FTC under Fire for Being Too Soft on Carmakers
The Fair Trade Commission (FTC) announced on Jan. 12 that it will warn Hyundai Motor Co. and Kia Corp. for misleading consumers with false and exaggerated advertisements for their authorized parts.
According to the FTC’s findings, the two carmakers' user manuals for their cars produced and sold between September 2012 and June 2020 say that only their authorized parts can guarantee vehicles’ safety and performance and unauthorized parts may undermine their performance and trigger malfunctions.
The manuals in question are for 23 models of Hyundai Motor including the Grandeur, Sonata, Avante and G70 and 17 of Kia including the Ray, Morning and K3.
The FTC said the information in the user manuals misleads consumers to believe that the quality or performance of parts other than the authorized ones are poor and inappropriate for use. The two carmakers' sister company Hyundai Mobis supplies authorized parts, which are manufactured by subcontractors under an OEM system. All other parts are called unauthorized parts.
Unauthorized parts also include products from companies that supply authorized parts to Hyundai Mobis. In other words, depending on whether the Hyundai Mobis brand is attached or not, parts from the same company become authorized or unthorized.
Experts note that the two companies' manuals for overseas users simply say that using counterfeit, faked or defective products may lead to a poor performance or breakdown of the cars, instead of saying that only authorized parts can guarantee vehicles’ safety and performance.
The two carmakers are believed to have gained huge economic benefits by inducing consumers to purchase authorized products through the misleading information.
However, the FTC decided to issue warnings to the two carmakers, the lowest level of punishment against violators of fair trade regulations, drawing fire from critics.