Honda Fined Record $70 Million for Violating Federal Safety Law

On January 8, 2015, the National Highway Traffic Safety Administration (NHTSA) announced that Honda had agreed to pay $70 million for violations of the nation’s TREAD Act. This amount represents more than half of the amount of all of the penalties that NHTSA issued to automakers in 2014.

Failure to Report Injuries, Deaths, and Warranty Claims

The record civil penalty stems from Honda’s failure to report vehicle-related injuries, deaths, and warranty claims to the federal government. From 2003 to 2014, NHTSA reports that the automaker withheld information on over 1,700 deaths and injuries. Along with the $70 million fine, Honda also agreed to increased oversight by the NHTSA, and will consent to third-party audits to ensure that it meets its reporting obligations going forward.

The NHTSA issued Honda’s sanctions under the Transportation Recall Enhancement, Accountability, and Documentation (TREAD) Act. Enacted in 2000, the TREAD Act was originally a direct response to safety issues with Firestone tires (hence the tire-related acronym). The law requires automakers and equipment manufacturers to self-report any information that might indicate a safety defect. These companies also must inform the NHTSA of recalls and other safety-related campaigns.

Increased Scrutiny on Automakers

The $126 million in penalties that NHTSA issued in 2014 exceeds the total amount of fines the agency collected in all of its prior years of oversight combined. U.S. Transportation Secretary Anthony Foxx stated that the record penalties reflect a new, “no excuses” approach. Going forward, he intends for the NHTSA to hold vehicle manufacturers responsible for maintaining the safety of the nation’s roadways.

Part of the agency’s justification for Honda’s record penalty stemmed from the company’s admission that it had known about the reporting issue as early as 2011, but still failed to act on it until 2014. The TREAD Act provides for increased fines – and potentially even criminal penalties – for violating safety laws and misleading NHTSA about defect-related accidents. Following the announcement of Honda’s agreement to pay the $70 million penalty, NHTSA Administrator Dr. Mark Rosekind reinforced Secretary Foxx’s no-excuses stance on inaccurate reporting:

“Today’s announcement sends a very clear message to the entire industry that manufacturers have responsibility for the complete and timely reporting of this critical safety information.”

NHTSA has not yet stated whether it intends to pursue criminal sanctions against the automaker as well.

Details Still Yet to be Uncovered

Even at the time the penalties were announced, the extent of Honda’s underreporting remained unclear. In many cases, full details on thedefect-related injuries and deaths still had not been fully reported. However, the financial penalties levied against Honda represent the maximum amount allowed by statute for its violations.

If you drive a Honda vehicle, stay tuned to see if any safety recalls follow the NHTSA’s heavy-handed enforcement.

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