Feds Hit GM With Record $35 Million Fine Over Ignition Recall Fiasco
Saying General Motors broke the law by failing to notify regulators of an ignition switch defect tied to 13 deaths, the U.S. Department of Transportation announced the automaker will face a record $35 million fine and is ordered to make "significant and wide-ranging internal changes."
The fine is the single highest civil penalty amount ever paid as a result of a National Highway Traffic Safety Administration investigation, officials said. And while it is a drop in the bucket for GM, it is the maximum fine amount currently allowed under law.
GM will also have pay additional fines for failing to respond on time to the agency's document demands during NHTSA's investigation.
"GM broke the law," U.S. Transportation Secretary Anthony Foxx said at a press conference in Washington today. GM knew about the airbag failures related to the ignition switch issue since 2009, Foxx said, but did not tell customers or notify NHTSA as required by law.
"What we cannot tolerate, what we will not tolerate, is a person or company who knows danger exists and says nothing," Foxx said.
Under the agreement, the company once derided as Government Motors will have to get a lot more cozy with the government, as NHTSA will closely monitor the ignition switch recall efforts. The agency has ordered GM to "take steps to maximize the number of vehicle owners who bring in their vehicles for repair, including targeted outreach to non-English speakers, maintaining up-to-date information on its website, and engaging with vehicle owners through the media."
GM recalled more than 2 million Cobalts, G5s, Ions and other cars from the 2000s earlier this year after disclosing that they have known for more than a decade about a flaw in their cars' ignition switch that can lead to shutoffs and airbag failures. The problem has been linked to 13 deaths.
NHTSA reviewed data related to the airbag failures in 2007 and 2010, but each time determined that it lacked the data necessary to open a formal investigation. The agency now says GM had failed to advise them of the defect during the earlier reviews.
Foxx also said he urged Congress to support an act that would increase the maximum fine from $35 million to $300 million.
More details to come.
Photo credit AP