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Honda Fined Record $70 Million for Failure to Report Information on Safety Defects

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On January 8, 2015, the National Highway Traffic Safety Administration (NHTSA) announced that Honda will be required to pay $70 million in fines to the U.S. Department of Transportation for “failing to report deaths, injuries, and certain warranty claims to the federal government in violation of the TREAD Act.” The company will also be subject to “increased NHTSA oversight and third party audits” to be sure they improve their reporting processes.

This is the largest civil penalty ever levied on an auto manufacturer.

Automakers Must Report Potential Safety Defects

The TREAD Act (Transportation Recall Enhancement, Accountability, and Documentation Act)—enacted November 1, 2000, in response to the safety of Firestone tires and related matters—requires vehicle and equipment manufacturers to report to the NHTSA information concerning evidence of a potential safety defect, and to advise the administration of safety recalls and other safety campaigns.

Violations of this act can be grounds for civil penalties, such as this one against Honda, and even criminal penalties, if the automaker is found to have misled the NHTSA about safety defects that cause injury or death.

After an investigation by the NHTSA, Honda was found to be in violation of this act, and was ordered to pay:

  • $35 million for failing to report 1,729 injury and death claims to the NHTSA between 2003 and 2014
  • $35 million for failing to report customer satisfaction and warranty claims between 2003 and 2014

Injuries and deaths associated with defective Takata air bags—which may explode upon deployment, sending metal and plastic fragments into the interior of the vehicle and potentially injuring or even killing occupants—are some of those that Honda failed to report.

Honda has now issued a nationwide recall of Takata driver’s side air bags, and is exploring a global investigative recall to find out more about why the air bags are not operating correctly.

Air bags weren’t the only problem, however. Honda also failed to report complaints concerning seat belts, brakes, and acceleration problems.

NHTSA Cracking Down on Reporting Violations

These fines are indicative of the steps the NHTSA plans to take to increase oversight into potential safety problems. The administration has faced criticism for failing to take action sooner on both the Takata air bag problems and those associated with the General Motors (GM) ignition switch defect.

The NHTSA noted in its announcement that it had issued more fines in 2014 than in any other year in history. “These fines reflect the tough stance we will take against those who violate the law and fail to do their part in the mission to keep Americans safe on the road,” said U.S. Transportation Secretary Anthony Foxx.

Currently, the NHTSA may not fine a company more than $35 million—a cap established by Congress. They have proposed a bill that would increase that limit to $300 million.

Victims of air bag-related injuries may be eligible to file a Takata air bag lawsuit in an effort to recover damages.