Nissan Settlement to Pay $4.6 Million to 300 ZX Owners
The Nissan Motor Corp. has agreed to pay as much as $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 models.
Under the legal settlement, signed by a San Diego Superior Court judge Tuesday, Nissan does not admit wrongdoing, but it will provide rebate certificates worth $175 each to registered owners of 26,500 300 ZX cars which sold new in California before Aug. 1, 1987.
In lieu of the $175 certificates, which may be used for goods or services at any Nissan dealer in the state, consumers may receive a $1,000 factory rebate good toward the purchase of a new 300 ZX, which carries a recommended list price of $21,699.
Year of Negotiation
The agreement, believed to involve one of the largest total rebate amounts in a deceptive-advertising case in California, does not affect owners of Nissans in other states.
The settlement caps more than a year of negotiations that 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 parts of his 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,” 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, and negotiations spanning a year led to the settlement signed Tuesday by the parties and Judge James Milliken.
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.
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. It also is distinctive, he said, because most of the consumer fraud unit’s cases challenge alleged unfair competition and deceptive advertising practiced by auto dealerships, rather than manufacturers.
“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.”
A spokesman for Carson-based Nissan said the company does not believe that consumers were misled and noted that the manufacturer corrected its advertising once it was apprised of the complaints.
“This provides a response to a consumer concern . . . and we wanted to make certain that we rectified that concern,” spokesman William Pauli said of the settlement. “We believe this accomplishes that.” Pauli said Nissan used simulated leather on the bolsters because “it was proven that it wore better in high-stress areas” such as seats. He added that the company has not received complaints from consumers in any other states.
Under the settlement, Nissan must mail letters to the registered owners of the 26,500 ZX models with leather seats sold in California before the advertising was altered. If all 26,500 owners are located and take advantage of the $175 certificates, it could cost Nissan $4,637,500, Newsome said.
The $175 represents the approximate difference between the retail cost of the seats actually used in the cars and the worth of the seats if they were upholstered entirely in leather.
“This case is a good example of how just one consumer complaint can make a big difference for a lot of people,” Newsome said. “We don’t often have the chance to bring a remedy to this many people.”
The legal agreement also enjoins Nissan from misrepresenting the type of material used to upholster any seat, bolster, headrest or car interior, or from misrepresenting the amount of leather used in a vehicle’s interior.
