Toyota Slammed With $16.4M USD Federal Fine For Defect Deception
April 5, 2010 9:10 PM
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(Source: Sting Ray Studios)
Toyota has recalled millions of vehicles, including the best-selling Camry for unintended acceleration problems. Toyota has now received a massive fine for trying to deceive U.S. federal regulators.
(Source: Torque Report)
Fine is largest in U.S. history against an automaker
The atmosphere at the U.S. Department of Transportation on Monday was tense as Secretary Ray LaHood
slammed Japanese automaker Toyota
. Lahood announced, "
We now have proof that Toyota failed to live up to its legal obligations
Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families.
Defects are an automaker's eternal enemy. Every year thousands, if not millions of vehicles are recalled for defects. Toyota's critical problem was not so much the defects itself -- despite the
massive number of vehicles
involved. Rather, Toyota's key mistake was the dangerous game of deception it reportedly played.
According to documents obtained from Toyota, the company began a recall on
in September of last year in Canada and Europe. However, it failed to inform U.S. regulators of the problem, and made no effort to launch a recall of the effected vehicles until it came under heavy fire in January.
That constitutes a gross violation of federal safety guidelines, which demand that an automaker inform the U.S. federal regulators within five days of discovering a defect.
As a result, the DOT has thrown the book at Toyota, proposing a $16.4M USD, the maximum penalty allowed under the law. That fine far surpasses the biggest previous fine against an automaker -- $1M USD sum levied against General Motors
for failing to promptly recall windshield wipers in 2002-2003 model vehicles
Toyota has two weeks decide its response. Despite the reportedly conclusive evidence, the Asian automaker is expected to appeal the decision, perhaps seeking a smaller fine.
National Highway Traffic Safety Administration (NHTSA)
continues to investigate the sticky accelerators, unsatisfied with Toyota's claim that floor mats were solely to blame. NHTSA is looking at a host of mechanical and electrical elements for bugs, and is even examining whether
could play a role, with the
help of experts from NASA
The government continues to investigate Toyota's behavior during the recall, as well. DOT officials said more fines could brought against Toyota if further proof of wrongdoing is revealed.
While the defect mess is unpleasant for all those involved it does raise some interesting questions about governance. Some say that the government should not police companies, and that the commercial press should be left to investigate reports of defects and inform consumers of safety risk. Others argue the current system is a successful one. And still others argue that current regulation does not go far enough -- that the federal government should have the ability to levy even bigger fines against companies who knowingly make products that could endanger U.S. consumers.
135 pending lawsuits
against Toyota raise similar questions. Some argue that allowing such free litigation against safety critical businesses, such as automakers and healthcare providers allows citizens to take regulation into their own hands. Others argue that it hinders free enterprise, raising prices, and worse yet leads to bigger government.
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RE: Where does the money go???
4/5/2010 11:20:34 PM
I think you are a bit naive my friend. If a company feels that the price of the fallout would be less than the price of fixing something they will often just let it go.
I suggest you do some research into this type of thing.
RE: Where does the money go???
4/6/2010 10:45:54 AM
Ok let's assume you are correct and that Toyota calculated this recall <twirling finger around ear>. Because if they knew about this they would know about all the 2.3 mil cars that would be affected and just say, "Yeah that's cool. We'll be able to swing it."
So now looking back, do you think Toyota is in a better place today than they were before all of this happened?
I have worked with engineers on lighting and when there is a problem and I ask how I can help, they might dismiss me by saying, "Well, it not life threatening and it hasn't become a warranty issue yet, so we're ok at this point."
So if it is life threatening (a light that melts and obscures the driver's viability of the road) the policy is to deal with it. Or they get enough returns of something benign (a light that has streaks on it) they MIGHT (this is where the calculation you speak of enters the story) continue to maufacture.
They draw the line at life threatening.
Again, let's give you the benefit of the doubt and assume that someone at Toyota knew that the cars could take off and become unstoppable. Do you think they burned the results of the test that determined that? No. They would keep it and go back to the drawing board because dead people don't by cars.
If there was any wrong doing by Toyota, it was negligence and not some conspiracy to raise money.
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