General Motors to Pay $900 Million Settlement for Faulty Ignition Switch Charges

General Motors has reached a 900-million-dollar settlement with the U.S. Justice Department settling charges that the company failed to obey federal laws requiring prompt disclosure of safety problems.  The company manufactured faulty ignition switches that were linked to more than 120 deaths, numerous injuries, and massive recalls of affected vehicles.  The ignition switch defect caused small cars to turn off suddenly, cutting off the engine power and disabling the airbags.

The penalty fees are a result, not from the company’s manufacturing of a defective product, but of their delay in reporting the problem to the National Highway Traffic Safety Administration for more than a decade.  The issue was publicly disclosed in early 2014, after which GM created and funded an independently administered fund to examine incident reports and offer settlements to victims.  The fund has approved settlement offers for families of 124 victims who were killed and 275 who were injured.  GM is expected to pay as much as 575 million dollars in private settlements in addition to the 900 million dollars to the Justice Department.

The investigation did not find any one employee at General Motors responsible for the defect, concluding that the problems stemmed from a collective failure at the automaker.  Investigators found that engineers, attorneys, and mid-level corporate executives had neglected to grasp the significance of the matter or simply failed to follow federal guidelines for reporting serious defects.  Following the release of an internal investigation report, GM fired 15 employees linked to the negligence.

The General Motors settlement is widely being compared to the 1.2 billion dollar settlement Toyota paid for covering up defects that caused unintended acceleration in its vehicles.  General Motors is required to pay a dollar amount that is substantially lower than what Toyota paid and for a defect that caused greater harm to its consumers.  General Motors has been cooperative with the proceedings, potentially resulting in this lower settlement.

Automobile makers have a responsibility to report known defects to the National Highway Traffic Safety Administration within five days of learning of a problem.  Consumers should be able to trust that manufacturers are producing safe products.  The U.S. Justice Department aims to hold companies who violate safety regulations responsible for their wrongdoing.  If you wish to learn more about your rights for driving a safely manufactured vehicle, contact Thomas Law Offices for more information.