Nissan to Pay Rebates, Fine to Settle Suit
Nissan Motor Corp. has agreed to pay up to $4.6 million in rebates and a $250,000 penalty to settle a lawsuit alleging that the auto maker misled consumers about the amount of leather used in the seats of its sporty 300 ZX cars.
Nissan is to provide rebate certificates worth $175 each to the 26,500 registered owners of 300 ZX cars sold new in California before Aug. 1, 1987.
The $175 rebate certificate may be used for goods or services at any Nissan dealer in California, or it can be exchanged for a $1,000 factory rebate good toward the purchase of a new 300 ZX. The car carries a recommended list price of $21,699.
The agreement, believed to involve one of the largest total rebate amounts in a deceptive advertising case in California, does not include Nissans sold in other states.
The settlement caps more than a year of negotiations and originated with a complaint filed in 1986 by a 300 ZX owner in San Diego. The owner, who has asked to remain anonymous, complained to the city attorney’s consumer fraud unit after learning that the bolsters, or reinforced side portions of the car seats, were simulated--not genuine--leather.
“He had spent as much as $1,200 on the leather option package, and when he noticed some cracking on the seat, he took it to an upholstery shop for repair,” San Diego Deputy City Atty. William Newsome III said. “The shop owner told him the bolsters were in fact vinyl, not leather as they had been advertised in the car’s promotional window sticker.”
A four-month investigation by the city attorney’s office and the state attorney general’s consumer fraud unit followed, Newsome said. Negotiations spanning a year led to the settlement signed Tuesday by the parties and San Diego Superior Court Judge James Milliken.
Under the legal settlement, Nissan did not admit wrongdoing.
A spokesman for Nissan, which has its U.S. headquarters in Carson, said the company does not believe that consumers were misled and noted that the manufacturer corrected its advertising.
“This (agreement) provides a response to a consumer concern . . . and we wanted to make certain that we rectified that concern,” spokesman William Pauli said. “We believe this accomplishes that.” Nissan used simulated leather on bolsters because it was shown to hold up better in areas of high wear, he said.
When alerted of the problem in July, Nissan revised the wording of window stickers and brochures advertising the optional “leather trim” package, which also includes bronze tinted windows, a visor vanity mirror and leather door panel inserts. Promotional materials previously billed the cars as having “leather seating surfaces” when in fact the seats were only 83% leather.
Newsome said the settlement requires Nissan to mail letters to the registered owners of the 26,500 ZX models with the leather option package sold in California before the advertising was altered. If all the owners are located and take advantage of the $175 certificates, it could cost Nissan $4,637,500.
Deputy Atty. Gen. Michael Botwin said the total amount for which Nissan could be liable makes the settlement among the largest of its type in the state.
“The significance of this case from a law enforcement standpoint is that it will create a heightened awareness on the part of manufacturers as to how they describe their automobiles or parts of their automobiles,” Botwin said. “It will make them careful not to mislead and confuse the public.”
