An unprecedented and controversial consent agreement between the Federal Trade Commission (FTC) and General Motors (GM) calls for the establishment of a nationwide arbitration program to settle FTC charges that millions of GM cars have defective parts. The agreement has flaws from the consumer's standpoint, but millions of GM car owners stand to gain from it. In 1980 the FTC issued a complaint that three major components of more than 20 million GM cars had an abnormally high failure rate. The FTC agreed to settle the complaint by ordering GM to set up a consumer-arbitration program specifically to handle certain kinds of complaints. It will be run by the Better Business Bureau (BBB). Under the new agreement, a consumer can go to arbitration on the three components no matter when the repairs were made, no matter the age or mileage of the car, and no matter who owns the car today. GM is bound by the arbitrator's decision, but the consumer is not. The FTC had three reservations about the agreement: it abandoned the principle of automatic reimbursement for demonstrably defective products; many consumers entitled to refunds won't receive anything when arbitration becomes a precondition; and the consumer will have a hard time proving that a particular product was defective. The advantages of this agreement are that it was easier to obtain quickly and that GM made some other concessions: to arbitrate all power-train problems and to make its service bulletins available to consumers. Although it will help many consumers, the arbitration process will be complicated. Three side boxes include additional information.