm certifying that the p(L' 1t:urc rust 3ppCart.t! withln YC1l1r GH S flr:ot 3(; mul1ths-in-servitl!. if yuu qualify, the dt!aler will tlWI1 art'lIn&IJ to have 3 new fender installed within 120 dD)'B of your rC'Iuest. (,) ;\ : : ., 134 Decision and Order L.. lil9t l)oc Not Ill r-2 .!out l' ''lldcr Nolo, lIut Appears In 1)11 ur(! Klll 311 1976 0(' 1977 i\spell or Volur. front (enders will rust prematurely. II"L, JU'It 1.n CIUC your c3r frollt fenders rust in the future (but within 36 ''''ILlis- in-service), ke,' p this letter and the form with the car, Then, you do (a), (b) IInd (c) in paragraph 3, (If you eell your car, please give this letter and the form to the next owner, \;ll.1t You Do If \'ou Paid For front Fender Rust Rcpairs lourself lie(ore lou Got This Letter Determine if the rust Is in the front (1"11.!"r area desc.ribed 1n p:lragraph 1. Also determine if the 1,11" :.red during your car r lret 36 months-tn-service.

(b) C:Hefully fe.ld the statement (1n the repayment part of the fot1) about when the rust first appeared on your s front fender. If the rust occurred during the car s first 36 months-in-servi . slgn the statement and mail it with your ori(;inal repair bills (keep II copy for yourself), copies of cancelled che, or other proof that repairs were done, to the address shown, If you do not have your original bill, try to get one from the repair shop. If you cannot get an or1 inal, send a opy.

CI\l"ysl\!r will repay YO!. for reasonable repair bills. (Chrysler may ish to see your ar and proof of payment before repaying you. ;,at You Should Rcmgmber "'1\r)'91er rcpl;\c n\('nt pro!;ram covers )' OU only if you call or ge. to: II Dodge, rlymollth or Chrysler dealer. Chrysler Y. program ovcrs you only if you had pairs before you got this letter. In either ase . you should act promptly after eru!lt r8, ep in mind that where road salt is used heavily our dealers ' shops may be rcrowded, Al, n\;\tchfng paints exa tly is not alwa)'s possible. \Ie deeply regret an)' inconvenience to you, We will handle each situation 81i quic:kly Bnd fairly ua possible, If you lose your form or if :ou have ny problem s with our I,' ;ra, call ycur 10(:31 Chrysler Co::poration\ lone Office (li. sted in your Pal;es or (." 5 ::':H1U;IIJ. or ' ..rite :0: Chr::sler Cori'Or,lti.

Service a d P3r t UJ vision t Office ox 17lS Detroit, Which!I;;1I l,tl188 If you have difficulty finding yout" local Chrysler Corporation Zone Office:II phone number, you may cull (313) 956-5970. Very truly yours, Rust Area !'t CLiltYSl.L:C, \ . JOINEltCUllrOnATION (;('lwr:11 !manager - Service and Parts lavision Decision and Order 96 F. D:"

:c" t.g UAKV INL. 140 145 Complaint