The writer, a Los Angeles freelancer and former Detroit News business reporter, writes a blog, Starkman Approved.
By Eric Starkman
Public relations people too often are dismissed as liars for hire. Given that only eight percent of Americans trust advertising professionals, it’s a safe bet that PR folks don’t rank much better.
According to Gallup’s 2023 Honesty and Ethics Survey, the American public trusts advertising professionals as little as they do car salespersons and senators and just a tad more than they do members of Congress.
I owned a PR firm in New York City for many years. I got out of the business because companies and CEOs increasingly were seeking flacks they mistakenly believed could spin wrongdoing and questionable activities to seem like no big deal.
It wasn’t always that way. I never lied in all the years I practiced PR, and the clients I represented would have fired me if I suggested issuing false or deliberatively deceptive statements. In the years I worked in journalism, including several at the Detroit News in the mid-80s, most of the PR folks I dealt with were honest and trustworthy.
A company’s PR is reflective of its senior management. That’s what sparked my investigative work on the former Beaumont Health and its CEO John Fox for which I received a local journalism award. When spokesman Mark Geary derided a Channel 7 report that Beaumont had merely “paused” the closing of Beaumont Wayne at the height of the pandemic rather than closed it as the station reported, the statement was a siren call to start digging.
A hospital closed its doors at the height of a pandemic and Geary was arguing semantics. It wasn’t Beaumont’s only instance making false and misleading statements under the leadership of former CEO Fox.
GM’s brigade of PR people too often skates close to the line, and the automaker’s statement in response to the FTC essentially giving the company a pardon for its egregious privacy violations was an example of crossing it.
“Respecting our customers’ privacy and earning their trust is deeply important to us,” GM said in a statement. “Although Smart Driver was created to promote safer driving behavior, we ended that program due to customer feedback.”
Respects Customers?
GM’s claim that it respects customers’ privacy and that earning their trust is “deeply important” is very much at odds with the facts. Allow me to explain the audacity of GM’s statement.
GM CEO Mary Barra in 2021 boasted to Wall Street that by the end of the decade, GM would be a “platform innovator” generating as much as $25 billion from its software-enabled services, like heated seats to warm drivers’ derrieres. That’s the reason GM opted not to include Apple’s CarPlay as part of its infotainment systems. Barra wanted to control customer data so she could better profit from it. Of course, GM claimed that its proprietary software and interface would create a better customer infotainment experience.
GM smelled a money-making opportunity tracking customer driving habits and selling the information to brokers, who in turn sold the data to insurance companies. The data was paydirt for insurance companies as it included critical information like how often and long GM owners drive, how fast they take corners, how hard they hit the brakes, and whether they speed.
Reporter Kashmir Hill (Linkedin photo)
Had things gone according to plan, GM no doubt would have continued tracking its customers without their knowledge. Unfortunately, a New York Times reporter specializing in privacy issues named Kashmir Hill got wind of what GM was up to and published this story exposing GM’s Big Brother activities.
Hill readily found examples of hapless GM customers whose insurance rates went up considerably because of GM’s data, but notably didn’t feature any customers whose rates went down.
“It felt like a betrayal,” customer Kenn Dahl told Hill. “They’re taking information that I didn’t realize was going to be shared and screwing with our insurance.”
Thanks to GM’s driver surveillance activities, Dahl, 65, was hit was a 21% increase in his insurance premium despite never having been deemed responsible for a single accident.
Wasn't Optional
Hill reported that some GM car owners said the automaker tracked them despite never having activated a GM connectivity feature called OnStar Smart Driver, which enabled the company’s Big Brother driving surveillance. The Detroit Free Press reported in August 2022 that while GM previously claimed its OnStar connectivity and surveillance package was optional, in fact it was mandatory and cost $1,500 extra.
Texas AG Ken Paxton
In a damning lawsuit filed against GM, Texas attorney general Ken Paxton alleges in considerable detail the lengths GM went to deceive customers and get them to agree to have their driving habits monitored.
“GM’s practice was to subject consumers who had just completed the time-consuming and stress process of buying or leasing a vehicle at a dealership to an “onboarding” process,” Paxton alleges. “To customers, the onboarding process appeared to be a mandatory pre-requisite to taking ownership of the vehicle; however, it was no more than a deceptively designed sales flow to ensure that customers would sign up for GM’s products and unwittingly be enrolled in GM’s Driving Data collection scheme.
