The writer, Los Angeles freelancer and former Business reporter for Detroit News, blogs at Starkman Approved. This column is republished with permission.
By Eric Starkman
Liar, liar, pants on fire!
If I were Tesla founder Elon Musk, this is what I’d tweet at Ford following the company’s $19.2 million settlement with 40 states and the District of Columbia for deliberately exaggerating the actual fuel economy of its 2013-14 C-Max Hybrids and the payload capacity of its 2011-14 Super Duty pickups. Unlike Tesla, which doesn’t spend money on advertising and public relations, Ford spends millions selling its vehicles and has lied through its teeth to gain an edge.
You’re forgiven if you have no idea what I’m talking about. Most media did not cover the settlement, including, as far as I know, the Detroit Free Press, which lists Ford’s public relations department as its main competitor. The News, to its credit, covered the story and noted that Michigan is not among the states that will benefit from the settlement.
I contacted Attorney General Dana Nessel’s office for an explanation, but understandably she has bigger fish to fry like the Canary Tree Service in Gaylord. I’ll let you know if I hear from Michigan’s fearless law enforcement chief.
Ford’s settlement was brokered and announced last week by Iowa Attorney General Tom Miller, who was obviously no match for Ford’s legal department. The settlement is a pittance for a company that made $17.9 billion last year on revenue of $136 billion. Ford CEO Jim Farley, who received $23 million in compensation in 2021, could pay the settlement out of his own pocket and end up with $4 million, making him pauper compared to the $29 million dollars that GM CEO Mary Barra received.
It’s no surprise that Miller’s office couldn’t impose a sanction that would cause Ford real pain. Check out the credentials of Steven Croley, the general counsel Ford hired last year. Croley, on paper at least, is one of the most credentialed corporate legal chiefs in the country.
Ford’s public relations people are as cheeky as their advertising colleagues. In a statement emailed to the Detroit News, spokeswoman Cathie Hargett said Ford’s settlement did not include an admission of wrongdoing.
“We are pleased that the case is closed with no judicial findings of improper conduct,” Hargett said. “We have worked with the states to resolve their issues and in doing so have limited additional investigation costs and legal costs for all parties.”
Hargett is welcome to applaud the fact that, on a strictly legal basis, Ford got away with it, but here’s what Miller had to say about Ford’s behavior.
“Consumers place great importance on fuel efficiency when purchasing new vehicles,” Miller said in a press release. “For years, Ford has advertised impressive fuel economy and payload capacity for its cars and trucks. Unfortunately, these figures were not based on reality, leaving customers with vehicles that did not meet their standards.
Payload capacity is the maximum weight and space that a truck can carry, which is very important for individuals or businesses that use them to transport materials and goods. This could be the determining factor in the purchase of the vehicle.
The misleading advertisements are not what one would expect from a company that was named one of the “ten most ethical companies in the world” in March. It’s also not what one should reasonably expect from Ford, given its supposedly ancient code of conduct.
In 1977, Ford pledged to “make accurate representations to our customers, use only knowledgeable testimonials, and strive to be open about all aspects of the products and services we offer.” The company promised to be “vigilant against behavior that has the intent, ability or effect of being misleading to our customers”. Ford also pledged to “not just technically obey the law” but to “strive to serve our customers with honest values, avoiding all devices and schemes that exploit human ignorance or credulity. “.
I feel like when Ford wrote its code of conduct decades ago, there really was an institutional desire and commitment to adhere to it. I’m an avid reader of corporate code of conduct statements, and most of them today are written in HR and PR language, not the plain language used to articulate Ford’s values and policies. I have noticed that there is a disproportionate correlation between the declared piety of corporate conduct statements and their actual adherence. American Express and Centene are just two examples.
What’s remarkable about Ford’s publicity deception is that it was deliberately orchestrated.
