Ford Will Pay $19.2M In False Ad Settlement Over Fuel Efficiency Claims

American automaker Ford is on the brink of making false claims about the fuel efficiency of its hybrid C-Max and the payload capacity of its Super Duty trucks.

Ford Motor Company has agreed to pay $19.2 million in a multi-state settlement on charges of false advertising. The settlement was announced today by 40 state attorneys general and the District of Columbia, all of whom were involved in the case.

Investigations revealed that auto manufacturers made false claims about the fuel economy and payload capacity (maximum weight a vehicle can safely carry) of some hybrid and pickup truck models between 2013 and 2014.

Specifically, the case relates to Ford’s 2013 decision to downgrade the advertised fuel economy rating on its C-Max compact hybrid vehicle. In essence, the company posted an ad that misrepresented the distance a driver can travel with a single tank of gas on the C-Max and claimed that driving style would not affect the car’s actual fuel economy. The company also claims in its marketing that the vehicle offers better fuel economy than competing hybrid models.

These issues are evidenced in Ford’s advertising campaign for the vehicle, ‘Hybrid Games’, which pitted the C-Max against the Toyota Prius in a series of videos. The ad shows that the C-Max gets 47 miles per gallon (mpg) both on the highway and in the city. But in reality, the C-Max’s fuel economy rating is close to 42 mpg in urban areas and 37 mpg on the highway.

The lawsuit also claims that Ford used deceptive tactics to snatch the title of “Best in Class” payload capacity for its Super Duty trucks, when, in fact, competing models had actually outperformed the Super Duty. Acting New Jersey Attorney General Matthew Platkin explained to Reuters: “In calculating the maximum payload capacity of its vehicles… Ford used a truck configuration not actually intended for sale to individual buyers — which omitted standard items such as spare wheels, tires and jacks, radio, and center console. (which was replaced by the mini console.) By doing so, the company was able to add more weight to its marketable payload capacity and thereby reclaim the “Best in Class” payload award in this misplaced place.

This settlement not only requires Ford to pay, it also prohibits the company from making further false or misleading claims about the estimated fuel economy or payload capacity of any new model in its advertisements.

Ford’s reaction to the settlement

As part of the settlement, Ford did not admit any wrongdoing. A Ford spokesperson told The Drum: “We are pleased that this matter was resolved without any judicial findings of inappropriate behavior. We are working with the states to resolve their concerns and in the process limit the costs of additional investigations and legal fees for all parties.”

The spokesperson also noted that when it came to the company’s attention that some 2013 and 2014 models had incorrect fuel economy label values, Ford “voluntarily” notified the U.S. Environmental Protection Agency (EPA) and reimbursed customers who purchased or rented vehicles with the label. which is inaccurate during and after the time in which fuel economy is incorrectly advertised.

The spokesperson also pointed out that Ford follows the standards set by the EPA and other regulatory agency standards for fuel economy labeling and advertising and stressed that vehicle performance claims made by the company are credible.

However, some want to draw attention to the broader negative economic impact that false advertising claims can have on consumers, regardless of whether the problem is fixed afterwards. “Families across Pennsylvania are pinching money to buy gas right now,” Pennsylvania Attorney General Josh Shapiro said in a statement today. “Some might even consider buying a more fuel-efficient car, and when making that purchase decision, they rely on the information manufacturers provide about fuel economy. Ford can’t be allowed to jack up the numbers where they like to make their hybrid vehicles look their best. Consumers have the right to have the facts to make a fully informed decision.”

Despite the deal, some advertising pundits don’t believe the deal will hurt the automaker’s reputation much in the long term. “I don’t think much will happen to Ford — they sound too loud and the brand is too established,” said Robert Passikoff, chief executive and founder of marketing consulting and research firm Brand Keys. “They were caught and they paid for it. Millions are just pennies to them. There won’t be a big overall effect in terms of branding. It’s going to be painful to cycle this news and then move on to something else.”

Others are more skeptical. “This is a costly mistake that will impact their reputation in this particular product category for a while,” said Dr Karen Freberg, marketing expert and professor of strategic communications at the University of Louisville. “With overall rising costs, people are looking to brands like Ford for hybrid products, and if they don’t do what they’re supposed to, it’s a business and reputation problem.”

Freberg points out that, for the hybrid and electric vehicle industries in particular, the risk of over-promising can be high — he warns brands to be careful and meticulous in communicating the benefits of their products. “This should be something that other brands looking to get more involved with in the hybrid model category…to make sure their message aligns with their product promises. We can’t over-promise or elaborate on what our products do for consumers if they aren’t true. This is a case for others to see and learn from for the future.”

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