“As part of this onboarding process, General Motors electronically presented customers with over fifty pages of disclosures . . . which consisted of product descriptions and a confusing series of applicable user terms and privacy notices.”
Paxton’s lawsuit alleges that GM entered “many agreements” to sell its customers’ driving data. The company allegedly went so far as to contractually obligate one of its driving data buyers to purchase driving data from other automakers and then kick back to GM a portion of the resulting profit. That was on top of the initial multimillion lump sum payment GM demanded from the purchasing company.
Paxton alleges that GM “profited handsomely” from its “ill-gotten data,” earning “millions” from multiple new revenue streams.
Unlike Michigan AG Dana Nessel who lacks the talent and resolve to go after major corporations, Paxton swings for the fences and has attorneys in his department who can win big settlements.
Paxton earlier last year secured a record $1.4 billion settlement with Meta (formerly known as Facebook) to stop the company’s practice of capturing and using the personal biometric data of millions of Texans without legal authorization. The settlement dwarfed the $390 million settlement 40 states reached with Google in 2022.
At least a dozen class action lawsuits have been filed against GM for its alleged privacy violations. Notably, it’s not the only incidence of GM’s dishonesty.
GM CEO Mary Barra (GM photo)
GM’s Cruise subsidiary, who’s board Barra chairs, last November agreed to resolve a criminal charge in federal court for providing a false record to National Highway Traffic Safety Administration (NHTSA) with the intent to impede, obstruct, or influence the investigation of a crash involving one of Cruise’s autonomous vehicles. The Biden administration’s DOJ, which like Nessel doesn’t go after big companies, let Cruise off with a $500,000 fine.
GM also is facing a massive class action lawsuit across 26 states that alleges the auto manufacturer violated state consumer protection statutes by knowingly putting vehicles with faulty transmissions on the road, endangering drivers, passengers, and pedestrians.
The certified class represents more than 800,000 owners of GM vehicles with one of two models of eight-speed automatic transmissions, the GM 8L90 or 8L45, which were manufactured between 2015 and March 1, 2019. Plaintiffs claim that the vehicles suffer from shuddering or shaking in higher gears and hesitation, lurching, or jerking in lower gears. Some drivers reported the gear shifting as so violent that it feels as if they were hit by another vehicle.
There are reported issues with other GM transmissions. Meanwhile, Reuters reported today the National Highway Traffic Safety Administration has opened a preliminary probe into 877,710 vehicles manufactured by General Motors, after receiving reports alleging engine failure.
The investigation covers certain Chevrolet Silverado, GMC Sierra, Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon and Cadillac Escalade trucks and SUVs from model years 2019-2024, equipped with the L87 V8 engine.
According to the auto safety regulator, complainants reported a bearing failure that might result in either engine seizure or breaching of the engine block by the connecting rod. NHTSA said it received 39 complaints and a number of early warning reporting field reports from vehicle owners, who also said there was no detectability prior to engine failures.
CEO Barra didn’t create GM’s ethically challenged culture, but she likely helped foster it in her earlier role as head of HR. Moreover, she vowed to institute meaningful reforms when she assumed GM’s top leadership position.
Within weeks of Barra becoming CEO, it was revealed that GM knowingly sold Chevrolet Cobalts and Saturn Ions with faulty ignition switches that could inadvertently shut off car engines and airbags, a problem linked to at least 97 deaths and forced the recall of 2.6 million vehicles. Based on the finding of an investigation conducted by a former U.S. Attorney GM retained, Barra blamed mid-level underlings for the fiasco. She fired 15 unidentified persons and disciplined five others.
A law firm that investigated Cruise’s safety issues and management’s hostility with regulators blamed the company’s culture. Cruise’s former chief people officer was Arden Hoffman, who now oversees GM’s global HR functions.
Hoffman told employees she would be dividing her time between Detroit, San Francisco and Montana when she first joined the company. Hoffman reports directly to Barra, as does California-based Lin-Hua Wu, GM’s chief communications officer.
Deadline Detroit is working on a series of articles about GM, including its HR and cultural practices. The writer welcomes hearing from current and former GM employees. Confidentiality assured. Eric@starkmanapproved.com.