Excerpt from the AG Miller press release:
In the world of truck advertising, the “best in class” payload claim is a coveted title. The attorneys general allege that Ford devised a deceptive methodology to calculate maximum payload capacity based on a hypothetical truck configuration that omitted standard items such as the spare tire, tire and jack, center console (in the replaced by a mini-console) and the radio. The trucks’ hypothetical payload capacity increased from about 154 to 194 pounds, just enough for Ford to advertise a misleading Best-in-Class payload.
Ford only used this deceptive strategy to calculate payload for advertising purposes; it did not use this strategy to calculate the actual payload capacity of each Super Duty pickup. Although Ford announced that the best-in-class payload was available to all consumers, only fleet buyers (a limited class of companies that purchase multiple new vehicles each year for commercial purposes) could order trucks equipped with so as to be able to achieve the advertised payload capacity. Individual buyers couldn’t buy a Super Duty pickup that fulfilled Ford’s Best-in-Class payload claims.
Think about it for a moment: Certain Ford employees, presumably with the knowledge and blessing of senior management, have concocted measures designed to deceive consumers, contrary to the company’s ethics rules. And Ford’s disappointments weren’t limited to the 2011-14 period for which he settled with the Iowa GA.
According to the independent trade publication Ford Authority, Ford last year issued a recall for certain 2020 Ford Super Duty vehicles equipped with the automaker’s 6.7L Power Stroke diesel engine due to inflated payload capacity values on the truck. tire and loading information label, overstated accessory reserve capacity values on the safety certification label and inflated weight values on the trailer loading documentation. This triggered a class action lawsuit, which AG Miller says is still ongoing.
Ford’s multistate regulations prohibit the company from “making false or misleading advertising claims regarding the estimated fuel economy or payload capacity of a new motor vehicle.” It subjects Ford to penalties under Iowa’s consumer fraud law if a court determines that Ford violated the settlement agreement. I might be wrong in assuming this, but I would expect the Iowa Consumer Fraud Act to already prohibit Ford and any other company from making false or misleading statements.
I wonder if Ford might still be in violation of misleading disclosures. The company’s much-vaunted Ford Lightning electric trucks have just been released, and trade publications have reported that the vehicle loses half of its range when towing a 23-foot Airstream trailer. The fact that several trade publications are considering the news of the reveal suggests that they were previously unaware of the considerable loss of range.
A 50% range loss is significant and worth disclosing upfront, especially as CEO Farley admits the company’s charging network needs “major work”. Airstream trailers are growing in popularity and with only being able to travel around 100 miles before charging Ford’s electric truck in the real world, Ford Lightning owners shouldn’t consider venturing too far out of their driveways.
Ford’s Farley tends to make statements that I perceive to be insincere, particularly his assertion that Ford’s “love of Michigan” influences his decision-making.
Under Farley’s leadership, Ford announced plans to invest more than $11 billion in Kentucky and Tennessee, expand manufacturing operations in Mexico where the popular electric Mustang is assembled, and move more jobs white-collar workers in India, where Ford already has more than 11,000 employees. . It has been reported that Ford is planning to build electric vehicles in India for export. Last October, I wrote a column about how Farley played Michigan Governor Gretchen Whiter and other state officials for fools.
Whitmer and the flattering Detroit media love to tout Ford’s revitalization of the city’s old train station which is being renovated with nearly $500 million in public funds. Notably, Ford does not want his name on the structure, supposedly to keep the building “agnostic”. My skeptical view is that the facility will become yet another taxpayer mess, and Ford doesn’t want its logo to appear prominently on a failed project that will remind Detroit residents of the company’s abandonment of the city. .
Maybe Farley deserves all the hype and accolades, but history shows that when the media goes universally gaga over a CEO and writes exaggerated articles claiming they walk on water, they’re rarely on the sidelines. their bill.
Unfortunately for Michigan, if Farley fails, Ford could do the same. He’s been betting the farm on electric vehicles, and if Ford’s Lightning trucks don’t sell or perform as expected, things could spiral out of control very quickly.
Either way, Farley will walk away with tens of millions of dollars, and Gannett-owned Detroit Free Press will likely continue to worship the ground he walks on.
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